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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--An omnibus energy bill being developed in the Massachusetts House of Representatives contains a provision committing the state to buy power from offshore windfarms totaling up to 2,000 megawatts (MW). That bill is temporarily stalled behind a solar energy bill. But if it becomes law, which is no sure thing, windpower advocates say it could jump start the U.S. offshore wind industry.
Offshore windfarms are common in Europe, but in the U.S., development has proceeded at a snail's pace. Offshore windpower advocates sometimes refer to the New England coast as the Saudi Arabia of offshore wind potential. But high costs, political opposition and litigation have combined to stymie offshore projects. The prolonged controversy and eventual stalling of the Cape Wind project was a blow to offshore windfarm development. For more on that, see January 15, 2015, article--Cape Wind Project's Future in Doubt after Utilities Cancel PPAs. The nation's first offshore windfarm, Block Island, is under construction and is expected to begin operating by yearend 2016. For more on that project, see May 1, 2015, article--Construction Begins on First U.S. Offshore Windfarm.
But financial, political and legal obstacles have not deterred offshore windpower developers. Industrial Info is tracking 17 active U.S. offshore windfarms with total investment value (TIV) exceeding $22.5 billion. Eight of those projects have TIVs exceeding $1 billion. Several are scheduled to kick off construction in the next few years, though a few projects have experienced repeated delays. Virginia, New Jersey, Rhode Island and Massachusetts are the states with the largest dollar-value of active planned offshore windfarms under development.
Click on the icon at right to see a chart of the state with the largest dollar value of offshore windpower projects under development.
"Offshore wind is poised to take off in the United States," U.S. Senator Ed Markey (D-Mass.) said in his keynote address to the U.S. Offshore Wind Leadership Conference in Boston at the end of February, an event attended by about 300 people, according to The Boston Globe. A few days later, the Globe reported, Massachusetts House Speaker Robert DeLeo told the Greater Boston Chamber of Commerce the Bay State has "the opportunity to launch a new industry that is successful in other parts of the world, right here at home."
Shortly thereafter, in mid-March, the University of Delaware's Special Initiative on Offshore Wind released a study that concluded offshore wind generation costs could drop by up to 55% between 2020 and 2030 if Massachusetts committed to developing 2,000 megawatts (MW) of that resource and assuming continued "technology and industry advances."
The authors of that study, Massachusetts Offshore Wind Future Cost Study, said, "U.S. states can, with thoughtful but straightforward policy, lower the cost of power from offshore wind." If Massachusetts committed to offshore wind at the 2,000-MW level, the state would be enlisting the market to help achieve its policy goals, it added.
In a statement, Willett Kempton, the lead author of that study, said: "The key is making a firm commitment to (the 2,000-MW) scale, so the market can do its work. By providing market visibility--the state's commitment to a pipeline of projects over a set period--the offshore wind industry in the US can deliver energy costs on the kind of downward trajectory seen in Europe." To prepare its study, the University of Delaware surveyed experts in the offshore windpower industry in New England.
Previously proposed offshore windpower projects in New England have had a levelized cost of energy (LCOE) above 24 cents per kilowatt-hour (kWh) of power generated, the report noted. But a 2,000-MW buildout off the shore of Massachusetts could drop those costs to about 16.2 cents per kWh, it predicted. Advances in materials and design could push prices down as low as about 11 cents per kWh, the study forecast.
Onshore wind power has expanded dramatically in the U.S., exceeding 75,000 MW of installed generating capacity. But the University of Delaware report noted offshore windpower has lagged in this country, despite its significant potential as a clean electric resource. Offshore windpower in the Northeast is "a clean energy resource many times larger than on-land wind or rooftop solar," the study said, adding it has the "potential to supply all electricity used by those coastal states."
One reason offshore wind advocates are clustering around Massachusetts is that state's tough climate-change legislation, passed in 2008, requires a reduction of carbon dioxide (CO2) emissions by at least 80% below 1990 levels by 2050. Complying with that law, no easy task, became even more difficult with the decision by Entergy Corporation (NYSE:ETR) (New Orleans, Louisiana) to retire the Pilgrim Nuclear Generating Station by 2019. Pilgrim accounts for the majority of Massachusetts' carbon-free electricity today. For more on the state's CO2 reduction challenges, see February 20, 2015, article--Footprint Power Secures Financing for Unusual NGCC in Massachusetts.
Massachusetts depends on natural gas for nearly 50% of its electricity, up from about 15% in 2000, which makes it vulnerable to gas price jumps and supply dislocations, the Globe reported. During the "Polar Vortex," a brief bone-chilling cold snap in early 2014, power prices in the nearby PJM Interconnection hit $2,000 per megawatt-hour, up from about $100 on a typical peak price during normal winter days. Prices for gas and electricity in New England also soared. For more on that, see February 24, 2014, article--New PJM Bal Day Application Manages Trader Price Risks in Extremely Volatile Energy Market.
Meeting New England's electric demand by constructing high-voltage electric transmission lines or natural gas pipelines into the area has been a time-consuming, risky and frustrating experience for developers. The "Not in My Backyard" syndrome, better known as NIMBY, has stalled or killed proposed pipeline and transmission projects the same as it has offshore wind projects. For more on that, see December 1, 2015, article--Closure of Pilgrim Nuclear Plant Sparks New Debate Over New England's Energy Future and April 8, 2015, article--Developers Delay, Cancel Gas Projects in U.S. Northeast.
"There's no one silver bullet that will keep the lights on in New England," said Britt Burt, Industrial Info's vice president of Electric Power research. "Offshore wind may be part of the solution, but it is only one part. Developers will need some type of regulatory assurance, if not a guarantee, before they will commit resources to offshore windpower projects they know will draw opposition from deep-pocketed opponents. It's the ultimate chicken-or-egg problem, and solving it may require the region's elected officials to step up and enact stronger pro-offshore wind policies."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
Offshore windfarms are common in Europe, but in the U.S., development has proceeded at a snail's pace. Offshore windpower advocates sometimes refer to the New England coast as the Saudi Arabia of offshore wind potential. But high costs, political opposition and litigation have combined to stymie offshore projects. The prolonged controversy and eventual stalling of the Cape Wind project was a blow to offshore windfarm development. For more on that, see January 15, 2015, article--Cape Wind Project's Future in Doubt after Utilities Cancel PPAs. The nation's first offshore windfarm, Block Island, is under construction and is expected to begin operating by yearend 2016. For more on that project, see May 1, 2015, article--Construction Begins on First U.S. Offshore Windfarm.
But financial, political and legal obstacles have not deterred offshore windpower developers. Industrial Info is tracking 17 active U.S. offshore windfarms with total investment value (TIV) exceeding $22.5 billion. Eight of those projects have TIVs exceeding $1 billion. Several are scheduled to kick off construction in the next few years, though a few projects have experienced repeated delays. Virginia, New Jersey, Rhode Island and Massachusetts are the states with the largest dollar-value of active planned offshore windfarms under development.
Click on the icon at right to see a chart of the state with the largest dollar value of offshore windpower projects under development."Offshore wind is poised to take off in the United States," U.S. Senator Ed Markey (D-Mass.) said in his keynote address to the U.S. Offshore Wind Leadership Conference in Boston at the end of February, an event attended by about 300 people, according to The Boston Globe. A few days later, the Globe reported, Massachusetts House Speaker Robert DeLeo told the Greater Boston Chamber of Commerce the Bay State has "the opportunity to launch a new industry that is successful in other parts of the world, right here at home."
Shortly thereafter, in mid-March, the University of Delaware's Special Initiative on Offshore Wind released a study that concluded offshore wind generation costs could drop by up to 55% between 2020 and 2030 if Massachusetts committed to developing 2,000 megawatts (MW) of that resource and assuming continued "technology and industry advances."
The authors of that study, Massachusetts Offshore Wind Future Cost Study, said, "U.S. states can, with thoughtful but straightforward policy, lower the cost of power from offshore wind." If Massachusetts committed to offshore wind at the 2,000-MW level, the state would be enlisting the market to help achieve its policy goals, it added.
In a statement, Willett Kempton, the lead author of that study, said: "The key is making a firm commitment to (the 2,000-MW) scale, so the market can do its work. By providing market visibility--the state's commitment to a pipeline of projects over a set period--the offshore wind industry in the US can deliver energy costs on the kind of downward trajectory seen in Europe." To prepare its study, the University of Delaware surveyed experts in the offshore windpower industry in New England.
Previously proposed offshore windpower projects in New England have had a levelized cost of energy (LCOE) above 24 cents per kilowatt-hour (kWh) of power generated, the report noted. But a 2,000-MW buildout off the shore of Massachusetts could drop those costs to about 16.2 cents per kWh, it predicted. Advances in materials and design could push prices down as low as about 11 cents per kWh, the study forecast.
Onshore wind power has expanded dramatically in the U.S., exceeding 75,000 MW of installed generating capacity. But the University of Delaware report noted offshore windpower has lagged in this country, despite its significant potential as a clean electric resource. Offshore windpower in the Northeast is "a clean energy resource many times larger than on-land wind or rooftop solar," the study said, adding it has the "potential to supply all electricity used by those coastal states."
One reason offshore wind advocates are clustering around Massachusetts is that state's tough climate-change legislation, passed in 2008, requires a reduction of carbon dioxide (CO2) emissions by at least 80% below 1990 levels by 2050. Complying with that law, no easy task, became even more difficult with the decision by Entergy Corporation (NYSE:ETR) (New Orleans, Louisiana) to retire the Pilgrim Nuclear Generating Station by 2019. Pilgrim accounts for the majority of Massachusetts' carbon-free electricity today. For more on the state's CO2 reduction challenges, see February 20, 2015, article--Footprint Power Secures Financing for Unusual NGCC in Massachusetts.
Massachusetts depends on natural gas for nearly 50% of its electricity, up from about 15% in 2000, which makes it vulnerable to gas price jumps and supply dislocations, the Globe reported. During the "Polar Vortex," a brief bone-chilling cold snap in early 2014, power prices in the nearby PJM Interconnection hit $2,000 per megawatt-hour, up from about $100 on a typical peak price during normal winter days. Prices for gas and electricity in New England also soared. For more on that, see February 24, 2014, article--New PJM Bal Day Application Manages Trader Price Risks in Extremely Volatile Energy Market.
Meeting New England's electric demand by constructing high-voltage electric transmission lines or natural gas pipelines into the area has been a time-consuming, risky and frustrating experience for developers. The "Not in My Backyard" syndrome, better known as NIMBY, has stalled or killed proposed pipeline and transmission projects the same as it has offshore wind projects. For more on that, see December 1, 2015, article--Closure of Pilgrim Nuclear Plant Sparks New Debate Over New England's Energy Future and April 8, 2015, article--Developers Delay, Cancel Gas Projects in U.S. Northeast.
"There's no one silver bullet that will keep the lights on in New England," said Britt Burt, Industrial Info's vice president of Electric Power research. "Offshore wind may be part of the solution, but it is only one part. Developers will need some type of regulatory assurance, if not a guarantee, before they will commit resources to offshore windpower projects they know will draw opposition from deep-pocketed opponents. It's the ultimate chicken-or-egg problem, and solving it may require the region's elected officials to step up and enact stronger pro-offshore wind policies."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
