Wind Power May Gain Footing Off Coast of U.S.

Federal Government Prepares to Lease Tracts for Turbines
By JEFFREY BALLSeptember 3, 2008;

Amid a national debate over offshore oil drilling, the federal government is preparing to unleash development of another offshore energy source: wind.
The Interior Department, the agency that handles oil-and-gas leases in U.S. waters, is preparing to lease swaths of the outer continental shelf to companies that want to erect massive wind turbines. With the public-comment period for the proposal scheduled to end Monday, competition is heating up to develop wind projects on the shelf, the same underwater formation largely covered by an oil-drilling ban that has become a contentious issue in the presidential race.
QUESTION OF THE DAY

If you had to choose one, which method of offshore energy production would you support?
The federal program signals the start of a broad push to develop offshore wind energy in the U.S. The country often is dubbed by renewable-energy experts as "the Saudi Arabia of wind" because of its vast, windy expanses, particularly in the Western plains. Now, rising interest in renewable energy is spurring exploration of the ocean, where the winds typically are heavier but the technological hurdles to tapping it are higher. That shift mirrors the oil industry's move to offshore wells decades ago.
The offshore-wind race is centered on the Northeast. In June, an electricity producer and a wind-energy developer in Delaware signed a contract for a project of some 67 turbines to be built about 11.5 miles off the state's coast. Over the next two months, Rhode Island and New Jersey are expected to choose wind-energy developers to work with as the states try to put together offshore projects.
And New York City officials are talking with wind-power developers about erecting turbines on a massive tract of the Atlantic Ocean about 25 miles from Manhattan. Offshore wind power seems likely to be the largest source of renewable energy for the city, says James Gallagher, senior vice president for energy policy for the New York Economic Development Corp. The idea is part of a broader plan by New York Mayor Michael Bloomberg to curb the growth in the city's demand for fossil-fueled energy.
The New York City plan also envisions installing smaller wind turbines atop buildings. But Mr. Gallagher says offshore wind provides a far bigger potential energy source.
These projects would require leasing ocean territory through the Interior Department, because they would be far enough out from the shore that they would sit in federal waters. Industry officials expect it would be three to five years before the first turbines were installed.
The Interior Department's Minerals Management Service expects to finalize its proposed rule governing leasing of offshore acreage for alternative-energy production by the end of the year, clearing the way for development to start soon after. Already, the agency is doing environmental analyses on 10 offshore parcels that it is considering leasing this fall for wind projects. If the agency approves the leases, companies could begin exploring the areas for possible wind-turbine sites.
Wind power is booming in the U.S. That is because of rising fossil-fuel prices, federal renewable-energy tax breaks and mounting opposition to new coal-fired power plants that emit greenhouse gases. Last year, 35% of the electricity-generation capacity added in the U.S. was from wind -- a percentage second only to natural gas, according to the American Wind Energy Association, a trade group.
But wind accounts for only about 1% of total electricity generated in the U.S. And so far, all the wind power in the U.S. is produced onshore. The states that crank out the most -- Texas, followed by California -- boast vast stretches where the wind blows hard and where there is enough land to install hundreds of turbines to catch it.
But the onshore wind industry in the U.S. is beginning to be hampered by a lack of electrical-grid capacity to carry the power from the isolated places where wind typically blows hardest to the population centers that need the juice. Offshore wind provides a potentially big source of energy close to major coastal cities.
That explains why roughly two dozen offshore wind projects are operating in Europe, a place with comparatively little open land. The Northeastern U.S., with similar land constraints, is starting to follow suit.
Big obstacles remain. Wind power is more expensive than fossil-fueled energy. In the U.S., the tax breaks necessary to make it competitive are due to expire Dec. 31. Several proposals to renew the wind-power tax breaks have failed to pass Congress, typically because the bills also included controversial measures to remove existing tax breaks for other industries, notably oil producers. Whether Congress will resolve the dispute and extend the wind-power tax breaks when it returns from its recess is unclear. In the past, it has let the tax credits expire three times, prompting a lull in wind-power construction until the credits later were renewed.
If offshore wind power can fly in the U.S., industry experts say, it is likely to take off in the Northeast. The region has high electricity prices, making it easier for wind-power developers to turn a profit. It has large coastal cities thirsty for more juice. And its offshore territory offers some of the strongest wind in the U.S.
In addition, the outer continental shelf extends out from the Northeast at shallow depths for long distances -- in contrast to the West Coast, where the shelf drops off quickly to great depths. Putting a wind turbine in shallow water is easier and less costly than putting one in deeper water.
And putting wind turbines far out from the coast could assuage opposition from coastal residents who don't want their seaside views obscured -- an issue the oil industry is also facing. Some proposed offshore wind projects have sparked significant opposition, notably one off Cape Cod.
Bluewater Wind, a Hoboken, N.J., company recently bought by Australia's Babcock & Brown Ltd., won the bid to develop the project off Delaware. It is waiting to hear, probably in the next month, whether it won the bid in Rhode Island and is among the companies talking with New York City.
Write to Jeffrey Ball at jeffrey.ball@wsj.com