Dispatch from Boston by Charles Nordstrom

It was great to talk to so many passionate advocates of offshore wind at the US Offshore Wind Leadership Conference in Boston this week. It’s clear that the mood in the US offshore wind sector has changed from “could we/should we?” to “when and how can we?”. The organizers gathered an impressive caliber of people for this event.

Most people in the offshore wind industry know me as a technologist, so it was a nice change of pace to be weighing in on policy issues. Having spent the last two years as an American working with a UK company with lots of policy experience in Europe, I have developed several new insights into the world of offshore wind policy. Based on my learning, I’d like to offer the following two views to my fellow Americans:

When it comes to the pipeline of projects, choose clarity over quantity.
Sure, we’d all love to have a competitive US offshore wind manufacturing landscape, but that requires a confident pipeline of 3 to 4 GW per year. That is too big of an ask for politicians and rate-payers right now. Instead, focus should be on a more realistic (i.e. smaller) five- to ten-year pipeline with expectations set accordingly. A regional pipeline with one or two utility-scale projects reaching financial investment decision (FID) each year would catalyze the US offshore wind industry. Would that mean a turbine factory in every state? No way. But it would be enough to get a US-flagged installation vessel built and justify the necessary improvements in some ports. And if that pipeline is spread across several states, with each kicking-in support and grid-connection priority, then this smaller, “right-sized” pipeline becomes politically feasible. Then we can grow from there once we establish a track record in offshore wind.

Choose the right support mechanism and harmonize across states.
In terms of support, we need to choose the right mechanism and harmonize across multiple states. I think the right answer is a mechanism based on the UK contract-for-difference (CfD) scheme or the most recent Dutch “Energy Agreement” (basically the Danish model, plus five years of certainty). These policies drive industry cost reduction through competition, effectively cap the public subsidy, and provide revenue certainty to investors. This revenue certainty mitigates a major risk factor for investors and lowers the cost of capital and the cost of energy.
A rolling, coordinated, multi-state approach that supports one or two utility-scale projects per year, with five to ten years of visibility, would move us beyond the current in-fighting over local economic development and help the US offshore wind industry to really take off.

Charles Nordstrom

Associate

BVGA

2017-05-12T15:18:27+00:00 08/03/2016|Views|