February 19, 2016
Trends favor cheaper offshore wind power
By CATHERINE KOZAK
Coastal Review Online
federal Bureau of Ocean Energy Management is preparing to offer leases
for wind power off North Carolina at the same time that oil prices are
at rock bottom. Expensive offshore wind energy seem like a fool’s
pursuit, that is until the future is taken into account.
wind generation has gotten so cheap, it is nearly competitive with
traditional power sources. The nascent U.S. offshore wind industry,
however, is navigating in unchartered waters right now, both literally
summer, a proposed sale notice will be published by BOEM, detailing the
area or areas that will be auctioned off Kitty Hawk or Wilmington,
according to Tracey Moriarty, an agency spokeswoman. Until then, she
said, the location of available wind blocks is not known.
steep upfront costs for offshore wind development, trends in renewable
energy make it a good bet that costs will decrease as the industry
think the whole continental shelf has good conditions to work in and
build in,” said Paul Gallagher, the chief operating officer of
Fishermen’s Energy, a company in New Jersey interested in offshore
North Carolina wind. “Every state has adequate wind resources to
sustain development to make it successful. The question is whether the
market will sustain those projects.”
said cheap natural gas makes it very difficult for offshore wind to be
competitive. President Obama’s recent proposal to put a $10 tax on each
barrel of oil, he added, could help even the playing field if Congress
as Gallagher and other wind proponents have argued, the true cost of
carbon emissions to society is rarely accounted for; nor are the
long-term benefits of clean, renewable power.
the federal government seeking to decrease carbon pollution, he said,
incentives for offshore wind production are appropriate. The
federal government late last year renewed a 2.3-cent-per-kilowatt-hour
production tax credit for wind power that will gradually decrease until
it ends in 2020.
a first project, so you’re doing everything with everybody who hasn’t
done it before – so there is a premium to be paid,” he said of the
“It does need some supports. It needs some subsidies.”
Carolina is the latest East Coast state considered by BOEM for offshore
wind farm development. The agency last year established three
prospective lease areas totaling about 307,590 acres, one off Kitty
Hawk and two off Wilmington. A revised environmental assessment
released in September found no significant environmental or
socioeconomic effects from issuing leases.
developers have been qualified by BOEM to bid on all or portions of the
areas: Apex Clean Energy, EDF Renewable Energy, Green Sailene, Dominion
Power North Carolina and Fishermen’s Energy.
companies would be able to come in between publications of the proposed
sale notice, which is followed by a 60-day comment period, and final
lease notices, said Brian Krevor, environmental protection specialist
in BOEM’s Office of Renewable Energy Programs.
of the concern expressed in public comments about North Carolina
offshore wind proposals, he said, concerned impacts on the view from
the beach of turbines, which can be 600 feet tall. Navigation issues
and effects on wildlife were mostly addressed earlier in the process.
The recent revision excluded areas where endangered right whales
migrated off Wilmington.
is a very long and deliberative process,” Krevor said, “and we’ve spent
a lot of time on those areas to try to eliminate these conflicts.”
can be held just days after the final notice is published, he said, and
leases can be issued to areas as small as 1/16th of a block, which are
three-mile squares. Bidders can lease contiguous blocks, partial
blocks or entire blocks. After leases are issued, a developer must
submit for approval a construction and operations plan. The agency
would then prepare an environmental analysis for the proposed project.
The lessee has up to 25 years to develop a plan.
far, four companies are interested in all of Wilmington East and
Wilmington West areas. Four are interested in all of Kitty Hawk, and
one company is interested in a smaller subset of blocks.
other Atlantic coast offshore wind projects are in various stages of
the permitting process, including Rhode Island, Massachusetts, New
Jersey, Maryland, Delaware and Virginia. According to the agency, BOEM
has awarded nine commercial wind leases, generating more than $14.5
million in high bids for more than 700,000 acres in federal waters.
Island, in Rhode Island, recently started construction and is on track
to become the first U.S. offshore wind farm. South Carolina is the most
recent addition and is at the very early point in the public engagement
BOEM is in the dark as much as anyone as to the likely outcome of
bidding. “We normally, truly, don’t have a clear picture sometimes
until a proposed sale notice closes,” said Will Waskes, project
coordinator with BOEM.
he declined to characterize the overall sentiment towards proposed
projects off North Carolina. “We don’t really speculate on that for any
of these projects,” Waskes said. “We’re regulatory agencies. We try to
develop it in a responsible way.”
with Fishermen’s Energy, said that things heat up with developers about
four months before a lease auction. Speculative planning is not the
nature of the industry, he said. “It makes sense before an auction to
really sharpen your pencils,” he said.
Smith, executive director of the Utility Variable-Generation
Integration Group, a multi-national energy group focused on economic
and reliable solar and wind generation, said that a recent analysis by
investment firm Lazard found the cost of renewable energy has
plummeted, in particular land-based wind power and solar energy.
is what’s driving the tremendous interest in wind and solar across the
country,” he said. “This is unprecedented. It’s a revolution taking
place technologically … I’ve been in the energy business for 45 years,
and there’s never been a more exciting time to be in the business
because of renewable energy.”
more complicated regulations and technology requirements, offshore wind
development costs about three times more than land-based wind, Smith
said. “The cost will go down as the experience goes up,” he said.
wind generation, meanwhile, has been improved dramatically, Smith said,
by building taller towers with longer rotors that more efficiently
capture more wind.
only is wind the lowest cost source of clean energy in the country
today,” Smith said in a recent presentation in Southern Shores, “wind
power is the lowest cost source of energy in the country today, period.”
And Smith is referring to mostly unsubsidized wind power costs.
lot of modern wind turbines have the potential to create a lot of
energy at a lower coast than even coal,” said Jason Hoyle, a research
analyst at Appalachian State Energy Center at Appalachian State
University in Boone.
Wind Farm, on 22,000 acres straddling Perquimans and Pasquotank
counties, is on-course to be completed by year’s end, said Paul
Copleman, spokesman for developer Iberdrola Renewables.
lawsuit filed in October against the state Department of Environmental
Quality’s review of the project is not expected to affect the project’s
plan, he said.
it is completed, the $400 million Amazon project would be the state’s
first commercial-scale wind farm, with 104 turbines generating up to
208 megawatts of electricity.
even with its higher costs, wind-energy production off the Southeast
U.S. coast is a good value beyond its environmental benefits, said
Chris Carnevale, coastal climate and energy manager for nonprofit
Southern Alliance for Clean Energy.
electric utilities are running at peak demand at the height of the hot
summer months, they tap into more expensive and inefficient sources
like combustion natural gas turbines to supply the extra power.
hot summer days coincide with the hours that wind turbines, helped by a
natural dynamic known as the “sea-breeze effect,” run most efficiently,
he said. The phenomenon results from cool air rushing inland as warmer
offshore wind peaks when utilities are firing up their most,” Carnevale
said. “It can be way, way cheaper than the utilities firing up (natural
gas) peaker plants.”
fact, the power produced by offshore wind could allow utilities to
avoid the need entirely to build such plants, Hoyle added, bringing
down capital overhead and production expenses for the power companies.
actual cost to generate power at different hours, he said, “that’s not
visible to the retail customers. That’s visible to only the utility
Carolina has comparably low electricity costs, Hoyle said, but those
costs are rooted in a vertically integrated monopoly system that is not
as transparent or competitive as wholesale markets used in other states
“There are trade-offs,” he said.
Carnevale said that it is the right time for the state to embrace wind power, including development in the Atlantic.
“Ultimately, we need to transition our energy,” he said “I would be really proud to have offshore wind towers off our coast.”
article is provided by Coastal Review Online, an online news service
covering North Carolina's coast. For more news, features, and
information about the coast, go to www.coastalreview.org.)