Offshore Wind Demonstration Projects Struggle Despite DOE Support
In May 2014, the U.S. Department of Energy (DOE) announced up to $47 million in financial support for three offshore wind demonstration projects expected to be operational by 2017. A year later, the three projects are facing significant hurdles arising from the high cost of developing offshore wind in the United States.
- In Oregon, the 30 MW WindFloat Pacific Project has been unable to secure a power purchase agreement (PPA)
- A bill requiring Pacific Power and Portland General Electric to purchase power at above-market costs did not advance in the Oregon Legislature
- In New Jersey, state regulators and the state appellate court have rejected a 20 cents/kWh PPA from the 20 MW Fishman’s Energy Project
- Fisherman’s Energy is appealing the case to the New Jersey Supreme Court
- Finally, Dominion Virginia Power delayed the 12 MW Virginia Offshore Wind Technology Advancement Project after receiving just a single EPC bid nearly twice the original estimate
- All three demonstration projects must report progress to the DOE at the end of July
- Meanwhile, the first operational offshore wind project in the United States is likely to be the 30 MW Block Island Wind Farm
- Currently under construction off the coast of Rhode Island, the project is expected to be operational by the end of 2016
- Deepwater Wind will sell power from the project to National Grid for an initial price of 24.4 cents/kWh
Despite offshore wind being stronger and more consistent than onshore wind, the industry has yet to install a demonstration project in the United States. As the broader renewable energy industry transitions from policy to economic drivers, the offshore wind industry is likely to experience sustained challenges in the effort to scale and drive cost declines. By comparison, the solar industry benefited from precipitous cost declines fortuitously overlapping with robust policy support for renewable energy (e.g., emergence of state portfolio standard and sustained federal tax credit).
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