The federal government is auctioning off more than 742,000 acres of federal waters south of Martha’s Vineyard. The plan is to fill the area with offshore wind turbines – enough turbines to power 1-and-a-half million homes. But with the recent news that the offshore Cape Wind project in Nantucket Sound may not go forward, it’s not at all clear that these new initiatives can succeed either.
Dan Renshaw is President of Sea Breeze Energy in Philadelphia, and his company is one of the qualified bidders for the auction. He said he’s optimistic about the prospect of installing commercial wind turbines in the windy waters off Martha’s Vineyard. But he’s apprehensive at the same time.
“There are certain project-specific issues that kinda give me concern. And clearly, an obvious issue that’s gonna have to be addressed is being able to find an outlet to sell the power that you would produce,” Renshaw said.
In Massachusetts, that’s anything but certain, as Cape Wind recently discovered when NStar and National Grid announced they’re backing out of agreements to buy electricity from the project.
Concerns about who will buy offshore wind electricity – and for what price – is one of the things holding offshore wind back in the United States. The federal government has awarded seven commercial wind energy leases in recent years – including Cape Wind -- but so far not a single turbine has been installed in any of those leased waters.
Renshaw notes that this is in stark contrast to Europe, which already has more than 2,000 wind turbines producing energy for the grid, and he points to two major reasons.
“Power prices are much higher in Europe than they are in the US, and on top of that, there are a tremendous number of subsidies in all the major offshore countries, in Germany, in Denmark and in the UK that go a long way toward moving this forward,” he said.
Renshaw added there’s another huge advantage for companies bidding on offshore leases in Europe.
“When you go and you bid and win a lease, you pretty much are guaranteed an outlet for the power as part of it. It’s completely different in the US, where the power sales are completely independent of what the Federal government’s doing with leasing,” said Renshaw.
It’s that lack of firm policy at the state level that often puts wind energy projects at risk, because there are no guaranteed customers. In Massachusetts, renewable energy received eight years of support from the Deval Patrick administration, but some wind power advocates say it’s uncertain whether Governor Charlie Baker’s energy team will continue on that course.
Abigail Hopper is the Director of the Bureau of Ocean Energy Management, the Federal agency handling the auction. She said her agency remains committed to wind energy, despite the recent setbacks for Cape Wind.
“It would be a mistake to interpret one project’s challenges as endemic across an entire industry,” said Hopper.
Hopper added that falling oil and gas prices shouldn’t be seen as a deterrent to wind energy development.
“Energy prices are incredibly volatile. And so anyone who’s interested in building this kind of big infrastructure project has to take the long view,” she said. “So this current dip in energy prices I don’t think will be impactful to the long-term trajectory of building a new industry.”
Even if this week’s auction is successful, it could be several years before turbines are installed. Once a lease is awarded, Hopper said a developer has one year to submit a site assessment plan, which outlines how the developer plans to use the wind resources in their area.
“And then once they have that site assessment plan, they then have 4-1/2 years to submit to us a construction and operations plan, which is a much more detailed, site-specific plan of where they’re gonna site each turbine, what the specific implications of that site plan would be. We then do an environmental analysis, and once we approve that, they are cleared to construct,” said Hopper.
In the run-up to the auction, 12 bidders were identified as qualified to participate. But one already has pulled out, saying the potential for realizing any return on his investment is too uncertain. Still, Hopper and federal officials hope the auction will help jump-start the fledgling offshore wind industry, and that some of the nation’s first turbines could be spinning in waters not far from Martha’s Vineyard.