Texas is bullish on offshore wind
Texas already has the largest land-based wind industry in the country. And it has existing support structures for offshore oil and gas projects, Leyland explained in an interview.
The state also has an advantage gained in annexation talks with the United States more than 160 years ago, following Texas’ war with Mexico: Texas enjoys sovereignty of its coastal waters out to 9 nautical miles, triple that of the other coastal states. Only Florida, on its Gulf Coast, and Puerto Rico enjoy the same rights.
So Baryonyx — which has already built major offshore wind farms in Europe — needs to deal primarily with the state’s General Land Office, as opposed to federal agencies, Leyland said. The company needs permission from the Army Corps of Engineers, which Baryonyx says it is on the fast track to acquiring as it moves forward with preparing an environmental impact statement the Army Corps requested for one planned project last month.
Beyond that lay formidable technological hurdles, Leyland said.
“The only thing I see that onshore and offshore wind have in common is the word ‘wind’,” he said. “I’ve been building things in the water, it’s all I’ve ever done for the past 37 years of my life, and it’s a challenge to build things in the water.”
Though developers do not want to put a firm timeline on when Texas will start to generate offshore wind power, most say it is unlikely anything will be running until 2016 at earliest.
Texas has all the pieces in place to make wind power a success, said Mannti Cummins, director of wind projects at the Corpus Christi-based energy company American Shoreline. The state has a favorable business climate, simplified permitting processes, minimal federal involvement and hundreds of companies that know how to build and operate complex mechanical equipment miles out into the ocean, he said.
The one thing it lacks today is a favorable price for electricity that would make it possible for offshore generators to sell to the state’s utilities, Cummins said.
‘Numbers don’t pencil out’ for wind
American Shoreline is fast becoming a major name in Texas’ wind energy due to its focus on building on land along the Gulf Coast. The company’s wind assets visible from Corpus Christi have been credited with saving the state from rolling blackouts when electricity demand shot to record highs last summer.
American Shoreline is planning on more projects from Corpus Christi to Brownsville, which experts say is home to the state’s best wind resources. The company is even working on projects across the border in Mexico. Texas’ strengthening attention toward coastal wind projects, which blow hardest when the demand is most needed, is further fueling energy regulator and investor interest to seeing offshore wind become a reality.
But while American Shoreline is moving ahead on offshore wind plans, now is not the time to start construction, Cummins said. To make wind feasible, he said, one would have to be able to sell wind energy at about $80 per megawatt-hour, double the price for existing land-based wind.
“We just got authorized on a phase three of our project with Austin Energy, a power purchase arrangement for $40 a megawatt-hour,” he noted. “The numbers don’t pencil out. You can’t sell your energy high enough.”
Developers are admittedly hoping for higher natural gas prices. A gas price of around $7 to $8 per million cubic feet of gas should suffice, they say, or about twice what it sells for now.
Offshore wind enthusiasts do not see natural gas prices staying in the doldrums forever.
The oil and gas industry is already shifting rigs away from gas to more liquids exploration and production since crude oil fetches a much better price than gas.
Moves to sell gas as a vehicle fuel and to export liquefied natural gas from the Gulf Coast are also seen as promising a better operating environment for offshore wind in the state, though not for another four to five years.
Though unlikely, Texas could still be first in the nation to feed its grid with offshore wind, some suggest. New Jersey regulators are also on record saying they see 2016 as the launch date for a nascent project there, and they are planning an aggressive incentive program similar to the one that made that state second in the nation in solar capacity.
So will market conditions improve enough to see development in Texas move forward more quickly? It is anybody’s guess, said Russel Smith, director of the Texas Renewable Energy Industries Association.
“It’s hard to say exactly how soon it will happen,” Smith said.
Leyland said it makes no difference to him if Texas is first or not.
More important for him is to build it properly and profitably, and to then watch the industry take off after the first successful projects come online. He wishes his competitors in the Northeast the best of luck.
“I want everybody to succeed,” Leyland said. “If that means everyone succeeds ahead of me I’m perfectly comfortable with that.”