U.S. Getting Closer to Building Wind Farms in the Atlantic

The US Atlantic states are making progress toward building the country's first offshore wind projects, but several barriers need to be addressed to propel the sector, according to an NGO report.

No offshore wind turbines are yet operating off the Atlantic coast, but up to 6GW of projects have been proposed - the equivalent of about five coal-fired power plants, the National Wildlife Federation report says. Around 3GW are advancing through the permitting process, securing leases and long-term power purchase agreements (PPA).

"It clearly establishes the momentum that has been created to build offshore wind farms in the Atlantic," said Curtis Fisher, co-author of the report and the Northeast regional executive director for the National Wildlife Federation.

But that is merely a fraction of the potential for more than 212GW in the shallow waters of the Atlantic Ocean identified by the US government.

The US has a long way to go to catch up with Europe and China. European countries have 43 offshore wind farms producing more than 2.3GW. China just completed its first major offshore wind farm, with a capacity of 102MW.

The European Wind Energy Association has set a target of 40GW of offshore wind by 2020 and 150GW by 2030, while the UK alone is aiming for 32GW. China has established a target of 30GW by 2020, the report says. The US Department of Energy (DOE) has proposed the development of 10GW of offshore wind by 2020 and 54GW by 2030.

"The US needs to catch up to the rest of the world," said Stewart Acuff, chief of staff for the Utility Workers Union of America.

A key factor in developing the US offshore wind sector is speeding up the permit process, supporters said. The permitting of the Cape Wind project - the first offshore wind farm in the US - took nine years, a "killer" for efforts to secure project financing, Fisher said.

Secretary of the Interior Ken Salazar announced last week an initiative called 'Smart from the Start' that aims to accelerate the siting and development of wind projects in the Atlantic. Salazar signed the Cape Wind lease in October, but hopes to speed up the process for other projects by identifying high-priority sites for quick and thorough permitting.

Last week, the Massachusetts Department of Public Utilities approved a 15-year PPA for National Grid to buy 50% of Cape Wind's electricity production and renewable energy credits for $0.187 per kWh beginning in 2013, a price that will increase at an annual rate of about 3.5%. If Cape Wind is unable to tap certain federal subsidies, the price will go up, but if debt financing costs are reduced as a result of the DOE loan guarantee programme, 75% of the savings will be passed along to customers in lower rates.

The initial offshore wind projects will be the most expensive, the report says, but the DOE has a strategic plan to reduce these costs over time, with prices expected to fall to $0.07-0.09 per kWh in 2030, a low price considering the scale of these projects, supporters said.

By. Gloria Gonzalez

Source: Environmental-Finance