Offshore Wind: Costs and Considerations for Future Development

By Joni Sliger, Energy Fellow

A floating wind turbine near Portugal.
Credit: Senu Sirnivas / NREL

As I reported last week, offshore wind energy will soon be flowing to the residents of Block Island, Rhode Island. Yet some continue to question the costs of Block Island Wind Farm (BIWF): will this project benefit the electricity consumers as much as it benefits the industry?

Financing renewable energy projects is no small feat. Developers typically need to lock in a contract proving to stockholders and regulators that the investment will be recovered. In part, financial difficulties explain some of the failed offshore wind projects of the past, such as Oregon’s WindFloat Pacific. The WindFloat Pacific project would have created floating offshore wind turbines near Coos Bay, Oregon (where the ocean floor is too deep for anchored turbines like at BIWF). Competing with low electricity prices from cheap hydroelectric, however, the project was unable to secure a contract from a power purchaser. (Note though that hydroelectric power generation has its environmental problems and is not a guaranteed long-term electricity source.) Without such a contract and lacking regulatory approval, the Windfloat Pacific Project stalled.

At Block Island, BIWF did not have to compete with cheap hydroelectric power. Instead, the islanders rely on imported diesel fuel, costing about $0.50/kwh currently, or five times the average electricity rate in the U.S. of $0.10/kWh. Under BIWF’s contract with utility National Grid, rate-paying islanders’ current electricity prices will drop to $0.30/kWh. Mainlanders, in contrast, who receive the excess wind energy, will face above-market rates in order to finance the $440 project. But some continue to question whether the price difference for the islanders reflects the whole story and will truly result in greater savings for the islanders or the state. (For an inside look at some of the intricacies of ratemaking, you can read about one of the Public Utility Commission meetings discussing BIWF here.)

According to the Rhode Island Public Radio, the true value of BIWF will not be clear for several years. While analysts can consider the current price of diesel fuel (the island’s previous fuel source) and compare it to the contractual price for offshore wind energy, the price of diesel varies. Long-term price stability is one of many benefits of renewable energy sources. Renewables offer additional benefits as well, many of which have not historically been considered in ratemaking, such as lower emissions and greater independence from global markets. For example, consider this proposal to build offshore wind farms in order to mitigate hurricane damage by reducing wind speed at a projected net cost of...zero. Yet whatever the net cost of a project, it is the upfront cost that can be daunting to developers, utilities, and regulators.

Fortunately, according to a new study just published in Nature Energy, the cost of each type of wind energy (onshore, offshore, and offshore floating) is projected to drop substantially in the coming decades. From 2014 to 2030, experts project a 24-30% reduction in costs; by 2050, they project a total reduction of 35-41%. While future costs are difficult to predict with much accuracy, the study surveyed 163 experts, the largest elicitation study on energy ever conducted. 

In addition to rising market confidence and falling market prices, offshore wind also has the benefit of the federal government’s attention: the Department of Energy and Department of the Interior recently released the National Offshore Wind Strategy: Facilitating the Development of the Offshore Wind Industry in the United States. Calling offshore wind energy development a “significant opportunity” for the nation, the report identifies 34 actions for the DOE and DOI to take in order to “facilitate responsible, robust, and sustainable offshore wind development in the United States.” With supportive governance, competitive market prices, and visionary developers already taking the plunge into offshore wind development, offshore wind energy may soon be coming soon to a coast near you. 

Kicking its Diesel Generator Habit, Block Island, RI Can Soon Boast Offshore Wind Power

By Joni Sliger, Energy Fellow

Image is of Middelgrunden Wind Farm off the coast
of Denmark. Credit: NREL/DOE and H.C. Sorensen,
Middelgrunden Wind Turbine Cooperative.

Offshore wind energy has arrived. The U.S. finally has a fully constructed, soon-to-be-operational offshore wind farm: Block Island Wind Farm.  

Block Island is a small island off the southeastern coast of Rhode Island where, lacking transmission cables to the mainland grid, the 1,000 or so year-round residents rely on diesel-powered generators, guzzling a million gallons of fuel ferried over each year. When Block Island Wind Farm, or BIWF, starts generating power this fall, that will change.  

BIWF is a humble project. It consists of only five turbines with a total capacity of 30 MW, or enough capacity to power about 17,000 homes. On average, it should provide 90 percent of the island’s electricity needs, according to project representatives. The project is also installing an underwater transmission cable that will connect to the mainland grid, both to provide excess wind power to the mainland and to get power from the mainland when the wind does not meet the island’s electricity needs. Notably, the project is reportedly deliberately small to help it navigate through the muddy permitting process for offshore wind and dodge potentially project-killing criticism. For a taste of the myriad complications that can hinder offshore wind development, read GEI policy analyst Andrea Lang’s recent discussion of Native Americans’ religious opposition to Massachusetts’s proposed 468 MW offshore wind farm, Cape Wind.)

Compare the small BIWF project to those ongoing in Europe. As one of my colleagues reported earlier this year, DONG Energy is planning the world’s largest offshore wind project, a 1.2 GW-capacity wind farm off the east coast of the United Kingdom.

Still, do not be fooled by BIWF’s humble start. The local Block Island Times refers to the project as “one of the most important stories ever to happen in our town.” While emotions are mixed, some report the view of the turbines has provided “an ecotourism attraction,” wherein spectators may enjoy viewing what is, we can hope, the birth of America’s newest energy era.

As I have discussed previously, offshore wind energy offers the U.S. a potential 86,000 MW of power, achievable by 2050. The technology itself is not new; Europe has a booming offshore wind market. While 2016 marks the arrival of the first 30 MW of offshore wind energy to the U.S., Europe spent the first half of the year alone bringing over 500 MW online. (And analysts report that as a bad start to the year!) The U.S. now has five turbines in the water; Europe boasts 3,344.

Some refer to the project as a pilot, but it really is not. Offshore wind technology does not need further demonstration and testing. As the CEO of Deepwater Wind (the developer that owns BIWF), Jeff Grybowski, reported, “This is not a science project, not an R&D project–it’s a commercial project. We’re free riding on the technical innovations that the Europeans have made.”

Yet freeriding on the technological advances is not enough for some. Some critics lament, perhaps fairly, that the locals are not reaping enough of the benefit. For BIWF, Rhode Island provided some of the workforce and some of the foundations, but other elements came from South Korea, Spain, Denmark, and France. While ideally local production and local employment would guarantee local benefits, importing goods is perhaps just part of the price we pay for arriving late to the offshore wind party. (For further discussion of the costs and financing of offshore wind, stay tuned for next week’s blog post.)

Despite offshore wind’s success in other areas of the world, however, it was not (and perhaps is still not) an industry-accepted option in the U.S. According to a recent report by the National Renewable Energy Laboratory, the simple lack of offshore wind turbines in the U.S. accounts for no small part of “an inability to build credibility around the market opportunity.”

The question now is whether BIWF finally provides that credibility and will help spur further deployment of offshore wind technology. For those like myself who see the future of energy production in renewables like offshore wind, we can certainly hope so.

Tribes & Renewables Part VI: The Cape Wind Project as a Lesson in Cultural Resource Protection

By Andrea Lang Clifford, Policy Analyst

In a lot of ways, tribes should embrace renewable energy both to combat the devastating effects of climate change and to boost tribal economies. Occasionally, however, renewable energy development raises concerns about preservation of important tribal cultural resources. Where such conflicts come up in the context of a federal agency decision (such as whether to grant a federal permit or lease federal land), agencies must comply with the National Historic Preservation Act (NHPA), which I explained in detail in the last post in this series. To review, the NHPA requires federal agencies to consult with interested parties–including tribes–regarding the effects of federally approved or developed projects on historic and cultural property. The final two posts of this blog series on “Tribes & Renewables” will explore two examples of how federal agencies have implemented the NHPA for proposed renewable energy projects. Today’s post explores tribal cultural resource protection issues that arose in the Cape Wind Project and explains how NHPA implementation for Cape Wind can serve as a lesson to federal agencies in the future. 

The Cape Wind Project and the Wampanoag Tribe of Gay Head

The Cape Wind Project is a proposed offshore wind farm for the Nantucket Sound in Massachusetts. As proposed, the project would include 130 turbines over a 25-square mile area, with a total capacity of 468 MW. According to the Bureau of Ocean Energy Management (BOEM), the federal agency responsible for leasing and permitting the project, it would supply up to 75% of Cape Cod, Martha’s Vineyard, and Nantucket’s electricity. 

Credit: BOEM

Among the many groups that have opposed Cape Wind for the past 15 years is the Wampanoag Tribe of Gay Head. “Wampanoag” literally means “People of the First Light,” and part of the tribe’s religious practice involves a dawn ceremony with a view of the sunrise over the Sound. In addition, the area the Sound occupies used to be dry land, and the tribe believes that archeological remains are present in the bed of the Sound. 

Because BOEM needed to issue a lease and federal permits for the project to move forward, the Cape Wind Project triggered the NHPA section 106 consultation requirements. As the last post in this series explained, that process requires federal agencies to consult with tribes to assess and resolve adverse effects of the project, although it does not direct the agency to protect cultural resources. 

Unfortunately, in the case of the Cape Wind Project, BOEM simply waited too long to begin consulting with the Wampanoag Tribe about the effects of the project on the tribe’s cultural resources. The tribe was naturally concerned that the large number of 440 foot turbine blades would obstruct culturally significant views of the Sound and that construction of the project would disturb archeological remains in the bed of the Sound. However, BOEM did not begin the process of identifying and resolving these potentially adverse effects until seven years after the project had been proposed and after the details of the project had already essentially been decided. This delay meant BOEM could not consider alternative sites when it began consultation, and it resulted in BOEM recommending mitigation measures that included half-measures such as painting the turbines an off-white color to help them blend into the background, a solution completely untenable for the tribe. 

According to the Advisory Council on Historic Preservation (Council), BOEM’s NHPA consultation on the Cape Wind Project was “tentative, inconsistent, and late,” and as a result, it did not adequately consider ways to mitigate the project’s effects. Importantly, the Council noted that “the development of renewable energy projects is not inherently incompatible with protection of historic resources, so long as full consideration is given to historic properties early in the identification of potential locations [and that] selection of nearby alternatives might result in far fewer adverse effects…” However, in the case of Cape Wind, BOEM did not actually give full consideration.

Cape Wind as a Lesson to Federal Agencies

While it is true that the NHPA is a purely procedural statute that does not mandate substantive protection for cultural resources, that does not mean that federal agencies should treat NHPA consultation as red tape. Consultation under the NHPA is meant to inform decision making, resulting in better substantive results through procedural means. If BOEM had consulted earlier in the Cape Wind project, as the Council recommended, it might have considered alternative nearby sites that would have addressed some of the Wampanoag Tribe’s concerns. 

Credit: PNNL

Besides Cape Wind-specific concerns, agencies should have an interest more generally in ensuring that tribes have a voice and a real seat at the table when it comes to consulting over cultural resource protection. Tribes may begin to view renewable energy projects more skeptically if agencies repeat the late and tentative consultation that occurred in the case of the Cape Wind Project. This would be an unfortunate result, given the amount of federal land in the United States that is rich in renewable energy resources and the likelihood that some of these future projects will raise cultural resource protection concerns. 

To foster a positive relationship with tribes on future renewable energy projects as well as positive results in protecting cultural resources, federal agencies should learn from Cape Wind and ensure that consultation begins early and earnestly. The final post in this series will provide another example of NHPA implementation and suggest more ways federal agencies can ensure that renewable energy projects move forward with minimal conflict.

Wind Farms and Advancements in Turbine Technology

By Sage Ertman, Policy Intern

Based on recent data collected by NCSL, legislatures in 29 states have adopted Renewable Portfolio Standards (regulation mandating increased production of energy from renewable sources); and another eight states have at least set goals (instead of mandates). The growing recognition of climate change and its devastating effects on our planet has spawned a global movement to combat it. The technologies that have allowed us to harvest energy from renewable sources continue to expand and develop as more people see the value of investing in a sustainable future. Huge leaps have been made across the board in finding increasingly efficient means to harvest this energy at even greater capacities. Wind energy technology, for example, is starting to see some major upgrades.

Wind energy is the fastest-growing source of electricity in the world. The entire globe’s installed capacity for wind power was 35,467 megawatts (MW) in 2013, while the United States alone achieved a capacity of almost 75 gigawatts (GW), or 75,000 MW, by the end of 2015. As costs go down and efficiency increases (and also hopefully because people realize how important it is for our environment and our future), investment in renewable energy will continue to climb. In fact, Deepwater Wind recently broke ground on the US’s first offshore wind project near Block Island, off the coast of Rhode Island. The project is expected to create 300 construction jobs, and when complete, it will boast five turbines that will produce 30 MW of power. Though this is a relatively small project, the Block Island Wind Farm will not only provide electricity to all the homes and businesses on the island, but will also generate additional power that can be fed back to the mainland grid via an undersea transmission line. The hope is that this project will spark some momentum to take advantage of offshore wind development. A 2010 study by the National Renewable Energy Laboratory (NREL) estimated that the total potential for offshore wind development within 50 miles of shore is more than 4,150 GW, while the total potential for onshore wind development was estimated to be 11,000 GW. To put that into perspective, the total installed wind capacity across the entire US as of 2015 was only about 74 GW.

Taking a look across the pond, DONG Energy is planning the world’s largest offshore wind project in the North Sea off the east coast of the United Kingdom. For this project, to be commissioned in 2020, DONG plans to install 170 turbines for a total capacity of 1.2 GW. That is nearly twice the size of the next largest offshore wind farm and will provide enough electricity to power over one million homes in the UK. There is also potential to expand the project and install up to 3 GW of capacity.

The offshore turbines used in the DONG project will be mounted to the seabed. These types of turbines require relatively shallow depths to develop; however, that means depth constraints allow us to access only a very small portion of our offshore wind capacity. Floating wind turbines, on the other hand, have the advantage of not being restricted by depth requirements, allowing greater access to valuable and more consistent offshore wind resources. They also allow the turbines to sit much farther offshore which minimizes visual pollution of the coastal skyline. For these reasons, Statoil, a leading Norwegian energy company, has plans to install the world’s first floating wind farm 15 miles off the Scottish coast later this year. Five wind turbines will be built, each with a 6 MW capacity, for a total capacity of 30 MW. The turbines will be stabilized by large steel tubes filled with ballast, which will be tethered, rather than affixed, to the seabed by long cables. Though the power produced by the project will be nominal, the excitement comes from taking steps to blaze a path for others to follow.

In addition to advancements in offshore wind farming, we have seen some major leaps in rotor blade technology as well. In 2015, the Fukushima Offshore Wind Consortium unveiled the world’s largest offshore floating wind turbine 12 miles off the coast of Fukushima. Though it is also larger than any fixed offshore wind turbine. Part of the Fukushima FORWARD project, this 7 MW turbine is one of three turbines destined for this location. A 2 MW turbine was installed in 2013, and a final 5 MW turbine is scheduled to be installed this summer. The largest turbine has 80-meter blades with a total rotor diameter of 164 meters (nearly the length of two football fields). While larger turbines allow for more energy production, the additional size and weight make reliability a real concern.  That is why a new project emerging from Denmark, spearheaded by LM Wind Power and Adwen, has the wind community anxiously waiting. The two companies have teamed up to produce the world’s largest rotor blade (video here), measuring 88.4 meters. The blade is specially designed for new 8 MW turbines that Adwen hopes to have in production by 2018.

However, Adwen’s accomplishment will likely soon be overshadowed by a project underway in the US. With funding from the US Department of Energy, researchers from Sandia National Laboratories are working to develop a revolutionary new wind turbine that will put the Fukushima and Denmark turbines to shame. For the new design, each blade will stretch a whopping 200 meters (this time longer than two football fields). That is roughly 2.5 times as long as the blades used in either the Fukushima or Denmark projects described above. This means the diameter of the rotor span, including the hub, will exceed 400 meters (roughly 4.5 football fields). Standing next to such a behemoth would certainly be awe-inspiring. This massive turbine is projected to yield a capacity of 50 MW, utterly blowing away the competition (pun intended). But that isn’t all they have planned.

Sandia Lab's new blade design

In a Sandia Labs News Release, Todd Griffith, the project’s lead blade designer and technical lead for Sandia’s Offshore Wind Energy Program, recently touched on some design problems the team had to overcome: “Conventional upwind blades are expensive to manufacture, deploy and maintain beyond 10-15 MW. They must be stiff, to avoid fatigue and eliminate the risk of tower strikes in strong gusts. Those stiff blades are heavy, and their mass, which is directly related to cost, becomes even more problematic at the extreme scale due to gravity loads and other changes.” The Sandia team solved this problem by using segmented blades, so that “at dangerous wind speeds, the blades are stowed and aligned with the wind direction, reducing the risk of damage.” This new design uses downwind blades, as opposed to traditional upwind blades, “bio-inspired” by the way palm trees move in storms. The offshore turbines must be able to withstand hurricane winds at speeds over 200mph. Though the project is still only in its design phase, this incredible innovation provides a glimpse into just one project seeking to blaze a path for others to follow.

An Introduction to Offshore Wind: The Energy That Piqued My Interest

By Joni Sliger, Policy Extern

Credit: Siemens AG and NREL

As a policy extern with GEI, I am very interested in researching Oregon’s policies and possibilities for a renewable energy future. After all, state energy policies are what first piqued my interest in the field of energy law.

While studying Global Environmental Change & Sustainability at Johns Hopkins University, I got involved with a campaign to amend Maryland’s Renewable Portfolio Standard (RPS) to add offshore wind energy. The campaign brought together labor unions interested in wind turbine manufacturing jobs, public health groups interested in transitioning Maryland (and Baltimore especially) off asthma-inducing fossil fuels, and students and environmentalists like myself interested in ensuring a sustainable energy future without volatile fuel prices and without huge greenhouse gas emissions. Unfortunately, the campaign did not succeed before I graduated in 2012. However, the following term, the legislature finally passed a law to amend the RPS.

Most RPSs require utilities to obtain a certain percentage of retail electricity sales from eligible renewable energy sources. Instead of merely adding offshore wind energy to the list of eligible resources, Maryland’s Offshore Wind Energy Act of 2013 created what is known as a “carve-out.” The carve-out requires that, within the percentage from renewables mandated by the RPS, a certain percentage must come specifically from offshore wind energy, beginning in 2017.

While an RPS provides investors with the certainty that a market exists for renewable energy, an RPS carve-out provides even greater certainty for a particular type of power. That is critically important for an emerging technology like offshore wind. At least, the technology is still emerging in the United States; Europe, in contrast, has already invested in offshore wind energy projects with a combined capacity of 8,000 megawatts, according to 2014 data from the European Wind Energy Association. Meanwhile, the very first offshore wind farm in the U.S.—Block Island Wind Farm in Rhode Island—began construction just this past July. While the U.S. farm is not yet operational, wind enthusiasts like myself can still celebrate the construction as a sign of progress.

Some scientists has referred to offshore wind energy as a “missed opportunity” for the United States. But the opportunity has not passed. Offshore wind is coming. There have been growing pains, but as highlighted by last week’s Summit on Offshore Wind Energy, the White House is looking to streamline the permitting process. In its press release, the White House announced the creation of an Interagency Working Group on Offshore Wind to coordinate the permitting process. The Summit also announced the funding of a multi-state project in the Northeast, the creation of an International Offshore Wind Regulators Forum to learn from experiences abroad, and the recent approval of two more areas for leasing to developers.

The United States might be late to the offshore wind party, but the possibilities are strong. The Department of Energy says the nation could obtain 86,000 MW from offshore wind by 2050.  Last week, the American Wind Energy Association hosted a conference on Offshore Wind in Baltimore, Maryland. The event brought together industry leaders that are optimistic about offshore development. After all, plans are underway to build a 500 MW farm off the coast of Ocean City, Maryland. Maryland’s amended RPS was a major incentive for this project; the developers will be applying for the offshore energy credits this month.

I am thrilled to see offshore wind energy finally taking off in the U.S. Obtaining permits and financing may have slowed the industry’s development, but those obstacles have not stopped it. We need this renewable energy, and we are on our way to getting it. “Wind is here,” noted one commentator, “and [so is] the ripple effect.”