Interview: US Offshore Wind Industry – Seeing is Believing

The most compelling action to encourage offshore wind development in the United States is to have real live examples of successful offshore wind projects, Charles Nordstrom, a Senior Associate and Head of the US team at BVG Associates, told Offshore WIND in an interview.

The first offshore wind farm in US waters, currently under construction off Rhode Island’s Block Island, will be the first such example of this, but the industry needs more than that, according to Nordstrom.

”We need approval for the relevant projects in Massachusetts, Maryland and Virginia. This will then mean that the offshore wind supply chain in the US is big enough to deliver economies of scale, reduce costs and attract significant investment. This in turn, requires a favourable political climate. These states should provide political, economic and environmental leadership for others to follow,” Nordstrom said.

Offshore WIND: The Block Island wind farm is expected to start generating power in the fourth quarter of 2016. Why a 25-year delay in adopting the industry, given that the first offshore wind farm in Europe was commissioned in 1991?

Nordstrom: It is undeniable that the US has been relatively slow to establish an offshore wind industry, but I believe the reasons for the delay until now can be put down to three main reasons:

• The US has a very long history of having very cheap fossil fuel prices. This reduces the demand, and business case, for establishing offshore wind generation;
• In the US, there has been a historical lack of political focus on climate change in general and the need for a sustainable, renewable energy source in particular; and
• The wind industry in the US has been focussed on onshore development. We have a vast onshore wind resource that has been the primary growth for renewable energy market for over 30 years.

Even though some of these factors are still present, I believe that changes in the geopolitical landscape and technological advances in the industry, means that the US is at the start of a very exciting time for offshore wind.

Offshore WIND: Some have argued that the country has enough wind resources on land and that building wind farms at sea is both redundant and costly. What is your standpoint on this matter, and what would be the advantages of developing offshore wind in the US?

Nordstrom: In theory, yes, we could power the United States many times over with onshore wind. However, the costs and practicalities of long transmission lines quickly lead to a pragmatic saturation level well below the electricity demand. Many of the major load centres in the US are near the coast and could be directly serviced by offshore wind farms. In many cases, the cost premium of going offshore is far less expensive than solving transmission issues associated with delivering interior onshore wind to the coast. Also, the technology developments and the supply chain grows, the costs of offshore wind will fall. Onshore and offshore should not be seen as competitors. The US needs both.

Offshore WIND: New Jersey’s Senate recently passed the Wind Energy Projects S2711 bill that removes the possibility of a project being rejected by the state’s Board of Public Utilities (BPU) based on not being economically viable. Has this finally cleared the path for the companies to try and harness the projected 1,700MW of offshore wind-generated power the state could potentially offer in the next five years?

Nordstrom: This bill is a step in the right direction, but I’m not sure if it will not be enough to say the political hurdles are cleared. New Jersey politics are difficult to understand, especially for outsiders. As long as the sitting governor is opposed to offshore wind, it will be difficult for the state to realize its potential. However, as other states establish an offshore wind industry, it’ll become increasingly difficult for any coastal state to ignore the environmental and economic benefits offshore wind can bring.

Offshore WIND: The Bureau of Ocean Energy Management’s (BOEM) South Carolina OW project seems to be progressing, even though certain media reported that local utilities and wind power developers have shown no interest in the project thus far. Why is there a lack of interest in this project?

Nordstrom: The project is at an early stage. BOEM’s recent steps are the first of many more to come. South Carolina is a good example of the federal government and state government being out in front and enabling a market. Ultimately, when BOEM offers a lease auction, it only takes one bidder to keep the process moving forward. For now, it is too early to dismiss South Carolina as being uninteresting to the industry. I talk to lots of people who are serious and are interested. Indeed, BOEM have just announced that at least two companies are expected to express interest in leasing all or portions of four tracts. For offshore wind, it’s very much as case of “watch this space” in South Carolina rather than writing it off.

Offshore WIND: Most of the offshore wind-related projects in US are linked to the East Coast. How suitable is the West Coast for offshore wind development?

Nordstrom: From a population and wind flow perspective, in many ways the West Coast is more suitable for offshore wind development than the East coast. The key problem is the nature of its seabed. The west coast continental shelf is a lot narrower than on the West Coast meaning water gets deeper much closer to shore. It therefore needs floating turbines to establish an industry in its deeper water. California is the world’s sixth largest economy and they have all the right market conditions (relatively expensive electricity, grid congestion) and political conditions (requirement to be 50% renewable) to take the lead on the West Coast. Oregon and Washington become more challenging. Much of the coastal waters are set aside as wildlife refuges and there is ample supply of inexpensive hydropower and onshore wind.

Offshore WIND: With new projects on the horizon, will the US supply chain be developed enough to support them, or the country will have to rely on foreign companies, primarily European, to some degree?

Nordstrom: We have studied this question. It appears likely that the first US projects will import European wind turbines and rely on the expertise of European suppliers. However we see a tipping point, triggered by a visible and stable pipeline of 1GW to 3GW, where we expect to see inward investment and a dramatic increase in local content. The key is showing the supply chain a pipeline of projects having a reasonable chance of being built.

Eventually, I think the offshore industry will follow the example of the onshore industry. Onshore wind in the US is a homegrown industry. There are already more than 500 wind-related manufacturing facilities located throughout the United States, and the US wind energy industry currently employs more than 73,000 people. Offshore will get there too, once there is better market visibility.

Interview prepared by Adnan Duraković and Adrijana Buljan, Offshore WIND Staff