Atlantic Coast states key to unleashing ‘energy gold mine’ — report

Source: Katherine Ling, E&E reporter • Posted: Friday, July 11, 2014

Atlantic Coast states should be proactive in boosting offshore wind energy as a solution to spiking electricity prices and impending carbon regulations, environmental groups say in a report released today.

The report emphasizes the benefits of offshore wind — which it dubs an “energy gold mine” and “unmatched solution” for energy and environmental issues — and outlines the “critical role” of state governments in advancing the offshore market.

The National Wildlife Federation sponsored the report, joined by more than three dozen other environmental groups, including the Natural Resources Defense Council, Oceana, the Sierra Club and Environment America.

The strong environmental backing is another vote of confidence for the industry, which also recently saw the Energy Department conditionally grant a $150 million loan guarantee to the Cape Wind project off the coast of Massachusetts and provide more than $140 million for three advanced offshore wind projects focused on lowering the cost of the technology (Greenwire, July 1).

The Interior Department also recently offered to auction more than 1,100 square miles of waters off the Massachusetts coast for offshore wind projects — the largest lease sale of its kind in U.S. history — and nearly 80,000 acres in Maryland will be auctioned for offshore wind development in August (Greenwire, July 2).

While the offshore wind market has found a foothold in Europe, it has been slow to start in the United States and its power remains much more expensive than onshore wind power or other renewable energy, let alone fossil-energy generation. Cape Wind, a project poised to become the first commercial offshore wind farm in the United States, estimates costs of about 19 cents per kilowatt-hour for energy delivered, almost twice that of current power on the grid.

The report emphasizes, however, that offshore wind corresponds with the extremes of the weather because of meteorological patterns, meaning it blows the hardest when air conditioners and heaters are running at their highest, known as “peak load coincidence.” New England’s energy mix is particularly hit hard in extreme weather conditions because of its delivery infrastructure and reliance on natural gas and oil, as demonstrated in last year’s harsh winter conditions.

Offshore wind also offers “price suppression,” the report says, because it provides power when it is most needed, saving money by avoiding turning on costly peaker power plants. It cites a report released last month by the Newton Energy Group, a software analytics and consulting company. That report concludes a $350-million-per-year reduction in energy costs from adding 1,200 megawatts of offshore wind energy to New England’s grid.

The savings would reduce retail electric rates by roughly $3 per megawatt-hour — a 2 percent reduction for ratepayers, according to the National Wildlife Federation.

Offshore wind is also be a “powerful tool” for meeting the proposed U.S. EPA carbon emission standards for existing sources, the report says.

“Harnessing just a fraction of this resource, estimated at over 1,300 gigawatts of electricity generation potential would result in a fundamental transformation in how and where this country produces energy — decreasing our reliance on fossil fuels, stabilizing energy prices, creating local good-paying jobs, enhancing our nation’s global competitiveness and helping protect wildlife and future generations from the dangerous impacts of climate change,” the report says.

The report calls on states to create “clear long-term market certainty” by approving contracts and rate recovery proposals, to build port infrastructure and facilities to support offshore wind farms, and to invest in research and development for the technology.

States should also ensure stakeholder buy-in and environmental protection by collecting data and input to guide planning decisions, the report says.

The report notes the success of Europe in offshore wind, but recently, the European Wind Energy Association said offshore installation is falling well behind the European Union’s target of 43 GW deployed by 2020 with France not having any capacity at all yet (ClimateWire, July 8).