Offshore Wind Power: Happening in Spite of Congressional Gridlock
by David Fessler, Investment U Senior Analyst
Thursday, October 13, 2011
All this week, I’m attending the American Wind Energy Association (AWEA)’s Offshore Wind Power 2011 Conference in Baltimore, Maryland. I’m a big advocate of wind power in general, and offshore wind in particular.
The keynote speaker for the Conference was Ken Salazar, the U.S. Secretary of the Interior. He’s a big proponent of offshore wind, and during his speech he praised the industry and state government leaders who’re taking the initiative to advance the cause of offshore wind here in the United States.
I got the chance to ask him a question during the press conference at the end of his address. More on that later. Let’s first take a look at the current state of alternative energy in light of the recent Solyndra debacle…
Is Alternative Energy Sustainable?
Solyndra’s failure raises a big question on everyone’s minds here when it comes to alternative energy like solar and wind. Is it “sustainable?” That is, can it pay for itself in the long run?
Onshore wind power made some inroads here in the United States, with about 42.4 GW currently installed. But while offshore wind power is non-existent here, it’s a different story elsewhere.
Head overseas, particularly to European countries, and you’ll find offshore wind well established, indeed thriving, and growing by leaps and bounds.
Why the big difference? A big part of the resistance, particularly to onshore wind, has been good old NIMBY-ism: “Not in My Back Yard.”
The big problem with onshore wind is actually getting the power from where it’s produced (remotely populated Midwestern states) to the densely populated coastal areas of the United States.
Unlike natural gas pipeline permitting, getting a new transmission line permitted can be a decade-long process, involving hundreds of permits from every municipality the line passes through. Sort of like watching a Bonsai tree grow.
Offshore Wind: Solving the Problems Plaguing Onshore Wind
Offshore wind promises to solve both the NIMBY-ism problem and the transmission issues. You see, the Atlantic Continental Shelf, where water is generally less than 100 feet deep, extends out nearly 100 miles off most of the Atlantic coast of the United States.
Than means huge, offshore wind turbines can not only be situated out of sight of anyone on shore, but the transmission lines can be located in federal waters, which start 20 miles offshore.
That will make the permitting process for turbines relatively simple. But the big advantage is that transmission line placement will be far easier. On shore, that same line permitting process involves every municipality it passes through. It can take a decade or more to get all permits in order.
Newly developed underwater high-voltage lines and substations will take the place of their onshore counterparts, tying individual turbines together. Less than a dozen shore connection points will bring vast amounts of power onshore.
They’ll provide much needed additional base load capacity (the wind blows offshore nearly all the time) to East Coast power providers.
An Embarrassment of Offshore Wind Riches
So how much power are we talking about? According to a report released by the Department of Energy’s National Renewable Energy Laboratory, the United States maxes out at 4,150.3 GW of offshore generating capacity.
Roughly 31 percent, or 1,300 GW, of that is off the East Coast states.
To put that in perspective, in 2008, U.S. electricity generating capacity from all sources barely topped 1,000 GW. So the wind power off the East Coast could power the entire country four times over.
At the post-keynote press conference, I asked Ken Salazar, the U.S. Secretary of the Interior, “To what extent will the lack of a national energy policy and the inability of our Congress to address that issue affect a lot of the projects you spoke of earlier this evening?”
His answer was, “David, that’s why I think we are at a crossroads. We need long-term Congressional support for the policies we’ve put in place. [This will] allow wind industry executives to make the long-term forecasts and capital commitments necessary to advance these projects. So there’s a lot Congress can do to help us move forward.”
It all gets back to Congress, and their lack of attention to our nation’s energy needs. I’ll have additional interviews coming your way in the days and weeks ahead from wind industry executives I’m interviewing at this show.
It will give us all a clearer picture as to the state of the offshore wind industry, and more importantly, where we should be focusing our investment dollars. Stay tuned.
Good investing,
David Fessler
Article by Investment U
