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US Offshore Wind Industry Sees Progress

Christopher Long
Manager of Offshore Wind and Siting Policy,
American Wind Energy Association

State and federal processes for developing offshore wind in the U.S. are well underway. As a result of offshore wind energy's significant job creation potential, proven environmental benefits and close proximity to demand, it has attracted developers to pursue projects along the East and West coasts, as well as in the Gulf of Mexico and the Great Lakes.

Although hurdles exist and major milestones still need to be reached, the United States has made important advances, including in the past year. Most recently, Congress included the extension of the Production Tax Credit and the Investment Tax Credit in the final deal to avert the fiscal cliff in late 2012. The version of the Production Tax Credit and Investment Tax Credit extension included in the legislation covers all wind projects that start construction in 2013. The Investment Tax Credit is particularly important in helping to launch the United States offshore wind industry because offshore projects are more capital intensive and they have longer permitting time lines compared to land-based wind projects.

On the regulatory side, in early 2011, the U.S. Department of the Interior and the U.S. Department of Energy unveiled a coordinated strategic plan to achieve the deployment of 10 gigawatts of offshore wind capacity by 2020 and 54 gigawatts by 2030. Since then there has been significant progress at the Department of the Interior and the U.S. Bureau of Ocean Energy Management, including the finding of no significant impact for the Mid-Atlantic wind energy areas. That finding means that leases for site-assessment activities can now be issued in New Jersey, Delaware, Maryland and Virginia without the need for preparation and federal review of an environmental impact statement, a process that could have taken at least two years for any project.

In addition, the Bureau of Ocean Energy Management published a draft environmental assessment for the Rhode Island-Massachusetts wind energy area, proposed lease sales for the wind energy areas off Rhode Island-Massachusetts and Virginia, and granted a lease to NRG Energy's (Princeton, New Jersey) Bluewater Wind project in the wind energy area off the coast of Delaware.

The research and development focus in the U.S. has been on near-term and shallow-water deployments in the Atlantic, Great Lakes and Gulf of Mexico in order to jump start a commercial market, as well as on strategic investment in technology such as floating foundations for projects in deeper water, including off the coast of Maine and the West Coast.

For example, in order to help speed technical innovations and drive down costs, last year, the Department of Energy announced the commitment of $43 million in funding for 41 projects across 20 states. These projects include those with teams focusing on innovations in key components, such as floating support structures and turbine rotor and control subsystems. Other teams are focusing on removing market barriers related to port and vessel requirements, and transmission grid integration.

In December 2012, the Department of Energy announced seven winners for its Advanced Technology Demonstration Project Initiative. Awardees include projects off the Atlantic and Pacific coasts, as well as in the Great Lakes and Gulf of Mexico. The goal of this program is to provide funding to verify innovative technology and help lower costs. Each awardee will receive up to $4 million to complete the engineering site evaluation and planning phase of the project. Upon completion of this phase, the Department of Energy will select up to three of these projects to receive an additional $47 million in funding for the follow-on design, fabrication and deployment phases in order to achieve operation by 2017.

Industry experts and analysts believe that the offshore wind industry in the U.S. is well-positioned for significant growth in the coming years. The high potential for the offshore segment of the wind energy industry makes the case for continued focus and investment.

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