Offshore Wind: Europe Now, U.S. When?

by Richard T. Stuebi

Every two years, the European Wind Energy Association (EWEA) holds a major conference on offshore wind energy.

The last time EWEA convened its offshore event, in December 2007 in Berlin, the mood was relatively somber. Several major offshore wind projects had been completed, but had run into unforeseen technical and economic challenges. European policies and regulations for the next phase of offshore wind energy were in flux. Although everyone was convinced that offshore wind was going to be a significant growth sector in the European energy mix, there were real doubts as to when such opportunities would actually come to fruition.

Last week, EWEA held their 2009 offshore event in Stockholm, where 4,750 attendees (up from about 2,000 in Berlin two years ago) congregated to celebrate what is now clearly emerging: a boom in offshore wind in Europe over the next decade. EWEA projects 50 gigawatts of offshore wind installed by 2020. With 20 gigawatts of projected installation, the United Kingdom is making a play to steal (or at least share) German leadership in offshore wind manufacturing and deployment.

Wind manufacturers are clearly bullish. Recently, Siemens (XETRA: SIE) has established a separate business unit for offshore wind, with well over 100 employees — and still hiring. Also, General Electric (NYSE: GE) acquired ScanWind, a Scandanavian turbine manufacturer, to gain a product specifically designed for offshore application, thereby getting back in the offshore game after retrenching in the wake of its initial foray in Arklow Ireland a few years ago. At the exhibition, Vestas (NASDAQ OMS Copenhagen: VMS) unveiled a new model, the V112-3.0, for the offshore market.

So, the offshore wind industry seems to be really taking off – in Europe. Here in the U.S., as is the case with so many things on the energy front, we’re years behind.

In its industry roadmap, projecting how the U.S. could achieve the aspiration (set by both the Bush and Obama Administrations) in which 20% of the nation’s electricity supply would come from wind energy by 2030, analysis by the U.S. Department of Energy indicates that about 50 gigawatts would probably need to come from offshore wind. This is not because there’s insufficient onshore wind resource in the U.S., but rather, that most of this resource is too far removed from demand centers in the East and access to transmission would be problematic.

Developers are increasingly exploring opportunities in U.S. offshore wind, mainly along the North Atlantic, due to favorable policies and market conditions in states like New Jersey, Delaware, Maryland, and Rhode Island. In the Great Lakes — likely to be a separate market from the Atlantic for geographic and logistics reasons — the Cleveland area is pursuing offshore wind, and so are parties in New York, Michigan and Wisconsin.

While the private sector is most eager (and naturally so) to find lucrative profit opportunities, civic leaders in each of these areas are taking steps to encourage offshore wind from a job-creation perspective, aiming to attract manufacturing activity and all of the logistics services – shipping, engineering, installation, maintenance – that come with significant development of offshore windfarms.

The good news is that many of these jobs for offshore wind pretty much have to be done locally. The bad news is that, at least when it comes to technological leadership in offshore wind, the U.S. has pretty much absent from that game, with the massive 10 MW Brittania design by Clipper Windpower (AIM: CWP) being the only American exception — although, it should be noted, its initial deployment is planned for the U.K.

The worse news is that offshore wind is not on a track to becoming a significant activity in the U.S. for at least 5 and probably more like 10 years. In the above-noted DOE study, offshore wind penetration only begins in the late 20-teens. This is because there’s nowhere near the degree of policy commitment to offshore wind in the U.S. as is seen in Europe. In turn, this is because Europe has less developable land, greater renewable energy and environmental aspirations, and higher electricity prices than the U.S.

So, akin to Thomas Friedman’s “Have A Nice Day” op-ed piece in the New York Times last week, the U.S. has clearly abdicated leadership in offshore wind to other countries.

Until the profit prospects become significant, developers will find it challenging to explore offshore wind energy opportunities in the U.S. For the U.S. market to really bloom, this puts the burden on the suppliers of offshore windfarms – not just the turbine manufacturers, but also those who are working on foundation, erection and shipping designs – to drive the costs of offshore wind down to competitive levels in a timely fashion (10 years?).

The private sector is likely to need a “carrot”, in the form of some supportive public policy, to make the investments in technological advancement for offshore wind energy that ultimately produce a self-sustaining growth industry.

As the Fellow for Energy and Environmental Advancement at the Cleveland Foundation, Richard T. Stuebi is on loan to NorTech as a founding Principal in its advanced energy initiative. He is also a Managing Director at Early Stage Partners, and is the founder of NextWave Energy.

3 replies
  1. 상율
    상율 says:

    Strong wind at nighttime & wind turbines are ideal for EVs. And they can also operate as a storage. The vehicle-to-grid communication technology is helping the battery serve as a storage to prevent the costly blackout standing at about $90 to 100bn per year. That means utilities are shedding cost for additional storage facilities and ratepayers are selling electricity during peak hours so that EVs can make more economic sense, as we know. It is also in the best interest of electricity utilities that EVs are going mainstream, thereby they need to put in charge stands where needed around highways, major roads with card readers or cell phone tech.

  2. The Daily Reviewer
    The Daily Reviewer says:

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  3. Mr. Photovoltaik
    Mr. Photovoltaik says:

    We in europe don't like offshore wind o much – it is a difficult technology. On the way to the next electricity station – the lost of energy is so high, that it is not efficient in my eyes.But we have to work on it – and maybe in a few years…

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