Last Friday, DOE and DOI issued an update of their National Offshore Wind Strategy. It's a moderately aggressive strategy, seeking to deploy at least 86 gigawatts of offshore wind by 2050. The report highlights both the significant opportunities and potential for growth and also some of the remaining potential roadblocks.
On the plus side:
- The combination of fossil retirements and demand growth provide significant incentive for offshore wind development.
- On a related point, the substitution of offshore wind for fossil generation, as a result of increased regulation, will have significant environmental benefits. Based on the government's current estimate of the social cost of carbon, increased offshore wind generation could produce $50B in avoided costs.
- Offshore wind could be cost competitive, at least in more expensive markets, by 2025.
- In the longer term, offshore wind could reduce wholesale electricity prices. It can also help decrease transmission.
What are the remaining obstacles? That's a pretty simple summary.
- Costs and technology risks are still too high.
- Regulatory processes need to be standardized and confidence has to grow in a robust, yet bounded, regulatory process. As the report states:
Offshore wind developers, financiers, and power purchasers need confidence in a project's ability to navigate regulatory and environmental compliance requirements in a predictable way.
In other words, no more Cape Wind debacles. If developers think that they will be subject to a death by a thousand cuts – or even a few dozen law suits – it's going to be a long time before offshore wind contributes any significant share of our generation supply.
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