Energy Policy Out at Sea


Today’s Wall Street Journal has a piece on the prospects for offshore wind energy (subscription required):

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.

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. . . .

[T]he 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.

My upcoming paper on Texas’ wind-energy development doesn’t go into great detail on the issue of offshore wind energy, but I touch on it: Offshore wind farms pose potential environmental problems of their own. WSJ’s Guy Chazan writes that “Deepwater wind-farm technology also has its critics, who say the turbines can encroach on shipping lanes and harm seabird sanctuaries. . . . They can also be prohibitively expensive, because they require long undersea transmission lines to hook turbines up to the grid system.” Project Beatrice, a North Sea wind farm project that began with the world’s largest wind turbines “has cost $90 million — or about $9 million per megawatt of installed generating capacity. By comparison, a gas-fired power station costs less than $1.5 million per MW installed to build.”

The International Herald Tribune’s James Kanter reports that, in 2004, wind turbines at Horns Reef, about ten miles off the Danish coast, “broke down, their critical equipment damaged by storms and salt water. Vestas, a Danish manufacturer, fixed the problem by replacing the equipment at a cost of €38 million, or $50 million. But Peter Kruse, the head of investor relations for Vestas, warned that the lesson from Horns Reef was that wind farms at sea would remain far more expensive than those on land. ‘Offshore wind farms don’t destroy your landscape,’ Kruse said, but the added installation and maintenance costs were ‘going to be very disappointing for many politicians across the world.’ ”

As with wind energy in general, what is important here is proceeding with caution, with a prudent strategy of reaching realistic energy goals. Instead of trying to declare wind energy or any other power source a winner, allow technological advances and the free market allow the winners to emerge. If wind energy turns out to be a screaming success, it will not be because we mandated and/or subsidized it. Rather, it will be because wind found its technologically and economically feasible share of our energy-supply mix.


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