LIPA-Suction: A Shift in the Future of U.S. Offshore Wind

by Richard T. Stuebi

This past week, it was reported (for instance, see article in Newsday) that the Long Island Power Authority (LIPA), or at least its Chairman Kevin Law, was in favor of pulling the plug on the 140 megawatt wind project being developed just south of Jones Beach by FPL Energy, a subsidiary of FPL Group (NYSE: FPL). This development came in the wake of a report by Pace Global Energy Services commissioned by LIPA on the potential economics of the proposed offshore project.

Meanwhile, here in Cleveland, the Great Lakes Regional Energy Development Task Force continues in the opposite direction, committed to exploring the potential for offshore wind in Lake Erie. As reported in an article in The Plain-Dealer, the Task Force announced that it will begin negotiating a contract with a project team, led by the wind developer juwi international, to conduct a feasibility study for an offshore wind research center to include a small (5-20 megawatt) demonstration project.

Why is Long Island going one way and Cleveland going the other? On Long Island, the offshore wind project was solely about economics, as the region needed more low-cost kilowatt-hours. When it appeared that the costs of the offshore wind project were going to be higher than expected, LIPA got cold feet.

In contrast, Cleveland knows that a small offshore wind project will NOT be an economic way to generate electricity. There aren’t enough economies of scale in offshore wind to make it economic today in most places in the U.S., and especially in the Midwest, no matter how much the project is expanded. Because there’s no point in making a huge offshore project, Cleveland is aiming for a project just big enough to matter in addressing the real needs of the future of offshore windfarms.

Cleveland wants to tackle offshore wind so that it can identify — and then overcome — the technological challenges and institutional barriers that make offshore wind so expensive today. By overcoming the factors that make offshore wind currently uneconomic, Cleveland seeks to become a leading center of offshore wind R&D. In subsequent years, when offshore wind does become economic (as offshore wind technology improves, the best onshore wind sites are exploited, and conventional energy costs further increase), this can lead Cleveland to becoming a major hub of offshore wind manufacturing and services for the Great Lakes and possibly beyond.

In short, Cleveland aims to build an offshore wind support/deployment industry in the decades to come, just like the offshore oil/gas industries that have bloomed in Houston and New Orleans when they led the way in tackling the challenges of offshore E&P in the Gulf of Mexico a few decades ago. The offshore wind effort in Cleveland is thus an economic development initiative, not an economic power generation project.

With Long Island’s retrenchment, and the continuing travails in Cape Cod related to the Cape Wind project, Cleveland can step in to fill the leadership vacuum in offshore wind. It takes guts to be a contrarian, but that’s where the biggest rewards lie. It’s not going to be easy, but in Cleveland, most people recognize that easy answers aren’t adequate to bring the region back to economic health.

Given their favorable situations, Long Island and Cape Cod can probably afford to be cautious, prudent, skeptical. Given the economic challenges here, leaders in Cleveland know that boldness is required. So, pending the results of the team’s feasibility study, ahoy to offshore wind.

Richard T. Stuebi is the BP Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc.

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