OFFSHORE WIND Jobs or cheap power? Experts say US can’t have both – E&E News

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Saqib Rahim, E&E News reporter

HAUPPAUGE, N.Y. States advancing offshore wind want everything they've seen in Europe: cheap, low-carbon power and the jobs that come with it.

They may soon find themselves having to choose between those aims, a panel of European industry executives said here yesterday.

Jonathan Cole, a managing director with renewables giant Iberdrola SA, said European countries did.

"What do they want in this sector? Do they want the cheapest unit cost of electricity? If so, consider the Dutch model," Cole said at the U.S. Offshore Wind conference. "Do they actually want to build a long-term sustainable industry? If so, they need to think, certainly for the first few units, about something different."

Cole said the Netherlands focused its policies on building the cheapest turbines, but that meant it had to import the units. Germany and the United Kingdom were less price-sensitive, but that drew more technological innovation to their shores.

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The remarks frame the dilemma before Maryland, Massachusetts and New York, as well as other states hoping to make offshore wind a contributor on the scale of nuclear and coal plants.

These states want zero-carbon electrons but also hope to jolt manufacturing. And they'd prefer not to be blamed for raising utility bills.

European companies say if states want to see that, they need to make firm promises measured in gigawatts.

Europe has built about 3,600 turbines, and the industry says it's reaching new economies of scale that are driving costs down. In April, the world's largest developer, Denmark-based Dong Energy, won an auction with two projects that were economical without any subsidy.

The industry says it can wring out more cost from economies of scale and larger turbines that harness more wind. One informal goal: getting costs under 10 cents per kilowatt-hour.

"The two fundamental drivers in the end are scale and competition," said Sven Utermhlen, chief operating officer at E.ON Climate & Renewables.

Northeast states are grappling with how that looks in America.

Smaller offshore wind projects have come in around 20 cents/kWh, said Willett Kempton, a professor at the University of Delaware.

On a grid fueled by nuclear, natural gas and onshore wind, 20 cents is well above market. So New Jersey and Maryland have offered special subsidies for offshore wind projects that can show economic benefits, whether in the form of jobs or local content.

New York is touting the size of its offshore wind resource, which it pegs around 1 gigawatt, and the promise of scale. Massachusetts has emphasized cost reduction: Each round of bids has to be cheaper than the last.

Several factors came together in Europe to drive down costs, the panel said.

One was heavy competition among manufacturers. The market consolidated around three main turbine builders Siemens AG, General Electric Co. and MHI Vestas Offshore Wind that are now locked in fierce competition.

Another was the long-term policy commitment to growing offshore wind, the panel said. Europe has installed around 12.6 GW of offshore wind. U.S. commitments amount to 4-5 GW.

Cole said that's nowhere near enough to get a factory for nacelles and blades, which are the most valuable parts of the turbines. To get factories for those, he estimated, the United States would have to build 3-4 GW a year.

"There are many reasons this will come, but it will not start with the nacelle. Nacelles will be the last component," said Kempton.

"There is plenty of other stuff which I think makes absolutely no sense to be manufactured outside the U.S., if we want to have a U.S. offshore wind business," said Utermhlen. "Cables. Foundations. Vessels. I think there's plenty of opportunity there."

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OFFSHORE WIND Jobs or cheap power? Experts say US can't have both - E&E News