15 August 2018

All Eyes On Offshore Wind—Will It Become A Reality In The United States?

Jones Day


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The United States currently significantly lags behind Europe's offshore wind power generation (which totals nearly 16,000 MW), with only one offshore wind farm in operation,
United States Energy and Natural Resources
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The United States currently significantly lags behind Europe's offshore wind power generation (which totals nearly 16,000 MW), with only one offshore wind farm in operation, a 30 MW project off the shore of Block Island, Rhode Island. The lack of offshore wind development in the United States is not due to lack of offshore wind potential, which notably is estimated by the Department of Energy to be roughly double the generating capacity of all electric power plants in the United States. It is instead due to myriad factors, including regulatory hurdles; significant transmission costs; additional cost and expertise required for construction, operation, and maintenance of offshore wind projects; and the increased exposure of offshore wind turbines to severe weather events. 

While onshore wind farms require specialized human capital and equipment, offshore wind farms require an entirely different set of skills and equipment. For example, offshore wind turbines require vessels and helicopters for both maintenance and construction as well as marine engineering, and they need to be prepared to withstand variable conditions. Further, the permitting and governmental approval process for offshore wind projects is far more complex and far less tested than that required for land-based wind farms. Indeed, a multiyear environmental assessment is required before a construction plan can even be submitted, and all leases must be granted by the federal government. Leases are awarded only after being weighed against other variables such as fishing and national security. 

Another daunting factor is opposition groups seeking to halt the development of offshore wind projects. For example, Cape Wind, once hailed as America's first offshore wind project, was eventually abandoned after lawsuits by well-funded opposition groups that opposed a wind project in Nantucket Sound piled up, resulting in the termination of its power purchase agreements due to missed construction milestones.

Notwithstanding these challenges, multiple East Coast states including Massachusetts, Rhode Island, Connecticut, New York, New Jersey, and Maryland have set ambitious goals for offshore wind generation capacity and are at the bidding or state approval process for a variety of offshore wind projects. For example, to fulfill New York's goal for offshore wind generation of 2.4 GW by 2030, the State of New York will solicit approximately 800 MW of offshore wind with an award expected to be announced in the second quarter of 2019. Additionally, earlier this year, Massachusetts selected a developer for an 800 MW offshore wind project, and Rhode Island announced plans for a 400 MW offshore wind farm. The largest offshore wind commitment—3.4 GW by 2030—was set by New Jersey in January of this year via executive order. 

While state officials are holding hearings and moving toward harnessing the power of offshore wind, various developers are keeping step by pursuing development of offshore wind farms ranging from 24 MW to 90 MW off the East Coast. Additionally, several wind developers hold federal leases for future offshore wind development. With these ambitious goals, industry experts are forecasting that by 2030, the United States will have 3 to 4 GW of offshore wind capacity installed. Given the challenges that offshore wind development in the United States continues to face, however, it remains to be seen whether offshore wind will finally become a real player in the U.S. power grid. 

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