Offshore Wind Ready To Take Off in US
Up and down the East Coast, initiatives to develop a massive and largely untapped market can make sea change in American offshore wind, says the Institute for Energy Economics and Financial Analysis (IEEFA).
IEEFA pointed out that the big lease sales ($405 million) last month in coastal waters off Massachusetts for three federally owned tracts that didn’t sell at an auction in 2015 signal a sea change in how U.S. offshore wind generation potential is now perceived.
The winners of that auction, who emerged after 32 rounds of bidding over two days, have global energy-industry pedigrees that bring market-making heft. Equinor Wind is the U.S. arm of the Norwegian oil major formerly known as Statoil. Mayflower Wind Energy is a Shell/EDP Renewables partnership.
Vineyard Wind is a joint venture between Copenhagen Infrastructure Partners and Avangrid Renewables, an American company that is part of the Iberdrola Group, the biggest single owner of renewable energy assets globally.
Much of the momentum around offshore wind is driven by companies with expertise in offshore oil platform activity, an advantage that brings a certain synergy. The industry has proven profitable at scale in Europe after having worked through environmental and fishing-rights complications to become a major piece of the electricity-generation sector. And while U.S. offshore wind remains a mostly untapped resource, that looks like it will be changing soon.
This year, construction is scheduled to begin off Massachusetts on a 160,000-acre, 800-megawatt (MW) project called Vineyard Wind (owned by its eponymous company) that is helping set market trends driven by technology advances and cost advantages.
Vineyard Wind has agreed to produce electricity for an average price of 8.5 cents per kilowatt hour (kWh) for 20 years, a price that defied most expectations and comes in at about a third of what wind-powered energy costs at Block Island Wind Farm, a small installation that to date is the only operating offshore wind power producer in American waters.
The potential in offshore U.S. wind is huge, according to a joint assessment produced two years ago by the federal Energy and Interior departments. That analysis put it at 10,800 gigawatts (GW) of capacity, which translates to 44,000 terawatt-hours (TWh), something on the order of 14 times current electricity usage in the U.S.