Changing Tides in Offshore Wind

The U.S. is now making moves to get into the offshore wind business that the United Kingdom is currently leading in the number of installations and planned projects.

We all know NIMBY-ism played a big role in many offshore wind projects not being built in the United States. All that red tape, coupled with uncertainty over climate change legislation (although we now know there will not be anything in place in 2010) led to us falling behind the rest of the world. But it’s not too late to get in on the action!

With the Cape Wind project coming into fruition off the Massachusetts coast after a 10-year battle, other states say they now want to start offshore wind farms, especially with state mandated renewable portfolio standards looming. The Department of the Interior, the same department that approved Cape Wind, has signed an agreement with 10 East Coast states that establishes an Atlantic Offshore Wind Energy Consortium to promote the development of wind resources on the Outer Continental Shelf. The memorandum of understanding was signed between Interior Secretary Ken Salazar and the governors of Maine, New Hampshire, Massachusetts, Rhode Island, New York, New Jersey, Delaware, Maryland, Virginia and North Carolina.

According to the memorandum of understanding, the consortium will develop an action plan to streamline offshore projects that span multiple states and optimize expertise across state boundaries. It will also try to smooth the process between state and federal permitting and approvals.

“By one estimate, if our nation fully pursues its potential for wind energy on land and offshore, wind can generate as much as 20 percent of our electricity by 2030,” Salazar said in a statement regarding the MOU.

The American Wind Energy Association (AWEA) thinks it is possible. Even though onshore wind installations in the first half of 2010 have dropped 71 percent compared to 2009, AWEA said the U.S. offshore wind market is growing.

According to AWEA, at the beginning of 2009, there were 5 offshore project proposals off the U.S. coasts. At the end of 2009, there were 20.

AWEA’s U.S. Wind Industry Annual Market Report 2009 counted 10 proposed offshore wind projects, including Cape Wind. Out of the remaining nine projects, three have been awarded exploratory leases from the Interior Department.

It will not be an easy battle. At least two environmental groups have filed a lawsuit against Cape Wind saying it will be harmful to the wildlife, specifically whales and birds in the area.

To add to the fight for Cape Wind, Massachusetts Attorney General Martha Coakley in July asked Cape Wind’s developers to disclose cost and profit estimates for the project, saying that “underlying construction and operating costs of Cape Wind and profits to the project’s investors” will help officials assess the project. The Attorney General’s office is concerned that a contract signed between National Grid and Cape Wind could have customers paying more than they should for the electricity. Both sides have since agreed to cut proposed rates by 10 percent, from 20.7 cents/kWh to 18.7 cents/kWh.

However, there is still a bright spot in the development of the U.S. offshore wind industry: New Jersey signed a bill August 19 that allows offshore wind developers to earn credits for the megawatt hours they produce and power suppliers are required to buy a certain number of credits each year to satisfy state mandates.

Other states are also seeing the good side in offshore wind. On July 26, Rhode Island and Massachusetts signed a memorandum of understanding to work on a plan for offshore wind off the coast of Rhode Island. The governors signed the MOU to coordinate offshore project planning using a Rhode Island ocean-zoning plan, the Special Area Management Plan or SAMP, as a guide to development.

Several wind energy projects for the Atlantic Outer Continental Shelf have been proposed for East Coast states, positioning the region to tap into the 54,000 MW of potential wind power, according to a report from DOE.

Task forces have been formally established with Rhode Island, Massachusetts, New Jersey, Virginia, Delaware, and Maryland and are in the process of being formed for New York, South Carolina, and Florida.

Developing this resource could create thousands of manufacturing, construction and operations jobs and displace older, inefficient fossil-fueled generating plants.

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