Offshore Wind: What is the U.S. Waiting For?
Can you guess how many offshore wind turbines exist in the United States? Exactly five. Given the high potential for this renewable energy technology, this is shocking – and needs to change.
A major reason the U.S. lags behind in offshore wind is the high risk that project developers and investors experience. Confusing procedures on initial development activities and permitting create high levels of uncertainty. They discourage industry development. Most recently, the project that promised to kick start the industry in the country, the Cape Wind project in Massachusetts, downright failed. Millions in secured investments were lost.
The U.S. needs to boost its offshore wind industry by de-risking investments and sending strong policy signals that demonstrate a commitment to investors. Public entities actively contributing to and investing in site development for offshore wind farms will do just that.
Initial activities are in fact the riskiest steps of offshore-wind investments. They include:
- Collecting data on environmental impacts of wind farms on ecosystems;
- Studying economic activities competing for the same waters;
- Consulting stakeholders and interagency partners;
- And planning and building grid extensions, underwater connections, and power conversion infrastructure, both on water and on land.
In short, initial site development is a costly, risky and lengthy procedure. If public entities actively support site development for offshore wind farms before site auction, approved projects will be able to proceed quickly and smoothly.
With public entities in charge of initial site assessments and site preparation, it will be easier to assign definitive authorization for offshore wind. Lawsuits against investors would be less likely. With public entities in charge of the development of infrastructure and grid extension – planned before leasing auctions – the incentive to turn back on offshore wind plans would be minimized.
With most of the high-risk activities carried out, the bar of entry at the auction stage gets much lower. Having a larger pool of auction participants drives up competition and drives down project costs and electricity prices. With the mandate of initiating site development and preparing the infrastructure, public entities will be able to accumulate technical knowledge and expertise in offshore wind and gain invaluable insight in this nascent industry.
Success stories in offshore wind investments in the U.S. would send strong signals to the industry. This policy would help define a clearer path for project development and set the stage for the development of a domestic offshore wind industry. Industry leaders, manufacturers and investors would be able to plan long-term.
Success stories would have many external benefits. This policy would demonstrate U.S. leadership and commitment to innovation and clean energy, as well as to climate action. It would help attract investments, now channeled towards Europe and China, and have spillover effects for other climate technologies. In sum, initial efforts and public investments in offshore wind would have very high returns for the overall economy and benefit the country in numerous ways.
America needs to transition to clean energy, and offshore wind has the potential to play a major role in offsetting emissions. Public entities proactively contributing to site development for offshore wind farms will allow the offshore wind industry in the U.S. to flourish.
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