James Montgomery, Associate Editor, RenewableEnergyWorld.com
February 27, 2014 | 7 Comments
New Hampshire, USA -- A conference this week in Boston packed some deep discussions about the U.S. offshore wind industry's progress, and opportunities and challenges ahead, from coordinating state and federal efforts to pursuing technology development, to simply getting the first steel into the water to show it can be done.
Facing the Problems, Elevate the Conversation
The question isn't whether offshore wind projects can be built, it's about establishing early momentum and shifting the emphasis from one-off projects to driving a sustainable industry, noted opening speaker Jim Lanard, founder and former president of the Offshore Wind Development Coalition. First thing first: get the first project in the water, something that later panelists agreed on. Second is establishing regulatory certainty at the state level: "we can't have states changing the rules of the game halfway through." The sector also has to do a better job about the economics of what's happening, from internalizing costs to structuring them financially -- but also changing the conversation from being so much about how much things cost, to the benefits offshore wind provides. "People hear about costs, the price of energy," he summarized, and the conversation drifts into "Yes, but... we need to get rid of that 'but' and get them to just say yes."
And that's perhaps the offshore wind industry's biggest problem: delivering its message. In northern New England the conversation about future energy supplies has been dominated by the prospect of importing hydro from government-controlled utilities in Canada, piped down by new (and controversial) transmission lines. "We're losing the argument why local renewables are a better option," he said, even in this region where few other renewable energy options (onshore wind, solar) are really viable at utility-scale. Deepwater and offshore wind development in general, must be opportunistic in selling power, he suggested, pointing to the Long Island Power Authority's current RFP due in March.
That conversation has to be raised up to a national level -- and making it a fair conversation. Peter Mandelstam, president of Arcadia Offshore (and longtime AWEA board member), suggested the offshore wind industry should take a page from how the "marriage equality" movement has evolved, changing the conversation and making it a national and widely nonpartisan movement. "We need to rededicate ourselves and have a national conversation about this transformative technology," he said. Part of shifting the marriage equality debate was in marginalizing and silencing fringe voices -- and that's what the offshore sector also needs to do, he said. "Illegitimate voices [namely, climate change deniers] have an audience in the marketplace of ideas which they don't deserve to have."
Coordinating State and Federal Policies, And a Cape Wind Update
Jim Gordon of Cape Wind laid out the case for offshore wind in New England: the current price of natural gas here is three times that of Europe (roughly $30/mmbtu vs. $10), electricity prices have soared to $237/MWh compared with Cape Wind's in-hand price of $190/MWh if it were running today, and New England's power pool capacity auction prices have spiked in the past few weeks fro around $2 per kilowatt-month to $15/kWm. (Deepwater Wind CEO Jeff Grybowski later offered a real-time update to Gordon's electricity pricing number which had crept up to $263/MWh, a simultaneous endorsement of ISO New England's mobile app.) The East Coast and New England in particular "is facing some very important energy decisions," Gordon noted. Prime among them: whether to commit to an energy destiny tied to huge investments in pipelines and Canadian shales or dedicate to domestic renewable energy, in particular offshore wind.
Speaking of delivering messages, Gordon revealed breaking news about Cape Wind: Danish credit export agency EKF has approved a $600 million commitment, on top of PensionDanmark's initial $200 million pledge, a commitment reiterated just weeks ago. EKF's investment reportedly is earmarked mainly for turbine purchases. Gordon expressed confidence that the project's financing will be completed by the third quarter of this year.
Gordon also delivered one of the event's best lines, admitting that the long saga surrounding his project has made him feel like he's a real-life star of Breaking Bad: the mild-mannered energy developer who evolves (devolves?) to accept and deal with the ruthless and cunning cartels surrounding him.
Deepwater's Grybowski urged harmony between state and federal polices, with deference to letting the state take the lead. Despite the Department of Interior's "admirable" interest in leasing offshore wind energy areas, he expressed a "firm level of frustration" with the lack of priority given to developers that actually want to build projects, and have revenue contracts in hand. "We question whether state and federal governments are working together as much as possible," he said. "I don't see the coordination. That's a huge problem for the next level of projects." Mandelstam, who at the center of the nation's first winning offshore wind contract in Delaware, agreed that states' initiatives must go first in a coordinated effort.
Chris Wissemann, CEO of Fishermen's Energy, walked through his project's up-and-down efforts to gain approval by the state of New Jersey's Board of Public Utilities. The project remains in BPU limbo, but he's optimistic that a final push to the finish line will happen with new BPU leadership -- a change due in part to backlash following the Christie administration's BridgeGate scandal and subsequent concerns raised about independent agencies' self-authority. Asked about the DoE offshore pilot project grant process, Fishermen's Weissmann suggested one of the eventually winners probably will be one of the floating-foundation projects (Principle Power in Oregon or the Aqua Ventus project in Maine). That means four other pilots will be fighting for the two remaining DOE downselect spots, but he feels Fishermen's has the best headstart and momentum. And most of them, he noted, will be relying on that DOE funding to move onward -- including Fishermen's.