Offshore Wind: Can the U.S. Catch Up with Europe?

The Environmental and Energy Study Institute (EESI) held a briefing examining the role of offshore wind domestically and internationally. Wind blows more powerfully and steadily over water than land, enabling offshore wind farms to generate a greater amount of consistent electricity than their onshore counterparts. Despite its benefits, the offshore wind industry is still in its nascent phase in the United States, where there are currently no operational offshore wind farms. The first U.S. offshore wind project is expected to come online in summer 2016 at Block Island, 12 miles off the coast of Rhode Island. Deepwater Wind is leading the Block Island project, which will generate 50 megawatts (MW) of power, enough to run 17,000 homes. U.S. Wind is working on a much larger project off the coast of Maryland, where it plans to have 500 MW of offshore wind operating by 2020. Offshore wind is a far more mature power source in Europe, with more than 10 gigawatts (GW) of offshore wind power currently operating. What is the future of offshore wind in the United States? Can the U.S. offshore wind industry match Europe's success?

• Senator Thomas Carper (D-DE), who co-introduced the Incentivizing Offshore Wind Power Act with Senator Susan Collins (R-Maine), noted that the United States has an opportunity to provide leadership in the offshore wind industry by doing what is right, not necessarily what is easiest.
• Fifteen miles due east of Delaware's beaches, the wind conditions are ideal for producing electricity through turbines. Sen. Carper argued that an offshore wind project in that area would put a significant number of people to work for years to come.
• The bill Sen. Carper co-introduced would create an investment tax credit for the first 3,000 megawatts of offshore wind placed into service (equivalent to about 600 wind turbines). Previously, Congress has offered investment tax credits for companies that start work on wind projects before a set deadline, but such a system does not give companies sufficient long-term predictability [The last investment tax credit for wind power expired on December 31, 2014].
• Without tax credits to help a nascent industry, Sen. Carper believes we will not see offshore wind power in the United States in the near future; however, with the tax credit, he believes it will take off in the very near future.
• Senator Carper stated that the role of government is to do for people what they cannot do for themselves. Carper pointed to offshore wind as a place where the government can fulfill this role by allowing offshore wind to flourish through the tax policy outlined in the Incentivizing Offshore Wind Power Act.
• Senator Jack Reed (D-RI), whose state of Rhode Island is home to the first American offshore wind project to start construction (Block Island Wind Farm), noted that the benefits of offshore wind extend beyond simply lowering emissions. When construction finishes, the Block Island Wind Farm will lower energy bills for families and businesses all across the island.
• The Senator stated that the offshore wind industry provides us with a smart investment opportunity that will generate clean energy and great jobs well into the future.
• Fatima Ahmad, Manager of Federal Regulatory Affairs and Offshore Wind, American Wind Energy Association (AWEA), emphasized her own optimism in the future of offshore wind in America and brought attention to the fact that the Clean Power Plan specifically cites offshore wind as a viable avenue for states to meet their emissions reductions goals.
• In addition to job creation and environmental protection, Ahmad highlighted the benefits that offshore wind provides for consumers, including fuel diversity and reductions in wholesale electricity prices. There is also a correlation between peak demand and offshore wind strength, meaning more wind energy is available to go into the grid when it is needed most.
• Jeffrey Grybowski, CEO, Deepwater Wind (Block Island Project, Rhode Island), highlighted offshore wind's global growth rate of 40 percent in 2015, noting that there are already over 3,000 turbines producing 10,000 megawatts (MW) of electricity in Europe and Asia.
• The European offshore wind industry is large and mature, having already created 60,000 jobs. Grybowski believes that this growth will spread to the United States, citing a Department of Energy study that found that 32,000 American jobs will be created in offshore wind by 2020.
• The Northeast coastline of the United States has a very high population density with very large energy demands, but will see its electricity supply decrease by an expected 8,500 MW over the next few years (as old power plants are shuttered). Conveniently, the seas off the East coast are home to some of the most optimal offshore wind conditions on the planet. And exploiting that wind does not require access to expensive, privately-owned property (unlike land-based power plants).
• When comparing offshore wind to onshore wind, it is critical to take into consideration the fact that energy projects are very geographically specific. There is a huge wind energy resource in the middle of the country but it is almost impossible to get that energy to the East coast at a reasonable cost. The value in offshore wind is its proximity to markets up and down the Eastern Sea Board.
• Backed by bipartisan support from the Rhode Island state government, the Block Island Wind Farm (currently under construction) is the first step in a larger regional project of offshore wind farms. The project will provide enough energy for 17,000 homes while creating over 300 local construction jobs. Grybowski said the 30 MW project, comprised of five 6 MW turbines, is scheduled to go into operation by 2016.
• Grybowski also noted that much of the incentive for boosting offshore wind in the United States is largely unrelated to the Clean Power Plan because the states that would most benefit from offshore wind are already well on their way towards meeting the reduction goals outlined in the Clean Power Plan.
• Paul Rich, Director of Project Development, U.S. Wind (Maryland), highlighted the geopolitical benefits of diversifying America’s energy portfolio with offshore wind by pointing to its stable prices, predictability, and high yields.
• U.S. Wind, Inc., is making headway on a new offshore wind project 12 miles off the coast of Ocean City, Maryland. This project has a $2 billion budget, and would create 3,100 jobs and produce 500 MW of power.
• With American offshore wind, a key element is its pathway to the marketplace. In Europe the offshore supply chain is well-established; the American offshore industry is looking to pull some of that technology, intelligence capacity, and risk tolerance to the United States. American companies will be dependent on European technology and knowhow until they have enough experience to establish their own, domestic supply chains.
• The key steps recommended by Rich for moving the U.S. offshore wind industry forward include promoting inter-agency collaboration, prioritizing the permitting of offshore wind, coordinating closely with states, and shortening the supply chain for new industry in the United States.
• Rich also addressed the controversy of the Cape Wind project by noting the many differences between the new wind farm projects and Cape Wind. Most importantly, the new projects are located 3 to 4 times further away from the shore, causing much less visual impact than the Cape Wind project.
• Georg Maue, First Secretary for Energy and Climate, German Embassy, discussed the important role of offshore wind in Germany’s energy transition, or Energiewende.
• Germany’s goal is to reach 40 to 45 percent renewable gross electricity consumption by 2025, with offshore wind playing a significant role in meeting this target.
• A major policy initiative driving Germany’s offshore industry is its eight-year feed-in tariff of 19.4 euro cents, which then declines to 3.9 euro cents. It has allowed offshore wind to provide much needed economic stimulus to struggling seaport cities such as Bremerhaven.
• Germany’s energy transformation is driven by the desire to create energy sources that are environmentally sound, reliable, and affordable. Offshore wind has proved to be an impressive source that excels in all three areas.
• Tom Simchak, Policy Advisor for Energy, British Embassy, explained the various ways in which the burgeoning UK offshore wind industry has brought prosperity and energy security to the United Kingdom.
• The United Kingdom is the global market leader in offshore wind: 5.1 GW have been installed or are currently under construction (enough to power 3.5 million homes), and they are on track to have 10 GW by 2020, representing the largest expansion in any class of renewable energy technology in the country.
• The British offshore wind industry benefits from a stable policy regime in support of investment in renewable electricity infrastructure. Contracts for Difference (CfD) and Renewables Obligation (RO) policies provide the long-term, predictable support necessary to gain the confidence of investors.
• Simchak also pointed out that it took the British offshore wind industry 15 years of steady growth to reach their current level of market maturity.

Efforts in the Senate have sought to catalyze the young U.S. industry. Sen. Tom Carper (D-DE) and Sen. Susan Collins (R-ME) reintroduced the Incentivizing Offshore Wind Power Act this past July, to provide a 30 percent investment tax credit for the first 3,000 MW of offshore wind put online. Such an incentive would help the United States realize some of offshore wind's potential, which the National Renewable Energy Laboratory estimates is more than 4,000 GW, enough to meet all U.S. electricity needs four times over.

With 82 offshore wind farms and 10,393.6 MW of installed wind energy capacity, the European Union leads the world in the production of offshore wind energy. And its lead is growing. Europe has been installing offshore wind turbines at a staggering pace—in the first six months of 2015, Europe installed 2,342.9 MW of offshore wind. With 15 wind farms currently under construction, that will bring the sum to 4,268.5 MW. As Europe's offshore wind leaders, the United Kingdom, Denmark and Germany have proved that offshore wind is a valuable source of clean energy.

Offshore wind conferences are being held in Baltimore, MD, by the Business Network for Offshore Wind on September 28, and by the American Wind Energy Association (AWEA) on September 29-30.