We need more, not less, competition for offshore wind

With ranks of competitors shrinking, government must intervene

THE OFFSHORE WIND ERA in the United States is here. With no need to burn fossil fuel, to enrich uranium, to dam rivers, or to build thousands of acres of solar panels, offshore wind is the most benign form of bulk power available to mankind.

Plans to seize the potential of offshore wind already have powerful momentum on the East Coast. Between Massachusetts, New York, and New Jersey alone, more than 8,000 megawatts of wind power is envisioned. Building out 1,000 megawatts entails up to $5 billion of capital investment, drawing the attention of developers far and wide. So far, European companies — mostly giant, state-spawned enterprises with deep experience in the offshore — have been quickest to recognize this enormous investment opportunity. This week the Danish firm Ørsted bought the only remaining independent US company with offshore wind positions, Deepwater.

Ørsted’s acquisition of Deepwater naturally diminishes the amount of competition for offshore wind contracts. Policy-makers in Massachusetts should immediately take two actions: first, Gov. Charlie Baker should ask the US Bureau of Ocean Energy Management to increase the number of planned offshore wind lease areas from two to three. Another lease area would assure that the loss of Deepwater as a competitive entrant will be offset by the emergence of a new lease owner off the coast of Massachusetts.

Second, the Massachusetts Department of Energy Resources should even more strongly promote an ocean grid that serves as a platform for multiple offshore wind developers. The first request for proposals that have solicited offshore power did not stipulate anything about the transmission that will take it to market. Naturally, extremely large and competent offshore wind generators dearly wish to own both the wind farms and the conduit to land and have advanced arguments to the effect that, they, and they alone, can get the job done right.

But letting each generator plan and build and own major transmission lines to shore is akin to letting Walmart plan and build and own the interstate that leads to its stores using its customers money. Bundling generation and transmission limits bidders to the few that have the capacity to do both. Limiting the offshore opportunities to only a few competitors is never good for those paying the bills.

As the Northeastern states so far have designed their procurements, the offshore transmission system is entirely in the hands of one or two offshore generators. Companies focused only on offshore transmission are not allowed to participate. The wind developers and their political and environmental supporters are raring to push forward. It’s understandable enough, but we risk selling ourselves short.

The solution, in this case, is to develop the offshore with the absolute fewest transmission cables in the seabed while creating a plug-and-play opportunity for wind developers. It is much wiser to develop an intelligent ocean grid that minimizes the number of transmission cables (and the attendant siting controversies) and maximizes the competition between large and small developers who seek to develop offshore wind.

Meet the Author
Let’s plan for the future of offshore wind with the best possible transmission infrastructure. With that, a remarkable new source of energy is ready to be harvested responsibly and efficiently.

Ed Krapels is the president and CEO of Anbaric Development Partners, an energy transmission company.