Get set to wait on offshore wind
As sailors will tell you, you can't be in a hurry if you're relying on the wind to get you places. The same is true with developing offshore wind energy. Don't expect to see tiny turbines spinning far out to sea when you're at Ocean City next summer, or for several more years at least.
There was a predictable hurrah (which this newspaper helped fan, because it was news, after all) when the federal government announced Monday that it is opening up the Atlantic Ocean off Maryland's coast for bids from potential developers of offshore wind power projects.
Gov. Martin O'Malley, who's made offshore wind a centerpiece of his administration's energy policy, issued a statement calling the federal announcement "another step forward for Maryland's new economy." He'll no doubt tout offshore wind again when he speaks later today at Towson University about his vision for creating a "new economy" in Maryland that relies heavily on "green" jobs like building, running and maintaining wind turbines.
To be sure, there are likely to be jobs created in Maryland when - or if - wind takes off in a big way. The O'Malley administration cites a recent projection that 4,000 manufacturing and construction jobs would be created during the development of a one-gigawatt "wind farm" off Ocean City, with another 800 permanent jobs dedicated to running and maintaining the more than 300 massive turbines that would need to be erected.
But though we could certainly use them in the current slump, those jobs are not just around the corner. Unless the regulatory process picks up speed, it will be a few years yet before any offshore wind project gains all the necessary approvals to move forward in Maryland, much less breaks ground, or water, or whatever. NRG Bluewater Wind, the company proposing to put wind turbines off Delaware's coast, said in August that the shakeup in the federal Minerals Management Service since the BP oil spill in the Gulf of Mexico has delayed the permits it needs to move ahead, and postponed that project by two years. It's now not expecting to start generating any electricity from offshore breezes until 2016. And Maryland's offshore development is trailing Delaware's.
Despite the reorganization of the federal offshore leasing bureaucracy, it's possible the red tape holding wind projects back might get streamlined, since the Obama and O'Malley administrations both are strongly behind renewable energy. But economic and political obstacles loom as well. As The New York Times reported this week, the Great Recession and cheap natural gas prices have made regulators in some states leery of letting utilities buy power from "green" energy sources like wind projects because they typically cost more than electricity produced by burning fossil fuels, particularly natural gas. Even deals that would raise residential customers rates by less than 1 percent are being rejected.
The pace of new wind projects has slowed, whether because of such resistance or the economy. Like other businesses, wind developers shy away from uncertainty. There's not much they can do about the economy, and when electricity demand will pick back up again. But developers say much of the uncertainty they're contending with has to do with government policy.
Congress has balked so far at passing national renewable energy standards, whether as part of a policy to fight climate change or to reduce US dependence on foreign oil.
Some states, Maryland included, have stepped up on their own with laws requiring a significant percentage of the power sold in the state come from renewable sources like wind and solar. In Maryland, the target is 20 percent by 2022, and the state is counting on offshore wind to produce most of that. But those "renewable portfolio standards" are coming in for criticism from some business and consumer advocates who complain they'll force ratepayers to subsidize more costly green power.
More immediately, wind developers point out that the tax credits and loan guarantees that have helped stimulate their industry's growth are set to expire at the end of this year, unless Congress renews them. The tax credits were first adopted in 1992 under the presidency of George H.W. Bush, but have been repeatedly renewed. The loan guarantees, under which the federal government assumes a share of the risk that such projects will go belly up, have been offered since the beginning of the Obama administration. With Congress about to undergo its own reorganization, it's anybody's guess when or if those incentives will be extended.
"We're sensitive to the political climate," says Peter D. Mandelstam, president of NRG Bluewater Wind. He points out that wind power technology was first developed in the United States, but the industry shifted its focus to Europe when those nations adopted and maintained strong incentives for developing wind projects. Now China has jumped on the wind bandwagon, and Mandelstam says it's building new turbines so quickly that it'll soon have more wind generating capacity than the United States.
"The United States has been hampered ... by its lack of an energy policy," Mandelstam says. "China is set to pass us in five years (building) what it took us 40 years to do."