Offshore wind facilities could offer a cost-effective and efficient means of drawing a highly abundant source of energy for residential and commercial use. Conventional wind facilities on land, while essential for the renewable energy sector, are troubled by the intermittency of wind strength. Sometimes the wind may blow too slowly, or it may not blow at all, casting public doubt on the reliability of terrestrial wind farms. Critics and skeptics have referenced (and often over exaggerated) this particular issue, making it more difficult to incentivize developers. With the production tax credit (PTC) out of effect, investors may have less overall confidence in wind energy's continued growth.
Yet wind power has maintained a steady growth rate. In 2013, wind supplied 4.13 percent of all electric capacity in the U.S., or roughly 61,108 megawatts (MW) nationwide. Iowa and South Dakota had 27.4 and 26 percent, respectively, of their total energy output coming from wind in 2013. Texas has the highest wind-generating capacity of all the states, with around 12,355 MW installed, and holds six of the 10 largest wind farms in the U.S. However, this growth has still been slow, and depends heavily on the PTC, which Congress allowed to expire four times in the past. This has put wind energy on what some experts call a "boom and bust" cycle: in the year following each expiration, construction of wind facilities fell by over 50 percent relative to the previous year. The lack of a tax credit, along with the intermittency and other factors, are roadblocks to the sector's development.
However, the wind blows constantly off the coasts, removing the intermittency factor. Countries like Germany, England and the Netherlands generate hundreds of MW from this source. Yet there are no offshore wind facilities in the United States. In fact, the first offshore windmill was only installed last year. Studies indicate that the U.S. has simply failed to utilize potential capacity. The Department of Energy (DOE), for example, has run multiple studies that conclude that if we implement sufficient incentivizing measures now, and utilized all potential capacity, including in the Great Lakes, offshore wind could provide the U.S. with over 4 million MW by 2030.
Constructing any sort of energy infrastructure is expensive and lengthy, and the construction of these facilities and their maintenance are highly expensive (which the PTC helps to alleviate), but analysts have said that offshore wind's benefits could ultimately outweigh the costs. What's kept it from taking off? It appears to be an issue with the permitting process for the plants themselves. While there is a vested private and public interest in building the facilities, firms constantly run into bureaucratic red tape that hinders their construction. The permitting process for wind farms can take two years or longer to complete, and so the uncertainty of the tax credit's extension often makes developers hesitate to begin. With no infrastructure in place for offshore wind farms, this makes receiving permits an exceedingly difficult task. Infrastructure is also expensive to construct, putting the price of a facility like Cape Wind in Massachusetts in the range of $2-3 billion, which makes permitting all the more less likely.
But there have been various state-level efforts at fostering offshore wind energy industries. In 2010, Governor Chris Christie signed the bipartisan Offshore Wind Economic Development Act, which established an offshore wind renewable energy certificate (OREC) program to make financial assistance and tax credits available to businesses that could build the necessary infrastructure. However, projects have encountered various bureaucratic impediments. This past March, the New Jersey Board of Public Utilities (BPU) halted the construction of Fishermen's Energy, despite the project's guarantee of a $47 million federal grant from the DOE. The plant would need to be 2.8 miles off the coast of Atlantic City, and would cost a total of $188 million while providing 25 MW of electricity, enough to power 10,000 homes. The BPU cited concerns that household payers would end up paying "hundreds of millions of dollars" for power and that the federal grants were "unsecured." This past May, however, Fishermen's Energy received the federal grant, prompting them to appeal to the BPU to overturn their previous decision. Some suspect that the BPU has put less confidence in renewable utilities due to Chris Christie's faltering support for them, ironic considering he spearheaded the bipartisan legislation in 2010.
Dominion Virginia was more fortunate, and bought a lease for 113,000 acres last September from the Department of the Interior (DOI), aiming to provide energy to around 700,000 homes. However, Dominion has little intention of using all this acreage any time soon, with the cost of offshore wind remaining three times as expensive as natural gas (a key commodity of Dominion). Dominion's senior vice president for alternative energy solutions Mary Doswell is on record saying that though offshore wind is a "large scale, sustainable resource," Dominion would need to "work on the cost," and that the company is waiting on "technological advances" that would make construction cheaper. Yet they are still working on two 6 MW offshore turbines, for which they have also received a $47 million grant from the DOE. These turbines would be 24 miles off the coast of Virginia Beach, and Dominion says that with regulatory approval, they could be operation by 2017 and provide electricity to 3,000 homes.
Cape Wind Associates LLC proposed their project for a large-scale facility of 130 turbines off the coast of Cape Cod in 2001, and the firm only received its permit in October 2010, following lengthy environmental reviews and inspections. The projected total capacity of the project is 468 MW, and is expected to generate 1600 gigawatt-hours/year. The Bureau of Ocean Management (BOEM) projects that this could generate enough power for tens of thousands of homes in Massachusetts. Despite these purported advantages the project has faced opposition from wealthy homeowners who claim it would ruin their views, businesses that fear its power rate increases, and fishermen who say it would interfere with their catches. Among these wealthy homeowners is William Koch, who has poured millions of dollars into derailing the project, allegedly to protect the view from his waterfront estate. However, Cape Wind is readying its ocean construction in 2015 and plans to start distributing power by 2016, having received nearly $1 billion in loans from Danish and Japanese companies. Unlike Dominion and Fishermen's Energy, it has not received a grant from the DOE, though it hopes to receive a $500 million loan guarantee from the department soon.
Despite these projects' impediments within their states, the federal government is making significant efforts to establish the infrastructure for offshore wind. The DOI has recently increased the acreage it will lease by more than 742,000 acres, offshore Massachusetts, for commercial wind facilities -- this has nearly doubled the federal offshore acreage for commercial offshore wind projects. This action will also help Cape Wind, which will most likely buy some of these acres for their wind farm. Although the costs remain high along with market uncertainties, investors, utilities, and the public sector are working to build the infrastructure, making offshore wind power a more concrete possibility in the U.S.