DOE Launches 6-Year, $180mm Offshore Wind Development Initiative

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The US has been slow to try and capitalize on the huge potential of offshore wind energy to reliably supply clean, renewable electricity to population centers along the US’ extensive coasts. That’s beginning to change, however, as the Obama administration ramps up its efforts to stimulate economic growth and environmental sustainability by fostering development of domestic renewable energy resources.

Energy Secretary Steven Chu yesterday announced the launch of an ambitious offshore wind energy research and development initiative that, over the next six years, will see some $180 million invested in accelerating “the deployment of breakthrough wind power technologies that will help diversify our nation’s energy portfolio, promote economic development and launch a new industry here in America,” according to a Dept. of Energy (DOE) press release.

“Developing all of our nation’s vast energy resources is an important part of President Obama’s blueprint for an American economy that uses all of America’s energy resources,” the EnergySecretary stated. “The new offshore wind energy initiative announced today will help to catalyze the development of offshore wind in America, supporting U.S. innovators as they seek to design and demonstrate next generation wind energy technologies. These investments are critical to ensuring that America remains competitive in this growing global industry that can drive new manufacturing, construction, installation and operation jobs across the country.”

The funds are subject to Congressional appropriations, with an initial $20 million slated to be made available in 2012 as the first step in supporting up to four innovative offshore wind energy installations, according to Secretary Chu.

Soliciting Letters of Intent for Initial 4 Offshore Wind Projects

Strong, consistent winds blow all along the US Atlantic, Pacific, Gulf of Mexico and Great Lakes’ coastlines, holding out potential energy estimated at some 4,000 gigawatts (GW). Tapping into them poses significant challenges that will require advances and testing all along the wind power supply chain, however.

High up-front capital costs are another constraining factor that needs to be addressed. It should be noted that a combination of supportive accounting rules, government tax incentives, and subsidies have helped the US offshore oil and gas industry to thrive.

It also should be noted that offshore wind power development has been robust in Europe. Denmark’s DONG Energy recently announced that the family firm that owns LEGO will invest some $534 million for an equity stake in DONG’s 277-MW Borkum Riffgrund 1 offshore wind farm. Expected to start generating clean, renewable electricity in 2015, the offshore wind farm will supply all of LEGO’s power needs through 2020.

Developing offshore wind energy resources also has a large upsdie in terms of job creation. A recently published Price Waterhouse Coopers (PwC) study found that some 33,000 Germans are now employed in the offshore wind power sector.

Aiming to surmount these hurdles, the DOE’s offshore wind power initiative will focus on achieving “large cost reductions over existing offshore wind technologies,” according to the DOE. Demonstration projects “will help address key challenges associated with installing utility-scale offshore wind turbines, connecting offshore turbines to the power grid, and navigating new permitting and approval processes.”

The Obama administration’s offshore wind power program is being launched as the DOE continues to work with the Dept. of Interior and other federal government offices to evaluate the nation’s offshore wind resource potential, identify areas with the highest potential, and devise a comprehensive offshore wind energy strategy.

The DOE is soliciting proposals from offshore wind power resource development groups for the first four projects slated for funding in 2012. Program funds may be used to cover up to 80% of a project’s design costs and 60% of hardware and installation costs. Letters of intent (LOI) are due on March 30 and applications are due on May 31, 2012.

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