Blog Post

Offshore Wind: Costly, But Big Benefits

With serious questions being raised about the costs of the world’s largest planned offshore wind farm, the London Array, and the never-ending saga that has crimped the controversial offshore Cape Wind project in Massachusetts, it’s easy to dismiss offshore wind as being too expensive and ultimately not viable.

After all, in a report on U.S. wind power potential last year, that country’s Department of Energy said the capital cost of offshore projects ranged from $2,400 to $5,000 per kilowatt, while onshore capital costs averaged $1,775 per kW. And a proposed offshore wind farm in Maine is being billed at $5 billion per gigawatt — or a whopping $25 billion.

But there are two big reasons to go offshore, particularly in the U.S: strong winds and location, location, location.

“The capacity factors are much higher, so the wind is actually stronger offshore than onshore,” Tyler Tringas, a wind analyst at New Energy Finance, told us. With more wind power, there’s more electricity that can be generated.

The Ocean Energy Institute — run by energy investment banker and energy adviser Matthew Simmons, as well as physicist George Hart — is banking on what they say are some of the strongest winds in the world in the Gulf of Maine.

“The second argument for offshore wind is that you can put the actual wind farms quite close to large metropolitan centers,” he said. And that could prove to be the linchpin.

Guess which states use the most electricity? The ones that are on the water. In the contiguous U.S., there are 28 states that have a coastal boundary, and they use 78 percent of the nation’s electricity, according to the Energy Information Administration. The DOE report said only six of those coastal states have sufficient onshore wind resources to generate more than 20 percent of their electricity needs.

And what about importing all that wind power potential from other states? One of the biggest hurdles, according to the DOE, is the lack of transmission lines that can get the power from the spots that have the best wind resources to the areas that need that power the most. The agency estimated that the U.S. could produce 20 percent of its electricity from onshore wind, but that it would cost at least $20 billion just to expand the transmission grid. And even if the money is there, there’s the headache of dealing with all the different states and municipalities which each control their little section of the transmission lines. Short of nationalizing the grid, it would be hard to get an expanded system in place anytime soon.

The idea of putting some turbines in the water, and just plugging them in to power, say, Boston, could actually be a reasonable idea, even in these troubled economic times.

And while Cape Wind has been waiting a long time to even start construction, regulatory hurdles abound for both offshore and onshore ind.

“I don’t think you can categorically say that it’s tougher to permit offshore, at least going forward,” said Tringas. “Maybe it was a few years ago, but you could easily run into just as many delays and difficulties trying to put a wind farm in Vermont.”

At least two more big offshore projects are on the way in the Northeast. Earlier this month, the governor of Rhode Island signed a final agreement with Deepwater Wind for a 400-MW offshore wind project for the tiny state, with construction expected to start in late 2010. Deepwater Wind is also working with the Public Service Enterprise Group (s PEG) on a 350-MW offshore wind farm in New Jersey.

And in the UK, a new report says there’s room for 5,000 to 7,000 more offshore wind turbines, which would be enough to power almost all of the homes in the country.