Follow U.S. Investment Immigration and U.S. Economy: According to reports, after several years of setbacks, offshore wind power projects on the U.S. East Coast are ready to launch, with the first offshore wind turbine in the United States beginning operations in June.
This project is located in the Port of Nowhere in Maine, rather than in long-considered areas such as Massachusetts, Rhode Island, New Jersey, or Texas; the generator specifications are also only small devices with a height of 30 meters and a capacity of 20 kilowatts, rather than megawatt-class giant wind turbines. Previously, the development of the U.S. offshore wind power industry was slow due to the lack of clear government incentives and tax exemption policies. In contrast, Europe has developed rapidly. Since the installation of the first offshore turbine in 1991, there are now 1,939 turbine generators in EU countries, with a total capacity of 6,040 megawatts.
The potential electric power contained in U.S. offshore wind is enormous, but energy analysts warn that challenges should not be underestimated, such as the high costs of building offshore wind farms, the expenses of connecting offshore power generation to land-based grids, and the lack of various government incentives and forecasts.
On a positive note, the Obama administration and the U.S. Department of the Interior have streamlined the approval process for offshore wind power, and this summer, two offshore wind areas on the East Coast successfully completed auctions. Among them, D.E. Shaw Investment Company won Rhode Island at the first wind auction held by the Bureau of Ocean Energy Management for $3.8 million. Now, the deep-water wind farm area off the coasts of Rhode Island and Massachusetts covers 66,800 hectares. The second auction took place in waters off the Virginia coast covering 45,700 hectares, won by Virginia Power, with an estimated generation capacity of about 2,000 megawatts. Next year, Maryland, New Jersey, and Massachusetts will participate in the auction.
Jeffrey Grybowski, CEO of Deepwater Wind, stated that Massachusetts, Rhode Island, Connecticut, and New York are the most suitable locations for wind power construction in the United States. Deepwater Wind hopes to install about 200 turbines, generating over 1,000 megawatts, enough to meet the needs of 400,000 households.
Chris Long, head of the Offshore Wind and Address Policy Department of the American Wind Energy Association, said: “The more projects in the water, the more it can drive the development of this industry. Projects are aimed at continuous innovation to reduce costs and achieve large-scale benefits.”
Nevertheless, many analysts remain concerned about the short-term prospects for offshore wind power, especially in the absence of clear federal financial support. Bruce Hamilton, head of the energy practice at Navigant Consulting, stated: “The development of offshore wind power requires policy incentives, as its investment is still far higher than market electricity prices.”
Currently, the only incentive policy from the U.S. government is the tax exemption for offshore wind investment, which is set to expire at the end of 2013. Under this policy, investors can deduct 30% of their investment from taxes, but construction must begin this year. Earlier this year, some senators proposed an offshore wind power incentive bill in an attempt to solidify the existing annual policy, but this proposal did not pass. Hamilton said: “The federal government’s policy will continue to be reviewed annually, as it has been in the past.”
In addition, the unpredictable federal funding has a significant impact on the construction of wind farms. According to a 2012 report from the U.S. National Energy Technology Laboratory, the electricity price for wind power generation in the U.S. East Coast wind fields is expected to exceed $0.15 per kilowatt-hour, several times that of coal or natural gas power generation. The way to lower electricity prices is to build more offshore wind power and connect it to offshore grids. Other reports suggest that a reasonable price for offshore wind power should be $0.10 per kilowatt-hour by 2020 and drop to $0.07 by 2030.
Offshore projects will demonstrate the enormous appeal of offshore wind energy to U.S. policymakers, and the American Wind Energy Association and other companies express great confidence in this. After all, land-based wind energy is troubled by site selection, as nearby residents often complain that turbines spoil the landscape and generate significant noise during operation. Supporters hope that the implementation of offshore projects will gain more support from federal or state governments, and the projects themselves are also a symbol, reminding people that there is abundant energy just a few miles from the coastline.
The U.S. National Renewable Energy Laboratory estimates that the wind energy potential onshore and offshore in the United States is 4,150 gigawatts, four times the national electricity demand, especially in the Northeast and Central Coast, where the water is deep and the wind is strong, presenting enormous development potential. Matt Huelsenbeck, an offshore wind energy expert and marine scientist at the non-profit organization Oceana, stated: “The East Coast is the ‘Saudi Arabia’ of offshore wind power; if fully developed, the energy here is sufficient to meet the entire U.S. electricity demand.”
The United States does not have a comprehensive national renewable energy goal, but 29 states and Washington, D.C. have set their own goals. Northeastern states like Massachusetts and Rhode Island are actively seeking renewable energy, while New Jersey and Maryland have now legislated in this regard, particularly targeting offshore wind development.
Kevin Jones, deputy director of the Energy and Environment Institute at Vermont Law School, is optimistic about offshore wind power, especially in the Northeast, as there are very few renewable energy options in the region, and onshore wind power development is continuously growing. He said: “If natural gas prices continue to fall, I think the offshore industry needs public policy support rather than federal subsidies. But if the Northeastern states can unite to leverage economies of scale, then all of this is possible.”
