Is the U.S. offshore wind market ready to take flight?

Proponents see Block Island completion as a sign of things to come

The U.S. offshore wind industry may finally be gaining velocity.

The Block Island Wind Farm, off the coast of Rhode Island, is on the verge of finishing construction, with blades installed on four of its five 589-foot turbines as of Aug. 16.

Developer Deepwater Wind LLC expects this 30-megawatt, $300-million to be operational by the end of 2016—delivering the first offshore wind-based power to the American electrical grid.

The first of many? Proponents certainly think so.

“There is a new opportunity that didn’t exist even a few years ago for U.S. offshore wind,” Matt Morrissey, managing director of Offshore Wind Massachusetts, recently told Bloomberg.

The U.S. offshore wind industry lags well behind Europe, where 10,000 megawatts have been installed off the coasts of Germany, Denmark and the U.K. However, in recent months, the U.S. has seen positive signs from both industry and government. From a regulatory and permitting angle:

• Massachusetts Gov. Charlie Baker recently signed a bill that requires utilities to purchase 1,600 MW of offshore-generated electricity over the next decade;
• New York State is expected to announce, in coming months, development plans for wind farms off the coast of Long Island; and
• The U.S. federal government has awarded 11 leases for development along the East Coast, from New England to Virginia.

As for investment, well-heeled outfits like hedge fund D.E. Shaw and private equity firm Blackstone Group LP are backing offshore projects in both the planning and construction stages.

The drawback to offshore wind projects has always been cost, especially capital cost, but as some have noted, more investors means competition, competition means innovation, and innovation means more economical projects.

“The U.S. offshore market is going to take off actually before we had predicted, which was 2025,” Anders Soe-Jensen, CEO of General Electric’s offshore wind unit, tells Bloomberg. “I am very optimistic about the U.S. market.”

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