Offshore Wind in the Trump Era: Does It Have a Future?

Burgeoning Industry Could Provide Twice the Power U.S. Needs

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Posted: Wednesday, April 12, 2017 9:53 am | Updated: 11:39 am, Wed Apr 12, 2017.

Since 2006 the U.S. has added just over 50 gigawatts of wind power capacity, however, virtually all of that installation has been land-based.

In fact, of the 20 largest land-based wind farms in the world, nine are located in the U.S., totaling 6.4 gigawatts of generating capacity – enough electricity to power more than 1.4 million homes each year. As much of an achievement as those figures represent, the promise of offshore wind power development is even greater.

According to the 2016 Offshore Wind Resource Assessment from the National Renewable Energy Laboratory, the U.S. has offshore wind power potential for more than 2,000 gigawatts – nearly double the nation’s current total electricity needs. Offshore wind is more abundant, more reliable and has less impact on human and animal activity than land-based wind. The Obama Administration generally supported wind development and renewable energy, but President Donald Trump has generally been seen as hostile to green energy development. Could offshore wind prove to be an exception to that rule?

Europe has been building offshore wind facilities since 1991, but the first U.S. offshore wind installation just began producing electricity in December. The Block Island Wind Farm, located off the coast of Rhode Island, is a 30 megawatt five turbine installation that is connected to the continental electric grid by 21 miles of cable laid on the ocean floor. In the wake of that achievement, 23 more offshore wind projects totaling 16 gigawatts are in various states of permitting and construction.

It is uncertain which project will be the next to go online. The furthest along in construction is the six-turbine, 25 megawatt Fisherman’s Energy project in New Jersey waters. This effort off the coast of Atlantic City is meant to be a pilot for a much larger 330 megawatt installation, but despite spending more than $11 million in construction so far the project was stalled in January when the U.S. Department of Energy pulled $40 million in grants.

According to news articles from 2015 and 2016, the problem may be rooted in N.J. Gov. Chris Christie’s antipathy to the project. In 2010, Christie took office promising to make New Jersey a leader in wind and renewable energy, signing the Offshore Wind Economic Development Act into law.

However, during his failed presidential run Christie sought funds from wealthy donors like the Koch brothers, whose oil and gas interests make them fierce opponents of renewable energy. According to a 2015 Washington Post article, this may have led Christie to distance himself from his previously stated goals on wind power. The result has been a regulatory Catch-22 in which the N.J. Board of Public Utilities would not provide approval for the Fisherman’s Energy project due to a doubt that federal funds would be forthcoming, leading developers to miss deadlines for paperwork that would have released millions in federal funds in the last days of the Obama Administration.

So can supporters of offshore wind expect assistance, roadblocks or mere neutrality from the Trump Administration? An official from the U.S. Bureau of Ocean Energy Management (BOEM) said it was “too soon to tell” what stance the new president would take on this promising technology, but a recent article published by the Union of Concerned Scientists (UCS) suggested that “the Trump Administration seems to be quietly embracing offshore wind power and its economic potential.” One promising development that may be feeding positive sentiment is the fact that in recent months big European energy companies have been making unsolicited bids to lease large tracts of ocean on the East Coast for wind development.

The UCS article cites an Interior Department auction in March 2017 that awarded wind energy development leases for 122,000 acres off the coast of Kitty Hawk, N.C. to Avangrid Renewables LLC, a unit of Iberdrola – a huge Spanish energy conglomerate. Avangrid is an advanced developer of wind, solar, biomass and geothermal power generation projects all over the United States. The auction garnered just over $9 million and in a press release Interior Secretary Ryan Zinke stated, “The success of this lease sale reflects the continued interest of coastal communities to develop their offshore energy resources. Renewable energy, like offshore wind, is one tool in the all-of-the-above energy toolbox that will help power America with domestic energy, securing energy independence, and bolstering the economy.”

Also, in December Norway’s Statoil, up until now best known for exploiting that Nordic country’s massive offshore oil assets, paid more than $42 million for a wind energy lease off Long Island. According to a March 2017 article in The Wall Street Journal, Statoil is boosting its investments in renewables from 5 percent of development spending today to as much as 20 percent by 2030. Offshore wind is the ideal place for a company so well versed in offshore energy operations to expand.

Even companies with no ties at all to renewable or green energy see offshore wind as a promising business in which to be. A September article at OilPrice.com stated that companies like Gulf Island Fabrication, Keystone Engineering and Montco Offshore – all longtime makers or servicers of offshore oil drilling rigs – are shifting some of their work to the offshore wind space. The article stated that much of U.S. oil production is expanding on land, not offshore, so companies like these need a way to diversify their offerings, and although building oil rigs is different than building turbine platforms, there are enough similarities to make the switch sensible.

As companies with decades of experience in offshore oil drilling dive into offshore wind, one potential impact is that their experience will help drive costs down and lead to more efficient construction. For example, early European offshore wind installations and the initial U.S. project in Rhode Island relied upon wind turbine masts anchored in shallow seabed. But companies like Statoil are using their experience building and operating floating oil rigs to build floating wind turbine foundations. According to a March Bloomberg News article, this allows new offshore wind to be built for up to 40 percent less than installations constructed just six years ago – add in larger turbines and more competition among suppliers and costs should continue to fall.

Another energy industry veteran, General Electric, has been making major investments in wind energy for years. In 2015 the U.S.-based conglomerate invested $10.6 billion in the energy company Alstom, which produces turbines specifically designed for offshore wind installations; then in 2016 GE spent $1.65 billion to purchase Denmark’s LM Wind, which makes the largest wind generator blades in the world. LM Wind just began building a $108 million factory in France to manufacture blades for offshore wind facilities.

Draw a line connecting the dots through all of these developments and the picture that becomes clear is an industry quickly picking up speed as it attracts investment and technology assistance from the most profitable and mature parts of global industry and commerce. In short, there are a lot of smart people concluding that there is serious money to be made in tapping into offshore wind. The bureaucratic foundation of official Washington seems to agree with them. According a joint report issued last September by the Department of the Interior and the Department of Energy, a growing offshore wind industry could employ as many as 34,000 workers by 2020, and as many as 80,000 by 2030 and as much as 181,000 people by 2050. The industry would generate $440 million in annual lease payments and $680 million in annual property tax payments for local economies.

With jobs and money of this scale at stake, it seems likely that the Trump Administration will not stand in the way of efforts to develop offshore wind, but it may be left to major corporations to lead the way. The months ahead will tell us which way this wind is blowing.

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