Regulatory Approval Times Slowing Wind Power Progress (USA)

As the offshore wind industry struggles to erect the first wind turbine off US shores, there are hurdles to financing and construction that are difficult, but not insurmountable, industry experts said Tuesday.

Lengthy and onerous permitting requirements for offshore wind top the list of obstacles, which includes supply-chain issues, unstable federal incentives and the technical challenges involved with siting wind turbines at

sea.

Low natural gas prices and public challenges such as those faced by the proposed Cape Wind project off the Massachusetts shore are other obstacles, said developers at the Wind Energy Offshore Utility Summit in Vienna,

Virginia.

Christopher Radtke, Credit Suisse’s vice President, Energy Group, International Business Development said “as we sit today the permitting, to my mind, is the biggest issue.”

Permitting lags create uncertainty in terms of investment and “that is a risk — whether it be on the equity side or certainly the debt side — that people are not particularly interested in taking.”

“Governmental policy will be needed if offshore wind is going to push forward on multiple fronts,” Radtke said.

In promoting wind energy projects to investors, developers should figure in the zero fuel cost, the high cost of transmission for onshore projects, and the fact that offshore wind generation can be sited closer to load, he said.

He noted that offshore wind has unique risks, that offshore technology is being developed on a project-by-project basis and is “not built with wrapped turnkey engineering procurement and construction.”

Uncertainty about the technology might make major financial institutions leery of financing projects.

Areva Renewables, a subsidiary of French nuclear giant Areva, is “very bullish” on the US market, said Steven Cuevas, Areva Renewables director of business development, offshore wind, but he added that “the big elephant in the room is financing.” He said the timing of lease permitting, more reliable vessels for offshore maintenance, and more “certainty and consistency” around federal incentives are needed to stimulate offshore wind.

There are also technical challenges, since turbines sited in the ocean are more difficult to access than turbines onshore, and must be sealed against corrosive effects of seawater and salt air. Offshore facilities also require a

high level of remote maintenance and repair capabilities because of the difficulties of accessing facilities miles offshore. Areva designs its offshore turbines from scratch, he said, and doesn’t modify terrestial wind turbines for use in the water.

“The challenges of offshore wind are wholly unique and different from that of the onshore community…” Cuevas said. “The challenges you have in the sea condition versus the onshore condition are much different and you need to have a turbine that is designed specifically for those conditions.”

The company’s goal is to build out a “robust domestic supply chain” for its turbines that will reduce costs, stimulate the US economy and create jobs, he said. A facility building 100 turbines a year would provide 3,750 jobs Cuevas said.

Feeding strong growth into the US economic sector is critical, said Bob Mitchell, President of Trans-Elect Development. The company, in conjunction with Internet search company Google and others, recently announced the proposed Atlantic Wind Connection, a proposed $5 billion, 350-mile-long undersea transmission line to serve future offshore wind off the East Coast.

“If you don’t have a commitment to developing the economic model here, you will lose political support,” Mitchell said.

(platts)

[mappress]

Source: platts, October 27, 2010