Offshore Wind Round-Up: US and Global Developments

Offshore wind development isn’t exactly breezing along these days in the United States, but at least it’s no longer stalled at the starting line for want of regulations.  As I mentioned here, MMS’ regulations for Renewable Energy and Alternate Uses of Existing Facilities on the Outer Continental Shelf which issued on April 22, 2009 took effect on June 22, 2009. MMS has since issued further Guidelines for the MMS Renewable Energy Framework (July 2009), to “provide program details and describe the type of information that we are looking for in various submittals that are required.” With new regulations in place, companies like Deepwater Wind are now confident enough to move ahead with test towers, such as this one just installed at the entrance to Great Salt Pond off the coast of Block Island.

So how does the offshore wind industry in the United States stack up against what’s happening on the global scene? Below the jump, we’ll give a round-up of the developments both in offshore wind industry in the United States and globally.

United States Developments

Michigan: The MMS regulations only apply to the Outer Continental Shelf, and thus, the delayed implementation should not, in theory, have affected offshore wind development on the Great Lakes.  But even now, Great Lakes projects are just starting to come under consideration.  And some states, such as Michigan remain in a quandary over whether to support offshore wind, says the Michigan Messenger.   to be sure, many in Michigan support offshore wind and welcome the potential economic benefits in a state where the auto industry is failing.  But others are concerned that offshore wind might adversely impact shoreline landowners and boaters who use the Great Lakes for recreation and vacation.  Currently, several pieces of legislation are under consideration that would give the state power to override local opposition to offshore and onshore wind projects.

West Coast: Because the outer continental shelf drops off steeply on the West Coast, the Pacific side of the United States has not been regarded as a hot spot for offshore wind. However, with advancements in floating platforms and deepwater wind, offshore wind may develop off the west coast sooner than expected. The San Francisco Chronicle reports on the progress of Principle Power, a company developing a floating offshore wind platform and has plans to install a single, 5 megawatt WindFloat off the coast of Oregon by 2012.

Long Island, NY: Remember the on-again, off-again offshore wind project proposed by the Long Island Power Authority (LIPA). Seems that it may be on again, with LIPA issuing this Request for Information on July 31, 2009, seeking input from the wind energy industry and stakeholders on interest in an offshore wind project. Responses are due August 31, 2009, with notice of intent to respond due August 17, 2009.

East Coast: Meanwhile, as of the end of July, Cape Wind, the first windfarm proposed in the United States, was still awaiting word from MMS on approval of its project, originally proposed in 2001. The long delay now means that Cape Wind will have to vie for financing in a still weak credit market.

Global Developments:

Global view: Though Dean Cooper, analyst at Ambrian predicts that “the global offshore wind market is also a long-run story, and is likely to pick up speed with turbine orders no earlier than 2013,” others are more sanguine. According to Seaworld Report, Douglas-Westwood’s World Offshore Wind Report predicts that:

offshore wind will see €21.6 billion of capital expenditure in the coming five year period to 2013 as 6.6 GW of new capacity is installed globally. With just over 1.5 GW of capacity online at present, this represents significant market growth and will lead to an annual capital expenditure of over €6.2bn at peak.

Major markets for offshore wind include the UK, followed by Germany and Denmark – all of which already have operational offshore wind projects in place.

UK Developments: Still, even the UK has been criticized for moving too slowly. According to the Guardian, Danish-based turbine manufacturer, Vestas is closing a plant on the Isle of Wight because the UK is not building windfarms quickly enough to justify the facility. Vestas also criticized the UK for putting its turbine manufacturers at a disadvantage in comparison to countries such as China and Spain which require windfarms built there to use locally made components. The UK has no similar rule, which further reduced the demand for Vestas’ UK-manufactured turbines.

Belgium: Other European countries are readying for first time offshore wind projects. From edie.netand Rechargenews.com is news of an offshore wind farm for Belgium. According to these stories, the European Investment Bank (EIB) has rescued the 330 MW Belwind Offshore Energy Project with a €300m contribution to cover the construction and operation of the first phase.

Russia: RusHydro, a company in Russia is planning the construction of a wind power park for the Ura Bar, near the Kislogubskaya tidal power plant and the strategically important Vidyaeva nuclear submarine base, reports the BarentsObserver.com. The project won’t be very large – 10 MW between the first and second phases, but it will supplement an existing tidal power station. Several other offshore or coastal wind farms are also planned along the Barents seacoast.

Norway: European companies are also exploring opportunities for deepwater development, with AREVA and Norwegian company SWAY entering into a partnership to provide technology for deepwater offshore wind develompent in Germany, according to NAWindpower.com.

In addition, SWAY has been granted a license from the Norwegian Water Resources and Energy Directorate for building a floating wind turbine plant for offshore wind power approximately seven kilometers outside Karmoy on the west coast of Norway. The project is a demonstration projecct, to test a full scale SWAY wind power plant and collect operating date. As Norwegian companies enter offshore wind markets, the Norwegian government is trying to keep pace on the policy side, with a recently announced policy on offshore renewable energy , which includes a national development strategy and plans for three test centers. Interestingly, the proposed regulations establish a framework for compensation to fisherman which is modeled on Norway’s oil and gas industry.

China: Finally, China is also moving ahead with offshore wind. According to this report, China has almost completed its first major offshore wind projects. In addition, because of fewer regulatory hurdles, China can develop projects quickly, thus, allowing it to catch up to other offshore wind leaders.

So to return to the original question of how the U.S. stacks up against global markets, the verdict is still out.  Even with countries like the UK leading the way, development overseas isn’t moving as quickly as some would like.  So, the United States can still catch up if it can start getting offshore projects into the water.

In addition, it’s worth that some developers don’t have any interest in offshore wind, preferring the opportutnities offered by the United States’ onshore wind market.  As the WSJ Environmental Capital Blog, British Petroleum (BP) put offshore wind plans on hold to focus on onshore wind development plans on U.S. onshore wind markets because of economies of scale – “There are just more wide empty spaces where you can put up turbines.”