Bloomberg News

Offshore Wind ‘Moon Landing’ May Spur Development in U.S. Waters

October 13, 2011

Oct. 13 (Bloomberg) -- The U.S. needs its own version of Alpha Ventus, the first offshore wind project in Germany, to push the industry on this side of the Atlantic, wind developers and officials said.

There are almost a dozen wind farms planned for U.S. waters and none have begun construction. One, Cape Wind in Massachusetts, has been in the works for a decade and it’s still not clear when the first turbines may be installed.

Completing a project off U.S. shores would show that developers can complete the permitting and financing processes and may provide a needed spark to the industry, said executives from Europe’s offshore energy industry and supporters of land- based wind farms in the U.S.

Alpha Ventus was “like Germany’s moon landing,” said Jens Eckhoff, president of the German Offshore Foundation.

E.ON AG, Vattenfall Europe AG and the German utility EWE AG invested 250 million euros ($333 million) to install Alpha Ventus’s 12 turbines about 45 kilometers (28 miles) off the German coast. They went into operation in April 2010, giving the country’s developers confidence to plan additional projects in the North Sea.

“The U.S. needs a similar project to be an international showpiece,” Eckhoff said yesterday during a panel at the American Wind Energy Association Offshore Wind 2011 Conference in Baltimore.

More than 1,200 megawatts of offshore wind capacity was installed worldwide last year, and total capacity is expected to reach 20 gigawatts in 2015, according to Bloomberg New Energy Finance. Of that, 658 megawatts will be in the U.S.

Finding ‘Gold’

Offshore wind is a potential gold mine, said Chet Culver, who was governor of Iowa from 2007 to 2011. Iowa is the second- largest source of wind power in the U.S. after Texas and gets as much as 20 percent of its energy from turbines. “You’ve got to build the infrastructure to get to the gold,” he said in an interview.

The U.S. announced the first offshore lease at the AWEA event last year, for Cape Wind, and the second may be issued “within months, maybe within weeks,” Interior Secretary Ken Salazar said at the conference. As many as five offshore wind permits may be approved within a year, he said.

Salazar and Energy Secretary Steven Chu set in February a goal of 10 gigawatts of offshore wind capacity in the U.S. by 2020 and 54 gigawatts by 2030.

Siemens Deal

Turbine companies and developers are already striking supply deals.

Siemens AG, the world’s largest offshore wind-turbine maker, has agreed to provide both financing and equipment for Cape Wind, the $2.6 billion project off Cape Cod that may have as much as 468 megawatts of capacity.

Deepwater Wind LLC announced Oct. 11 that it will buy five of Siemens’s 6-megawatt offshore wind turbines for the Block Island Wind Farm it’s planning 3 miles southeast of Block Island, Rhode Island.

The sale “shows that the offshore wind industry is gaining momentum in the U.S.,” Mark Albenze, chief executive officer of the Americas for Siemens Energy’s Wind Power Division, said in Providence, Rhode Island-based Deepwater’s announcement.

Sea-based wind power may become a major source of jobs and revenue, said John Breckenridge, a New York-based managing director of Good Energies Capital Inc. The Swiss renewable energy investment company is one of the backers of the Atlantic Wind Connection, an undersea transmission line that’s planned to carry power from offshore wind farm to Mid-Atlantic states from New York to Virginia.

‘Complicated Financing’

“There is this huge opportunity in the Mid-Atlantic to create this 20-year, multibillion dollar industry,” Breckenridge said yesterday in an interview. “The first offshore wind projects will require complicated financing,” and once one is complete, a lot of people will be interested in investing in the industry, he said.

Marubeni Corp. and Google Inc. are also backing the Atlantic Wind Connection, a $5 billion project that may eventually carry as much as 7,000 megawatts. “This solves transmission issues and those of offshore wind,” Rick Needham, Google’s director of green business operations, said in a joint interview with Breckenridge. “Kick-starting an industry is not something you do overnight.”

--Editors: Will Wade, Charles Siler

To contact the reporter on this story: Ehren Goossens in New York at egoossens1@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


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