October 4, 2010
Delaware

Offshore wind faces uphill climb

By Aaron Nathans, The News Journal, www.delmarvanow.com 3 October 2010

REHOBOTH BEACH – Just two short years ago, the vision of giant windmills 11 miles out to sea churning out clean electricity to help power Delaware into the future was a bandwagon with barely enough room for all its supporters, no matter their political allegiance.

The wind farm Bluewater Wind pledged to build by 2012 would help insulate the state from soaring prices for electricity generated with imported oil, or by pollution-spewing coal plants viewed as major contributors to global warming.

When the upstart firm signed a contract to sell enough electricity to Delmarva Power to light 50,000 homes, executives, lawmakers and environmental activists cheered, and imitators proposed similar projects for sites all along the Eastern Seaboard.

But nary a windmill marred the horizon on a recent day at Delaware Seashore State Park as Terri Ritchey scanned the water. She was struck only by the lack of progress toward what seemed a simple proposition.

“We should have done this years ago,” said Ritchey, a teacher from Fairfax County, Va.

At least six more summers are likely to pass before a Bluewater wind turbine produces any power, and the same is true for more than a dozen sites from South Carolina to New Jersey to Rhode Island.

That’s because offshore wind’s once impressive momentum has been stalled by a powerful shift in economic, social and political currents, all casting a suddenly harsh light on the industry’s weakest link: the high cost of the electricity from those ocean turbines.

The high cost of wind

Once vibrant public sentiment for moving away from fossil fuels – particularly imported oil – has been eroded by the long recession, low oil prices and a political climate that now frowns on government mandates and market subsidies that contribute to government deficits.

Ratepayers in several states have balked at paying a premium for offshore wind, which can cost twice as much as power produced by fossil fuels and more than land-based wind.

“Having people out of work, worrying about how they’re going to pay their bill, you never want to be the guy responsible for having any upward impact on customer rates, no matter how small,” said Bill Moore, chief executive officer of Deepwater Wind, which plans projects in New Jersey and Rhode Island. But “if we want to move off of fossil fuels, we’re all going to have to pay more for electricity.”

Offshore wind’s prospects worsened after the Gulf oil disaster, as renewed scrutiny of government oversight of any offshore drilling threw an already problematic permitting process into disarray. Industry officials now expect it will take seven to eight years to get full permission to build an offshore wind farm.

Many analysts say it all adds up to a deepening political reluctance to commit to an energy future rooted in renewables like wind and solar power – unless those power sources can survive without crutches in competition with fossil fuels.

“That’s what we’re seeing – a lot of uncertainty, a lot of time involved – that just discourages the upfront investment. Not having that clarity going forward is not helping the industry,” said Matt DaPrato, a wind analyst with IHS Emerging Energy Research.

Key victories

Despite the current climate, the offshore wind industry is far from dispirited.

States still are lining up to encourage new projects, and developers have won key victories in the last year moving projects closer to construction, cementing long-term power purchase deals with utilities despite higher prices.

Few doubt the long-term potential for offshore wind as an important part of future power generation along the East Coast, where demand still is expected to grow enough to require additional generating capacity. Put together, wind projects in Delaware, Massachusetts, New Jersey and Rhode Island would generate 2,200 megawatts, enough to completely power about 660,000 homes.

Just this week, the environmental group Oceana estimated offshore wind power could supply nearly half the current electricity used in all the East Coast states. In 2008, the Department of Energy estimated the nation could generate 3 percent of its electricity with offshore wind by 2030.

If the will is there.

“We need a series of green lights. This is a complicated endeavor,” said Michael Peck of Gamesa North America, which manufactures land-based wind turbines in Pennsylvania. “There has to be a whole industrial, societal, economic equation put in place to make it work. We’re doing it in bits and pieces, but we still need to fill in a lot of the blanks.”

Eastern states have given the industry a major boost by requiring that utilities buy a portion of their annual power – 20 percent in Delaware by 2020. That has helped motivate power companies to agree to long-term purchase contracts with wind development firms despite high per-watt prices.

When Bluewater won its contract with Delmarva Power in 2008, before the economic meltdown, it had to endure a battle with cost at centerstage after a 2005 rate-hike shock following electric deregulation in 2000. Bluewater’s price is regarded by analysts as a bargain for offshore wind power: 12.4 cents per kilowatt hour, barely higher than the 11.98 cents most residential Delmarva customers in Delaware pay today.

New jobs

Additionally, proponents of point to the potential for an offshore wind manufacturing industry along the coast, with tens of thousands of jobs in factories building the 8,000 parts needed for a hulking offshore wind turbine.

Oceana estimates an emerging offshore wind industry would create between 133,000 and 212,000 jobs in the U.S.

One such plant – geared now for production of turbines for land-based wind farms – has settled into space in a shuttered U.S. Steel factory in Bucks County near Philadelphia. Gamesa, a Spanish company, cranked up the plant in 2008, and employs 600 people there.

Delaware officials hope they will be able to land production and construction staging operations should Bluewater win go-aheads for wind farms off of Delaware’s coast, and perhaps off of New Jersey.

But Lanard and Gamesa’s Peck said it will take a wholesale commitment to Atlantic Ocean wind before any turbine manufacturer commits to production facilities. It takes five to seven years of work before a turbine supplier can feel comfortable investing in an offshore wind turbine factory, Peck said.

Delaware has made a strong case for Gamesa to build a factory in this state, but Pennsylvania, Ohio, South Carolina and Virginia are also contenders, he said.

Peck said his company is high on Delaware, if the industry can only get out of the starting gate.

“There’s no limits on what Delaware can make happen as far as offshore wind,” Peck said.

URL to article:  https://www.wind-watch.org/news/2010/10/04/offshore-wind-faces-uphill-climb/