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Federal Leasing for Offshore Wind Grows as First U.S. Offshore Wind Farm Comes Online

graph of purchased federal leases for offshore wind land area, as explained in the article text

Source: U.S. Energy Information Administration, based on Bureau of Ocean Energy Management. Note: 2016 and 2017 values are estimates.

 

The first commercial U.S. offshore wind farm, Block Island, is scheduled to come online in late 2016. Located three miles off the southeastern coast of Rhode Island, Block Island consists of five wind turbines that will produce 30 megawatts (MW) of electricity. The electricity will be used on Block Island, where electricity is currently supplied by diesel-powered generators. The high cost of current electricity sources on Block Island helps to reduce the economic hurdles typically associated with power from offshore wind.

The developer, Deepwater Wind, began construction on the project in July 2015 and holds two additional leases off the coasts of Rhode Island and of Massachusetts for future developments. Although the Block Island Wind Farm was constructed in state waters, these additional leases are farther from shore in federal waters.

State waters typically extend out to three nautical miles, and federal waters extend out to 200 nautical miles, forming a much larger area known as an exclusive economic zone. The National Renewable Energy Laboratory estimates that the United States has 4,200 gigawatts of potential offshore wind energy, with the majority of that potential in federal waters. Although local state agencies typically handle wind development in state waters, the Bureau of Ocean Energy Management (BOEM) manages all wind development in federal waters.

BOEM awards leases through a competitive bid system. BOEM identifies areas that have wind potential, which it designates as call areas. With enough interest from commercial developers and after public comment, BOEM designates a call area with sufficient potential for wind development as a wind energy area, where it can hold a future lease sale.

BOEM held the first competitive federal offshore commercial wind lease sale in 2013 and auctioned off nearly 165,000 acres for wind energy development off the coasts of Massachusetts and of Rhode Island. Since then, BOEM has held four additional auctions for wind development in the Atlantic region. To date, it has issued 11 commercial leases in federal waters, 9 of which were purchased through the competitive bid process. BOEM issued the other 2 leases before the first competitive lease sale. Cumulatively, since 2013 more than one million acres of land in federal waters have been leased for wind development and have generated more than $16 million in revenue from the lease sales for the federal government.

During the same period, the federal government collected more than $24 billion in revenue from offshore energy extraction activities, predominantly from oil and natural gas. This revenue includes rent, royalties per energy unit, and other fees. Because offshore wind is still in the development phase, companies are not currently paying royalties on production or other fees, but BOEM will collect future revenue from operating fees and additional lease sales. Production fees will be based on the capacity of the wind farm, its capacity factor, the average wholesale electric power price, and an operating fee rate that BOEM determines.

On December 15, BOEM will hold a lease sale for offshore New York for nearly 80,000 acres, and it plans to have another lease sale for areas of offshore North Carolina in 2017. Fourteen companies have qualified to participate in the New York lease sale. To qualify to participate, a company must demonstrate that it is financially, legally, and technically able to bid and develop on the lease. Since the first lease sale in 2013, the number of companies qualifying to participate has steadily increased, from 8 in 2013 to 14 in the latest offering. While there is no guarantee that a company holding a lease will choose to develop a wind farm, the purchase of a lease is a significant indicator of interest.

Wind speeds offshore tend to be higher and less variable compared to onshore. Additionally, offshore wind has the potential to provide power in coastal areas where demand is high and land-based renewable energy resources are limited. However, offshore wind currently has much higher costs than onshore wind, solar, or nonrenewable electricity generation options to serve loads on the U.S. mainland.

map of leasing areas, call areas, and wind energy areas along the U.S. Eastern coast, as explained in the article text

Source: U.S. Energy Information Administration, based on Bureau of Ocean Energy Management

 

Principal contributors: Matthew Manning

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Discussions

Darius Bentvels's picture
Darius Bentvels on Dec 6, 2016 12:18 pm GMT

This will enlarge USA’s gap in offshore wind development and costs, compared to advanced countries such as Denmark, Netherlands, Germany.

Seems no real competition to develop offshore wind cheaper than others, neither requirements to have installed e.g. 700MW at that date, etc.
Concession holders seem to get monopolies.

Apparently BOEM didn’t realize that offshore wind is a fundamental different business compared to oil & gas exploration.

Did BOEM study the situation and methods in e.g. Denmark (and visited them)?
They have far more offshore experience than anybody else.
They recently had a North-sea tender which deliver new offshore for ~€67/MWh during 11years, thereafter the owner has to sell at the (whole sale) market (prices ~€30/MWh).

Btw
All wind turbines in their first offshore windfarm constructed in 1991 still operate (11 turbines of 450KW).

Mark Heslep's picture
Mark Heslep on Dec 7, 2016 12:38 am GMT

How often do Atlantic hurricanes pass through Danish, Dutch, or German waters?

Darius Bentvels's picture
Darius Bentvels on Dec 7, 2016 8:24 am GMT

BOEM chose a method which is unproductive to increase offshore wind fast at the lowest possible price.

This US method may even be less productive than the UK method. And UK pays ~30% more than necessary (comparing to Denmark, NL)….

The BOEM method fills the wallets of big companies well.
So may be it’s a cultural issue.

Helmut Frik's picture
Helmut Frik on Dec 7, 2016 9:25 am GMT

Just some Orkanos and Tornados in germany. Strong enough to blow away the forrests:
But the problems are soved by building codes. Define the propoer wind speed the construction must survive. In the north sea for example you should be prepared for wave heights of 15-20m in some areas.

Be aware that as it seems the expected behaviour of buildings at high winds differ a bit between central europe and the US.
I have once seen a report about a test series how to construct houses to withstand hurricans in the US. They tested standard constructions and specially reinforrced constructions in a wind channel under realistic conditions. The results of the reinforcments have been impressive (positive).
At the same point I could see that all those reenforcement are already included in the german construction codes for _low_ wind areas. REquirements for high wind areas at the coast or in the mountains are somewhat higher here.
Which does not mean there are no damages due to storm here. But usually only old buildings are seriously affected, and you will not find whole settelments being blown away.
So define the wind speed which is expected once in a century as requirement for the offshore wind, and they will keep operating when the cities they should power are long since gone in the hurrican.

Helmut Frik's picture
Helmut Frik on Dec 7, 2016 9:42 am GMT

(For comparison: the maximum wind speed of Orkan Lothar was 272km/h above land, https://de.wikipedia.org/wiki/Orkan_Lothar, the maximum wind speed of Hurrican Katrina was 280 km/h to 344km/h (above sea))

Darius Bentvels's picture
Darius Bentvels on Dec 7, 2016 10:26 am GMT

It’s a cultural difference. E.g:
– Levees and flood walls are designed and maintained to break less than once in ~1000(?)years. Here the standard is less than once in 10,000years.

– In US people seem satisfied with a SAIDI*) figure which is 8 times worse than what we have here. While we count all outages, they exclude outages due to extreme weather. So the real difference is bigger.

____
*) SAIDI = total time electricity supply to the av. customer stopped during a year.

Helmut Frik's picture
Helmut Frik on Dec 7, 2016 10:53 am GMT

Sure it is. And knowing some people from the US and their abilities to calculate with money, I would not say that our way of doing things is always better. I could imagine that building cheaper and accept that rebuilding from time to time is neccesary saves some money at the bottom line.
But if the question comes to the point “is it possible to build that a hurrican will most likely not destroy the system”, it can be said that this is possible. Costs a little money, but not as much as Mark tries to suggest, because maximum wind speeds here are not that much lower. Typical dmage here are not houses blown away, but trees falling on houses, cars and people (hitting some target with higher frequency due to much higher population density)

Mark Heslep's picture
Mark Heslep on Dec 7, 2016 3:17 pm GMT

Europe does not experience *tropical* cyclones. Europe suffers extra-tropical cyclones. Katrina: maximum sustained (not gusts) winds of 175 mph (282 km/h), 9m storm surge, 17m wave height, up to 16 inches of rainfall, with rainfall sufficient to cause severe flooding from the Gulf Coast to Quebec, Canada.

Helmut Frik's picture
Helmut Frik on Dec 7, 2016 4:05 pm GMT

Yes, but the extra-tropical cyclones are not just mild breezes, causing the same wave heights and not so much less stong winds. When its stormy here it’s not just the mild breeze you want to tell us. Katrina slowed down a lot when reaching Land, while Lothar developed this speed completely over land.
So if you want to adopt the design from north sea to the gulf of Mexico, for a Hurrican like Katrina, the water forces would be the same, but the structure would need to be some percent stronger against wind forces.
If you are at the atlantic coast and want to withstand “just” a Hurrican like Sandy,with a wind speed of maximum 185km/h, the designs for the north sea propared mostly for windspeeds of 200km/h would already be correct. A up to date house at the german coast should not loose a single roof-tile at the wind speeds of Sandy. The same amout of rain would have caused severe probelms nevertheless.

Mark Heslep's picture
Mark Heslep on Dec 7, 2016 4:12 pm GMT

Mark Heslep's picture
Mark Heslep on Dec 7, 2016 4:14 pm GMT

Costs a little money, but not as much as Mark tries to suggest, because maximum wind speeds here are not that much lower…

The Block Island costs are not suggestions but a matter of record, $10 per Watt, perhaps $20 per average Watt for the only attempt made so far in US waters, in a near shore (3 miles) installation. The high cost is likely driven by the foundations (4 pole jackets), as they were indeed built sufficient to survive the worst possible storm (1000 year). The result however was a foundation of 1500 tons, 110 feet tall, piles driven 200 feet below sea floor. The BI foundations are more comparable to 10 story office building towed out to sea than the monopile designs used in the Baltic. On top, the GE turbines are more vulnerable, rated for a category 3 storm. The 73m blade tips could be in the wave tops of another category 5 Katrina.

Mark Heslep's picture
Mark Heslep on Dec 7, 2016 4:55 pm GMT

Here are the results for two consecutive hurricane seasons in the Gulf of Mexico on offshore oil and gas rigs, with mass in the tens of thousands of tons, cost to build starting in the hundreds of $millions.

…estimates from the Minerals Management Service suggest that the combined effect of hurricanes Ivan, Katrina and Rita brought about the destruction of 122 platforms, with extensive damage to another 72…

Ivan recorded peak wave heights of 30M

https://www.schiffundhafen.de/fileadmin/user_upload/Publikationen/ShipPo...

Helmut Frik's picture
Helmut Frik on Dec 7, 2016 5:05 pm GMT

That’s why I do not reference tha calm baltic sea but the rough North sea, You don’t fool around with ” de blanke Hans” .
They#ve increased monopile foundation size so they are also useful in Borsele, in water up to 120 foot deep.
Here for example up to 7m in Diameter with up to 150mm wall thickness and 1050t per monopile: http://www.4coffshore.com/windfarms/monopiles-support-structures-aid4.html, and the dimensions are still growing here in Europe, the monopiles for 8MW turbines will become accordingly bigger.

Helmut Frik's picture
Helmut Frik on Dec 8, 2016 6:07 am GMT

Where you see the differences in mentality. Design for wind power station in north sea is
– take the maximum wave height.
– add some meters, there you place the low platform and the watertight steel door.
– add some more meters (up to 10) and there you have the lowest level for the ip ot the rotor or any other sensible part.
MAybe that comes from the importance of coastal defens in the netherlands and the north of germany. There the country is at or below sea level for many many km. So people have learned there that coastal defense must stand. If it does not last any storm you’re doomed, there is nowhere to run, the water comes faster.

Darius Bentvels's picture
Darius Bentvels on Dec 8, 2016 11:34 am GMT

Mark,
The framework construction of the foundation in stead of a larger/wider monopile, make Block Island already excessive costly. Only novices make that type of mistakes.

GE onshore turbines are known to be far more vulnerable than Danish turbines. Furthermore GE has little offshore experience. All that adds to the costs.

So Block Island is n-times more expensive than e.g. Borssele. While Borssele is in deeper water (~30m) and farther offshore (~30km).

Mark Heslep's picture
Mark Heslep on Dec 8, 2016 9:54 pm GMT

Nonsense Bas. Predictable nonsense unfortunately. You’re no marine structural engineer. The company building the marine foundations has decades of experience in hurricane waters; you don’t. The GE turbines are offshore designs of course, designed by the French firm Alstom.

Mark Heslep's picture
Mark Heslep on Dec 8, 2016 10:09 pm GMT

I’m thinking shear, buckling loads, bending modes have something to do with structural design.

Look, the comparison of severe Euro low pressure systems to Atlantic tropical cyclones with a 1000 miles of fetch to build waves is silly. There’s published work on the likely failure rate of offshore turbines using typical designs in European waters in contact with a cyclone. Fifty percent failure in a category 3 storm. A large body of experience with massive marine structures in the Gulf of Mexico makes the finding unsurprising.

“Quantifying the hurricane risk to offshore wind turbines”, 2012, PNAS

Mark Heslep's picture
Mark Heslep on Dec 8, 2016 10:22 pm GMT

same wave heights

No, and with the cyclone storm surge especially not against fixed marine structures.

Waves nearly 100 feet tall were recorded last year in the Gulf of Mexico when Hurricane Ivan headed toward shore, forcing scientists to rethink what is normal.

http://www.livescience.com/364-hurricane-waves-soared-100-feet.html

and not so much less stong winds.

No. Sustained winds are much stronger, and force scales with V^2.

When its stormy here it’s not just the mild breeze you want to tell us.

Please dont put words in my mouth. What I and the literature will tell you is that tropical cyclones, fed by ocean heat, contain by far the most energy of any storm system.

Katrina slowed down a lot when reaching Land

*Offshore* turbines are the issue. Sandy was a tropical storm, not a hurricane, etc, etc. Be serious.

Helmut Frik's picture
Helmut Frik on Dec 8, 2016 10:27 pm GMT

Who is able to read has clear advanrages….
Printed there is “The U.S. Department of Energy has estimated that over 50 GW of offshore wind power will be required for the United States to generate 20% of its electricity from wind. Developers are actively planning offshore wind farms along the U.S. Atlantic and Gulf coasts and several leases have been signed for offshore sites. These planned projects are in areas that are sometimes struck by hurricanes. We present a method to estimate the catastrophe risk to offshore wind power using simulated hurricanes. Using this method, we estimate the fraction of offshore wind power simultaneously offline and the cumulative damage in a region. In Texas, the most vulnerable region we studied, 10% of offshore wind power could be offline simultaneously because of hurricane damage with a 100-year return period and 6% could be destroyed in any 10-year period. We also estimate the risks to single wind farms in four representative locations; we find the risks are significant but lower than those estimated in previously published results. Much of the hurricane risk to offshore wind turbines can be mitigated by designing turbines for higher maximum wind speeds, ensuring that turbine nacelles can turn quickly to track the wind direction even when grid power is lost, and building in areas with lower risk.”. What I wrote above is, that for the gulf of Mexico the turbines must be built some percent stronger for the higher windspeeds (to avoid the damages) Simple engineering task. . But 6% failure rate in 10 years is not 50%. (there is a article from 2013 with improved data as it seems…)

Mark Heslep's picture
Mark Heslep on Dec 8, 2016 10:49 pm GMT

the most vulnerable areas now being actively considered by developers, nearly half the turbines in a farm are likely to be destroyed in a 20-y period

Not interested in your opinion what you consider a “simple engineering task”, especially against the reality of the only example already built in the Atlantic, $20/average Watt.

Helmut Frik's picture
Helmut Frik on Dec 9, 2016 5:29 am GMT

Please start reading. We talk here about New York. Itz might surprise you that New York is not located at the gulf of Mexico.

Helmut Frik's picture
Helmut Frik on Dec 9, 2016 5:36 am GMT

I cited the newer text from 2012, you keep citing the older text from 2012. Semms some correction was neccesary for the older text.

Darius Bentvels's picture
Darius Bentvels on Dec 12, 2016 7:59 pm GMT

Price decreases for offshore wind go fast now.
The second Dutch 700MW offshore Borssele tender this year was won by a consortium lead by Shell. They install, operate and decommission the wind farm for €54.50/MWh during 15years, thereafter whole sale prices which are officially estimated to be €29/MWh in 2035.

An av. price for the 30yrs life period of the offshore wind farm of ~€42/MWh!

Compared with the €72.70/MWh price with which Dong won the first 700MW offshore Borssele tender this summer(July),
it’s a price decrease of ~20% within half a year!

Both offshore windfarms will utilize 8MW Vestas wind turbine.

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