Published on October 13th, 2014 | by Tina Casey8
Here’s The Real Reason Why The Offshore Wind Energy Industry Has The Happies
October 13th, 2014 by Tina Casey
The mood was upbeat at last week’s offshore wind industry conference in Atlantic City, New Jersey on October 7 and 8. The massive, long-awaited Cape Wind and Block Island offshore wind energy projects are kicking into high gear from the private sector, the Interior Department is steaming full speed ahead with the leasing process for additional Atlantic coast sites, and earlier this year the Energy Department announced federal funding for two more Atlantic coast projects that will serve as R&D platforms for cutting edge, cost-reducing offshore wind energy technologies.
Attendees would have been downright ecstatic, albeit in a schadenfreudy kind of way, if the conference had stretched out for just one more day. That’s because on October 9, Energy Secretary Moniz sat down with the editorial board of the Houston Chronicle and tore the curtain off the 800-pound gorilla in the US domestic energy resources room.
The US Offshore Wind Energy Industry Gets Happy
Atlantic City is perhaps better known for its casinos but it happens to be an early adopter of onshore wind energy, so all the more reason to stage an industrywide conference there.
The 2014 American Wind Energy Association Offshore WINDPOWER Conference attracted 600 attendees and bragging rights to keynote speaker Sally Jewell, US Secretary of the Interior.
Secretary Jewell summed up the mood:
I am encouraged by the collaborative spirit and the thoughtful planning that has been the hallmark of our approach to ensure that development is realized in the right way and in the right places. Offshore wind is an exciting new frontier that will help keep America competitive and expand domestic energy production, all without increasing carbon pollution.
As obliquely referenced by Jewell, development of Atlantic coast wind resources is being coordinated by the ten-state Atlantic Coast Wind Consortium, spearheaded by Interior.
Ironically, although New Jersey signed on to the effort at its launch in 2010, the state has been dragging its heels ever since. That’s not exactly a surprise given the governor’s enthusiastic relationship with fossil fuel stakeholders, namely the Koch brothers.
However, New Jersey is being dragged kicking and screaming into an offshore wind energy leadership role whether the Koch brothers approve or not. Last summer the state was included in Interior’s initial round of offshore wind energy leases, to the tune of a potential 3,400 megawatts.
New Jersey is also one of the aforementioned states to receive Energy Department funding for offshore wind farms that double as R&D showcases for new offshore technology.
Climate Change Impact: Offshore Wind Infrastructure vs. Fossil Infrastructure
As a brand new coastal industry emerging in the age of rapid climate change, the offshore wind energy industry has the good fortune of timing on its side. All that new infrastructure, from turbines and platforms to cables and onshore facilities, can be designed and sited for long term operational reliability with rising sea levels and severe weather taken into account.
In terms of what really matters — money — that means offshore wind energy investors are going to get some pretty good bang for their bucks.
The situation isn’t quite so sunny when you are dealing with massive legacy investments in existing infrastructure, which is what characterizes the coastal refinery industry.
Ryan Holeywell, Billy Smith II and other staff of the Houston Chronicle reported on Energy Secretary Ernst Moniz’s October 9 sitdown with that publication’s editorial board, and they did not bury the lede:
U.S. Energy Secretary Ernest Moniz warned that the Houston area’s energy infrastructure is especially vulnerable to the dangers of climate change and said the federal government is in the early stages of studying how to protect it.
Actually, it sounds like Moniz was already preaching to the choir. According to the article, on October 7 city officials sat down with industry stakeholders and to discuss the impact of climate change on the Houston Ship Channel, using the scenario of a 20-year rise in sea level combined with a major hurricane.
Climate “skepticism” was apparently not anywhere near the table. The group got all the lowdown from the National Oceanic and Atmospheric Administration, the Coast Guard, the Energy Department and the Army Corps of Engineers.
The Offshore Wind Energy Advantage
Here’s where it gets interesting in terms of the current downswing in the global oil markets. Sure, oil is trending cheaper right now, but the despite advances in drilling technology, the long term outlook for petroleum products is up.
Meanwhile, offshore wind is sharing in a long term downward trend in the cost of renewable energy, with new technology and improved systems efficiency being primary drivers.
Now throw the cost of hardening existing coastal energy infrastructure against climate change into the mix, and you’re looking at significant upward pressure on fossil products, not so much on offshore wind energy.
Houston official are already anticipating the need for a funding stream to prepare for the future. As cited in the Chronicle, Laura Spanjian, director of the city’s sustainability office, had this to say about the stakeholder meeting (emphasis added):
We want to agree on what the impacts are. We want to agree on what the solutions are. And we want to figure out if we can get funding.
Keep all that in mind as the wind industry gears up for yet another fight over extension of the federal production tax credit for wind energy.
In the latest development the American Wind Energy Association used its blog to call attention to a letter from IRS chief John Koskinen to the Senate Finance Committee, alerting Congress to the impact of continued procedural delays on extending the tax credit.
Here’s how AWEA sums up the last time Congress (okay, so the Republicans) delayed what used to be a routine extension dating back to the 1990’s:
The most recent expiration, in 2013, caused new wind installations to come to a halt, resulting in a 92 percent drop in new wind projects compared to 2012. That caused investment to drop from $25 billion in 2012 to roughly $2 billion in 2013 and the loss of thousands of manufacturing jobs in 2013.
So, for all the partisan obstruction of federal support for wind energy in Congress, don’t be surprised if those very same representatives turn around and provide Houston’s fossil stakeholders with a helping hand.