Article from Integral Consulting Inc.
By: Dr. Ian Voparil, Integral Consulting Inc.
The signing of the Inflation Reduction Act on August 16 signaled commitment by the federal government to provide investment security for renewable energy development and provide investment opportunities and tax credits for green energy through 2031 or 2033. This new act, and the planned expansion of the Bureau of Ocean Energy Management (BOEM) leasing program to California, Oregon, the Gulf of Mexico, and other locations off the eastern seaboard, sets the federal regulatory scheme in motion to ensure that offshore wind receives significant investment for years to come. The last auction, off coastal Carolina, generated more than $300 million for two lease areas and is just the latest milestone in the Biden administration’s efforts to deploy 30 gigawatts of offshore wind by 2030.1
In addition to federal polices, states are unlocking offshore wind development in coastal waters around the United States. For example, on June 29, Rhode Island’s governor signed legislation creating the most ambitious renewable energy target of any state. It requires the state to be 100 percent sufficient either directly from renewable energy resources or through offsets in the regional market by 2033.2 This follows a formal partnership of 11 East Coast states announced in mid-June to boost the offshore wind industry, a key plan of President Biden’s climate change agenda.3 There are currently 10 states with plans to have 100 percent renewable energy or a clean energy standard, with most timelines occurring in the next 20 years.
Integral is an active player in offshore wind, providing science to address key natural resource, environmental, cultural, and socioeconomic risks that require active management across different phases of wind farm development. This article is the first of a three-part overview about the risks and rewards from offshore wind energy.
Part 1—U.S. Wind History and Development
Wind is a sustainable source of energy brought about because of the sun’s impact on the atmosphere, the rotation of the planet, and the irregularities of the surface of the earth.4 Over the last 10 years, wind power capacity has grown by 15 percent and has become the largest renewable source of energy in the United States.5
Though wind power produces much lower lifecycle greenhouse gas (GHG) emissions than fossil fuels, there are other important environmental and economic factors to address:
- Wind must compete with other traditional forms of energy on a cost basis.
- It may not be the highest and best use of space (land or sea).
- Generation sites are typically remote, and power interconnection and transmission systems are often not currently available to carry to load centers.
- Wind production can cause pollution (e.g., noise) and may conflict with wildlife use.
The U.S. has had land-based wind energy since the 1850s when the U.S. Wind Engine Company was established by Daniel Halladay and John Burnham. It grew slowly over the next 120 years until the energy crisis in the 1970s helped create the Public Utility Regulatory Policies Act, which required companies to purchase a certain amount of energy from renewable sources. The first land-based wind farms were built in California in 1980, and further developments in wind energy were triggered by greater awareness of environmental effects and siting considerations.6 The Energy Policy Act of 1992 ushered in tax credits for wind-generated energy and, more importantly, renewed public and political focus on this renewable energy source. Following this legislation, the National Wind Power Technology Center was established and continues to work to make wind power a more cost-effective source of energy for the U.S. and abroad.7,8
More than 80 percent of electrical demand in the United States comes from coastal states.9 The first proposed offshore wind farm in the U.S. was the Cape Wind Project on Horseshoe Shoal off of Cape Cod, Massachusetts.10 Receiving final approval in 2011, the farm proposed 400 megawatts of offshore generation, but was eventually terminated due to licensing, legislative, and litigation drawbacks. Following this, and with all the considerations related to land-based development, the U.S. Department of Energy, in partnership with the Department of the Interior, developed the National Offshore Wind Strategy Report (2012) to help accelerate the commercialization of cost-effective offshore wind production in federal and state waters and to ensure an environmentally responsible industry.
In the following year, three demonstration projects were selected for development–one off the coast of Atlantic City, New Jersey; one off the coast of Maine; and one in Lake Erie.11 These three projects provided new technological features in offshore wind structure, turbine, and electrical transmission design. These projects were viewed as demonstration cases for state and federal permitting, technology, and the grid interconnection processes in the United States. In 2013, the University of Maine deployed the first concrete-composite floating wind turbine, and in 2016, Block Island (Rhode Island) became the first commercially operated offshore wind farm with capacity to power more than 17,000 households.12 Lessons learned from this project continue to inform commercial operations off the East Coast of the U.S.13
Improved technology is not the only requirement to make offshore wind a more economical and sustainable choice. Governments around the world have instituted a competitive bid process, or auction, to encourage the rollout of offshore wind energy production. The Outer Continental Shelf (OCS) Lands Act (1953) requires BOEM to award leases for offshore wind projects competitively, unless BOEM determines there is no competitive interest.14 BOEM’s lease sale format has been modified over the last few years to include criteria beyond price and feasibility, including local control, economic development, stakeholder engagement, and sustainability.
Across the globe, only 24 percent of installed offshore wind capacity was auctioned as of 2021; however, this is expected to rise to 97 percent by 2030.15 The first U.S. auction took place in 2013 when BOEM awarded the Rhode Island/Massachusetts Wind Energy Area to Deepwater Wind, LLC. Since then, seven other auctions have taken place for development along the East Coast, most recently off the coast of the Carolinas.14 The first West Coast auction is scheduled for fall 2022 for five different proposed leases, three within the Morro Bay Wind Energy Area (WEA) off the central California coast and two within the Humboldt WEA off the northern California coast. Additional auctions are to come for leases off the coast of Oregon, the Southeast Coast, and East Coast.15
In the next article, we will review opportunities to improve risk management for an offshore wind farm once a lease sale has occurred.
(8) Wind | NREL