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Offshore Wind: On the road to success?

It seems so, dear readers, at least in Europe. While offshore wind is booming here, the US almost missed the trend. In the Focus of this first Windfair Offshore Letter we take a closer look at this rather exceptional situation.

Europe's first – and then there's nothing

Offshore wind energy had a difficult start, also in Europe. But now it is on its way to become a success story. More and more offshore wind farms are inaugurated and produce energy, especially in the UK and Denmark. Germany has fallen behind its own schedule, but now the first farms are starting to work there, too. Up to date European countries built wind farms with a capacity of more than 6040 MW.

Taking a closer look at other continents shows Asia is still in the early stages of development. First projects are being installed in Japan and China. Japan recently announced plans to build a floating wind farm in front of the destroyed Fukushima nuclear power plant. The country which is struck by earthquakes periodically hopes to exploit new ways of generating renewable energy. Meanwhile China is breaking world records in constructing the longest blades and highest towers. But they don't have any offshore farms working yet.

There is not much going on at all in Australia, South America and Africa, surely due to costs in the first place.

What about the US?

In the United States the first offshore turbine was installed this summer. This is the first turbine, not the first wind farm. This lonely turbine is not comparable to those known in Europe, but is a small one consisting of an 18m tower and producing only 20 KW of energy – enough for just some homes in the area.

The people of the US changed their minds in the last years though regarding their energy supply. After decades of ignorance they finally seem to have realized that renewable energy is the key to the future. This led to a massive increase in the use of onshore wind energy. According to 'Yale Environment 360' there are installed turbines with a capacity of more than 60000 MW in the US.

But there is only one offshore turbine. What's going on in the land of opportunity?

Many problems stopped the development

The first offshore turbine of the United States should have been installed in 2001 – more than a decade ago. Jim Gordon wanted to build an offshore wind farm called 'Cape Wind' in front of the shores of Massachusetts. Nowadays the name of the project recalls many lawsuits and a long-lasting process of getting the necessary approvals that only ended late last year. The beginning of construction is finally due to start next year. (For more information about this topic read the following article).

No ITC/PTC = No Offshore Wind Industry

One of the biggest problems of the US offshore industry is the political insecurity. Because Congress has acquired the habit of only extending the relevant tax incentives (Production Tax Credit/Investment Tax Credit) for one year at a time many investors don't want to spend their money. Offshore wind farms are cost-intensive with a long-lasting construction time. Because of the political insecurity many projects are at stake, e.g. the 'Atlantic City Project' in New Jersey.

No climate targets for the United States

Another problem in the US is the lack of generally binding nationwide climate targets. Some states have individually created their own, others not.

Europe on the other hand does have them. The EU wants to increase their share of renewable energy up to 20 percent until 2020 and even up to 40 percent until 2030. There are about 2 GW of offshore wind capacity to be installed this year which will produce electricity for more than 1 million people.

Germany will likely miss its own targets set up for 2020: The construction of 10000 MW of offshore wind turbines. But as Nico Nolte of the Bundesamt für Seeschifffahrt und Hydrographie (BSH) told the 'Hamburger Abendblatt' recently it is still possible to build up to 8000 MW in German waters. That means the industry will have to install up to 1500 turbines. „We do have the opportunity to start the second round of constructing offshore wind farms from 2015 'til 2017“, Nolte remarks optimistically.

First auctions show increasing interest in offshore

The interest in offshore wind energy is rising, also in the US. The first two auctions of land in front of the coast lines took place this summer. The American company 'Deepwater Wind' won the first auction by spending $3.8 million on an area located off the coast of Rhode Island and Massachusetts. They want to install up to 1000 MW there which means raising 200 turbines. Deepwater CEO Jeff Grybowski told the media afterwards: “We believe that site is the single best site for offshore wind in the United States.”

A second auction held by the 'Bureau of Ocean Energy Management' (BOEM) was held in early September. An area in front of the coastline of Virginia was auctioned off, consisting of a capacity for 2000 MW. More auctions are about to follow until the end of this year.

The Saudi Arabia of offshore wind”

“The East Coast is the Saudi Arabia of offshore wind, because there is enough energy there to provide the entire U.S. with electricity if it was fully developed,” said marine scientist and offshore expert Matt Huelsenbeck of the organization Oceana once. His words have become famous since then describing the potential of the area. Wind blows steady at the east coast and there is a lot of money to earn there. States like Massachusetts, Rhode Island, Maryland or New Jersey push hard to get the most of it. Some even say there is a potential of 4149 GW of wind energy in the US – four times the energy the United States need at the moment.

First projects about to start

It'll take a while until this potential will be fully explored. Currently there are two wind farms competing for the title of 'First US Offshore Wind Farm': Cape Wind and Block Island. Likely Block Island which will be build off the coast of Rhode Island by Deepwater Wind will win the game.

Offshore wind industry in any case is getting support from many different companies, e.g. Google who invested in renewable energy earlier this year by buying a wind farm in Texas to run their servers. The company is also part of the consortium installing a giant underwater cable along the east coast shoreline. The 'Atlantic Wind Connection' is supposed to transport energy from the offshore wind farms onto the shore.

As soon as the AWC will be installed future offshore wind farms of the entire region can easily connect with the cable. (More on this matter...)

An unforeseen problem occurred in this regard in Europe preventing the wind farm of Riffgat, Germany, to get to work. World War II ammunition was found en route of the transmission cable to shore. Huge efforts had to be made by TenneT, the cable operator, to get the old stuff out of the way. It's done now but caused a delay of nearly half a year. Costly, that...

High costs block construction

High costs have had a major impact on the development of the offshore wind industry in Europe like everywhere. And according to a recent study by the consulting firm of Prognos/Fichter (published by Stiftung Offshore Windenergie) prices will only go down if more turbines will be installed. That's the reason why many European governments still support offshore wind.

Alas, of course research and development are most important for the industry. Technical innovations will make an important contribution to prices to fall. Siemens as one of the world's industry leaders is investing a remarkable amount of money here.

European offshore companies are waiting for a signal to invest in the US. Extending the ITC/PTC will be quite helpful here and of course to get the US offshore wind industry really started.

“Stability is the message”, as Lewis Milford, founder and president of nonprofit organization Clean Energy Group (CEG) and founder of Clean Energy States Alliance (CESA), put it in the Huffington Post recently. Once started it is possible to close the gap between the Europe and US offshore sector and to clear the way for a prosperous field of business.

Windfair Online Editorial Staff

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