by Richard T. Stuebi
In Cleveland, the Great Lakes Energy Development Task Force (a collaboration involving many local public, private and academic organizations, led by the Cuyahoga County government) has commissioned a feasibility study for developing the Great Lakes Wind Energy Center (GLWEC). The GLWEC would include a demonstration offshore project in Lake Erie off of downtown Cleveland, along with an applied research center to facilitate the development of lower-cost next-generation offshore wind energy technologies and approaches.
The long-term market opportunity for offshore wind just in the Great Lakes (much less the oceans of the world) is huge. A 2004 study indicated a theoretical potential for almost 250 gigawatts (250,000 megawatts!) of wind installations in the Great Lakes, and the Land Policy Institute at Michigan State University recently released a report indicating 322 gigawatts of potential in the waters offshore the state of Michigan alone. Of course, nowhere near this much offshore wind generating capacity is likely to be installed, but even if 50 gigawatts becomes installed in the coming decades, at $4 million per megawatt, this would represent $200 billion of investment in the Great Lakes. This seems worth pursuing with some vigor.
As a member of the Task Force, I recently traveled to Hamburg to present the state of progress in developing the GLWEC at Germanischer Lloyd’s annual offshore wind workshop. This gave me an opportunity to “take the pulse” of how the wind industry was currently assessing prospects for offshore wind.
The general state-of-affairs is that the wind industry is preoccupied with prospects in the onshore markets around the world to pay much more than tangential attention to offshore opportunities. For instance, according to the 2007 Report of the Global Wind Energy Council, 20,076 megawatts of wind energy was installed worldwide in 2007, but according to statistics from the European Wind Energy Association, only 210 megawatts was installed offshore (all in Europe). With only 1% of the market, it’s easy to see how much a runt offshore wind remains in the overall wind industry.
A key theme of the discussions was the need to maximize reliability/availability/lifetime of offshore turbine designs to minimize overall life-cycle costs of offshore wind energy, given the costs and challenges associated with installation and servicing turbines on top of tall towers in the middle of large bodies of water often exposed to heavy seas and weather.
The wind industry appears to be realizing how naive it was in thinking it would be relatively straightforward to move from onshore to offshore, while simultaneously seeing that offshore wind market needs are rapidly approaching because onshore wind prospects will not be sufficient to meet overall demands for new wind energy installations. In other words, the wind industry is likely to become more serious and earnest in taking head-on the offshore promise and challenge in the relatively near-future. The industry leaders can’t avoid it forever. But, in the main, they are avoiding it for now.
In the meantime, I am aware of several entrepreneurial companies — some of whom working in stealth mode, some of them with substantial wherewithal — that are following Clayton Christensen’s Innovator’s Dilemma playbook and aggressively developing innovations to take on a market niche that the “big boys” aren’t terribly interested in right now. As a result, the current leaders of the wind industry — Vestas (CO: VWS), General Electric (NYSE: GE), Siemens (NYSE: SI), Gamesa (MCE: GAM), Suzlon (NSE: SUZLON) and so on — may wake up a few years ago and find that they “missed the boat” in offshore wind.