Offshore Wind Could Surge

Offshore Wind Could Surge

Location: New York
Author: Ken Silverstein
Date: Tuesday, October 13, 2009

Offshore wind production could surge forward. Both European and U.S. advocates say that the construction of such energy projects could take off assuming that both continents stick with their carbon-free energy themes.

Offshore wind development, in theory, would avoid the typical in-fighting that occurs with respect to all other of power projects that are built on land. In practice, however, it is just as onerous largely because the wind mills in some places could be seen by local residents and because of the extensive underwater transmission systems that are thought to harm sea life.

But with the global emphasis now on reducing carbon emissions, advocates have the attention of policymakers. "New offshore network plan will provide a truly pan-European electricity super highway," says Christian Kjaer, chief executive of the European Wind Energy Association. "This will bring affordable electricity to consumers, reduce import dependence, cut carbon emissions and allow Europe to access its largest domestic energy source -- offshore wind."

The European wind group says that 40 gigawatts and 150 gigawatts of offshore wind are scheduled to be in operation by 2020 and 2030, respectively, potentially providing 17 percent of the continent's electricity in 2030. That, in turn, would cut carbon emissions by 200 tons per year.

If Europe is to achieve 40 gigawatts of offshore wind power by 2020, then it would require an average growth in annual installations of 28 percent, the association says, which is an increase from 366 megawatts in 2008 to 6,900 megawatts in 2020. Right now, 11 wind offshore projects exist in Europe and mostly in Britain and Scandinavia. Together, they provide a mere faction of the electricity supply on the continent.

Meanwhile, U.S. Interior Secretary Ken Salazar is expected to release soon this government's plan to promote such energy projects that he says can displace many coal-fired units. First up could possibly be Cape Wind, which is in Nantucket Sound and which has been embattled for eight years. Rather than visualize the potential wind farm as an isolated producer, proponents say that it would be connected to a vast underwater transmission network that could ship power westward.

Offshore wind adds to an already immense potential in the United States, according to a study by Stanford University. In an article that appeared in the Journal of Geophysical Research, Cristina Archer and Mark Jacobson found that a quarter of the country has winds that are strong enough to provide electric power at costs equal to that of new natural gas or coal plants.

Transmission Maze

Despite the promise, offshore enthusiasts realize that they must build an underwater transmission network while at the same time, give wind turbine developers the certainty they need to gear up production. Tight supply chains, says Europe's wind group, could hamper future growth.

As for the European Union, it's in the process of drafting a blueprint to build a transnational grid that includes both onshore and offshore applications. Utilities there would be expected to shoulder a major share of the costs.

"There is huge developer interest in offshore wind power," says Arthuros Zervos, president of Europe's wind group. "The scale of planned projects is far greater than most people realize." Interestingly, the world's largest offshore wind facility has just gone into operation off the coast of Denmark -- a $1 billion enterprise that will produce about 300 megawatts using 91 turbines that has been developed by a utility there.

Analysts, in fact, are predicting a huge influx of new investment in offshore wind energy and particularly in Europe that has set such a lofty goal for itself. Globally, energy consulting firm ODS-Petrodata sets the figure at more than $60 billion until 2014, at which point it could double by 2020. It says that the offshore wind business could grow at 32 percent a year -- to 55 gigawatts by 2020. It's now 2 gigawatts.

Take GE Energy, which had $29 billion in annual revenues in 2008 and which says that it will continue to invest heavily in clean tech research: It just bought the Norwegian turbine maker, ScanWind, for $18 million in an effort to grab a bigger share of Europe's offshore wind market. Meantime, Germany's E.ON and Vattenfall are participating in a joint venture that will commercialize the country's first offshore wind farm by year's end. Twelve turbines in the North Sea are expected to generate 60 megawatts.

While key offshore wind projects in the U.S. have gone through a regulatory quagmire, the thinking is that they may get off the ground now the Obama administration is prepared to back them. Wind farms off the East Coast and Great Lakes are starting to perk up, although they still have some hurdles to cross. It's not just the eyesores and the harm to marine life that they create, opponents say, but it's also the cost-prohibitive development of an underwater transmission network.

"Although the credit crisis and other constraints have tempered the market, there is clearly a huge business opportunity here," says David Gault, renewables manager at ODS-Petrodata, as reported in Renewable Energy World. "These are big industrial projects, and it will take lots of equipment, manpower and innovation to get them built. Now is a great time for companies in other sectors, such as offshore oil and gas, to assess whether they can grab a piece of the action."

Challenges are ahead and notably winning the regulatory permits and investment capital to move forward. As long as the global community remains focused on reducing carbon emissions, developers and other proponents of offshore wind say that they are ready.