The potential is enormous: offshore wind resource data for the Great Lakes and U.S. outer-continental shelf and coastal waters indicate that, for annual average wind speeds above seven meters per second, the U.S.’s offshore wind energy total gross resource is 4,150GW, or about four times the current total generating capacity of the U.S.1 And certain findings in a recently released U.S. offshore wind energy market assessment sponsored by the U.S. Department of Energy (“DOE”), along with several recent DOE funds awards for advanced technology demonstration projects, indicate that the U.S. offshore wind energy industry is entering a critical phase of transition towards commercial deployment.
Back in February 2011, DOE published A National Offshore Wind Strategy: Creating an Offshore Wind Energy Industry in the United States (“National Offshore Wind Strategy”). The National Offshore Wind Strategy is intended to guide DOE’s Offshore Wind Innovation and Demonstration (“OSWInD”) initiative to support the development of a world-class offshore wind industry in the United States which is able to achieve the following deployment scenario: by 2030, 54GW of offshore wind generating capacity deployed at a cost of energy of $0.07/kWh; and with an deployment scenario of 10GW of offshore wind generating capacity deployed by 2020 at a cost of energy of $0.10/kWh.
Key points highlighted in the National Offshore Wind Strategy include the following:
• Offshore wind energy can reduce the nation’s greenhouse gas emissions, diversify its energy supply, provide cost-competitive electricity to key coastal regions, and revitalize key sectors of the economy by investing in infrastructure and skilled jobs.
• Challenges facing offshore projects include the relatively low cost of conventional energy, technical installation and interconnection challenges, and permitting delays due to insufficient site data and inexperience with permitting processes for projects in both federal and state waters.
• Since no one has installed wind turbines in U.S. waters, proposed projects lack critical data on the environmental and siting effects of offshore wind turbines and their installation, operation and maintenance. This lack of data drives up the costs of financing offshore wind projects to the point where financing charges account for roughly half of the cost of offshore wind energy.
• To achieve its target deployment scenario, the OSWInD initiative must accomplish two critical objectives: reduce the cost of offshore wind energy and reduce the timeline for deploying offshore wind energy.
• The OSWInD initiative has three focus areas: (1) Technology Development, (2) Market Barrier Removal, and (3) Advanced Technology Demonstration. Activities within these areas will include innovative turbines, marine systems engineering, computational tools and test data, resource planning, siting and permitting, complementary infrastructure, and advanced technology demonstration projects.2
To implement the OSWInD initiative, the National Offshore Wind Strategy specifies several research efforts in Technology Development and Market Barrier Removal. Technology Development includes projects to develop the engineering modeling and analysis tools required to lower overall offshore facility costs and to design offshore-specific turbines. Market Barrier Removal includes an annual market data report and analysis of emergent policy and economic questions, which is intended to reduce information barriers to investment and inform better decisions-making by policy makers and other stakeholders3. In December 2012, Navigant Consulting, Inc. (“Navigant”) released the first such report, the Offshore Wind Market and Economic Analysis – An Annual Assessment, dated November 28, 2012 (the “2012 Market Assessment”).
The objective of the 2012 Market Assessment is to provide a comprehensive assessment of the U.S. offshore wind market, which will be updated annually for a period of three years4. These updates are intended to deliver reliable and consistent data for removing entry barriers and increasing U.S. competitiveness in the offshore wind market. The 2012 Market Assessment finds that the U.S. offshore wind industry is “slowly transitioning from early development to demonstration of commercial viability.”5 Worldwide, there are approximately 4GW of offshore wind energy installations, most of which are concentrated in northwestern Europe, but with China recently gaining in market position. In the U.S., there are no offshore wind energy projects in operation or, as of the writing of the 2012 Market Assessment, under construction. Of the thirty-three announced U.S. offshore wind projects in various stages of development, there are nine that have reached what the 2012 Market Assessment defines as an advanced stage of development. Specifically, these nine projects have either obtained a site lease, conducted baseline or geophysical studies or entered into a power purchase agreement. Table 1 (page 38) of the 2012 Market Assessment provides summary data for these nine advanced development-stage U.S. projects.
Concurrently with the release of the 2012 Market Assessment in December 2012, DOE announced awards of up to $28 million in grants to fund the initial phase of seven offshore wind advanced technology demonstration projects. Three of the seven projects chosen for these grants appear to be pilot demonstration projects for three of the advanced-development stage projects included in the summary above: the Fisherman’s Energy: Phase I project; Lake Erie Offshore Wind Project, and the Baryonyx Rio Grand Wind Farm. Those three as well as another one of the technology demonstration projects involve advanced, fixed-bottom foundation designs, while the remaining three involve semi-submersible or floating foundations, and all or nearly all of the seven projects plan to install direct-drive wind turbine generators on these foundations.6
The substructure and foundation systems of offshore wind energy generators differ significantly from those of land-based wind turbines.7 Advanced bottom designs include tripod tube steel and guyed tube designs appropriate for depths below 30 meters (transitional depth) or for sites with softer soil composition. Other transitional-depth designs employ spaceframes, jackets or trusses. Each of these transitional-depth designs enable projects beyond the horizon where they could be entirely out of site from shore. Projects located at this distance could avoid breaking waves common in some shallow-water sites.8
Semi-submersible and floating designs could have even greater potential for cost savings and deep-water projects. These designs include the semisubmersible Dutch tri-floater, spar buoy with two tiers of guy wires, and three-armed mono-hull tension-leg platform.9 Although largely untested, floating designs promise reduced costs through full assembly at quayside and a less complicated load-out. Floating designs also would have greater access to higher wind speeds and energy capture over deeper waters, and might reduce projects’ environmental impacts. But significant cost drivers exist. Cost drivers include novel floating platforms, extensive mooring line systems, deep anchor installations, and technical risks associated with more remote locations.
In the initial phase, each of the seven projects will receive grants of up to $4 million to complete the engineering, design and permitting phase of the award. DOE will then select up to three of the seven projects to receive additional grants of up to $47 million over four years, subject to congressional appropriations, to fund follow-on phases of siting, construction and installation that will target the achievement of commercial operation in 2017.
1. U.S. Department of Energy, A National Offshore Wind Strategy: Creating an Offshore Wind Energy Industry in the United States ( February 2011) (“National Offshore Wind Strategy”), p. 5.
2. National Offshore Wind Strategy, p. iii.
3. National Offshore Wind Strategy, p. 37.
4. 2012 Market Assessment, p. xiv.
5. 2012 Market Assessment, p. xv.
6. See DOE Wind Program Selects Seven Projects to Demonstrate Next-Generation Offshore Wind Technologies, December 12, 2012, http://ww1.eere.enegy.gov/wind/news_detail.html?news_id=18842.
7. See National Renewable Energy Laboratory, Large-Scale Offshore Wind Power in the United States: Assessment of Opportunities and Barriers at § 5.1 (September 2010) (“NREL Assessment”).
8. See NREL Assessment at §18.104.22.168.
9. See NREL Assessment, Fig. 5-11.