1 Energy Powerful Enough to Electrify our Nation – Four Times Over

The future of U.S. energy is offshore – and we're not talking oil. The government is doling out massive leases for cheap offshore wind projects, and Dominion (NYSE: D  ) grabbed its own piece of the pie earlier this week. With a new player in the mix, let's see what offshore wind has in store.

Offshore wind 101
Offshore wind made its debut off the coast of Denmark in 1991 and has since spread worldwide. Most projects are located in shallow waters off the coast of Europe, but the U.S. is eyeing offshore wind as a potential player in the search for greener domestic energy sources.

Source: BOEM.gov 

With 53% of our population on coastlines, offshore wind could bring major power to the people . Offshore offers stronger and more consistent winds , and a 2012 report estimates offshore capacity at 4,223,000 MW – that's four times our total current generation .

Where wind stands now
To say offshore wind is in its infancy would be an understatement. The U.S. has yet to complete a single offshore wind project, and worldwide there are just 50 farms totaling 4,450 MW of capacity . But that same amount again is under construction, and over 30,000 MW have been given regulatory go-aheads around the globe . With the right support, infant industries can grow fast.

In the U.S., first place will likely go to privately held Cape Wind Associates. The company plans to start construction later this year, plopping 130 turbines totaling 468 MW of capacity off the Massachusetts coast . According to Cape Wind, the project should be fully operational by 2015 .

Dominion's purchase this past week isn't a game changer, but it does set the power company up for potential projects. The $1.6 million lease is a drop in the bucket for an estimated 2,000 MW of capacity 27 miles off the coast of Virginia . With a $4 million matching grant to push R&D ahead, Dominion expects to install its first turbine in 10 years. While that might seem like a long time to wait, Dominion's late entry into the offshore wind world gives it more staying power than NRG Energy (NYSE: NRG  ) seems to have sustained.

Treading in murky water
In November 2012, BOEM leased 96,000 acres off the coast of Delaware to Bluewater Wind Delaware LLC, a subsidiary of NRG Energy . A lease is far from a fully franked wind farm, and the future of this project remains unclear. Despite a regulatory process dating back to 2009 , NRG's website states that the "active development of its offshore wind options" has been on hold since January 2012 , and a December 2011 release put wind energy on hold as federal loan guarantees disappeared . NRG had also expected wind production tax credits to get the ax in 2012 , but they've been extended through at least 2013 .

Diversity while you wait
With no one sure when and where offshore wind will permanently pop up, an investment in turbine manufacturer General Electric (NYSE: GE  ) may be the smartest move today. While the company is far from a pure play on offshore wind, its Power & Water division (which includes wind) accounted for 19 % of 2012 revenue. Wind sales even got a specific shout-out in the company's latest annual report as sales increased 10% last year . The company already has a 4.1 MW turbine on the market "specifically designed for the offshore environment" with lower operating costs and reliable slow speed components .

Source: General Electric, Offshore Model 

Is the answer blowing in the wind?
Offshore wind power may be a long way off – but its potential is here today, and prices are dirt cheap. With a lease in the bag, Dominion's long-term vision could pay off in the years to come. The speed and scale at which offshore wind becomes viable will depend largely on government loans and tax credits. But if our nation takes its search for a cleaner, more independent energy source seriously, offshore wind should continue to see support in the years to come.

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Read/Post Comments (14) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 08, 2013, at 11:47 AM, Kngrthr wrote:

    It should be solar but the government and powers that be can not control that, once the technology was released, anybody could have it, a lot easier than installing a wind turbine.

  • Report this Comment On September 08, 2013, at 12:30 PM, phillipzx3 wrote:

    Let's not forget the HUGE amount of electricity that could be generated via geothermal. I recall Google funding a study that showed much more than a "4 times over" capability.

    Wind, Solar and Geothermal is the intelligent way. Coal, natural gas and nuclear are for the ignorant.

  • Report this Comment On September 08, 2013, at 12:39 PM, phillipzx3 wrote:

    "It should be solar but the government and powers that be..."

    The "problem" with solar is once you've installed your system, (unlike coal or natural gas) you're no longer a customer for 10..15...maybe 20 years or more.

    Wind turbines in the correct locations, can generate huge amounts of power. In Washington State, Wind is the second largest generator of power. Hydroelectric is still king (~90% of our power is from hydro, then wind). Last place is natural gas and our one remaining nuke plant.

    Coal is dead in Oregon, Washington and more or less (at less than 2%), in California.

  • Report this Comment On September 08, 2013, at 1:20 PM, RobP1965 wrote:

    Wind power off shore? Transmission will be sketchy at best but whatever. Seems like everyone is aching to be in the dark so, so be it.Okay, now get past NIMBY attitude every American has.

  • Report this Comment On September 08, 2013, at 1:33 PM, delm31 wrote:

    Don't give up on nuclear, or even fossil fuels. They produce a lot of energy. We also have wind, solar, hydroelectric, geothermal, hydrogen fuel cells, and hydrogen fusion (star) power to consider. An open mind beats a politically correct one.

  • Report this Comment On September 08, 2013, at 3:18 PM, vet212 wrote:

    It is pure foolishness to put ALL your eggs in one basket we also must use nuclear power as well and we can no longern allow rivers to be undammed as hydro electric power is also nonpolluting more so than solar or wind as both of those have a need for storage batteries and that means heavy metals

  • Report this Comment On September 08, 2013, at 3:42 PM, rlp2451 wrote:

    I just hope all these East Coast off shore wind farms can stand 200+MPH winds when we get the next Andrew or Katrina barreling inland.

  • Report this Comment On September 08, 2013, at 5:09 PM, vapor1trail wrote:

    The problem is they are extremely high maintenance due to salty air. Besides, the froggies liberals won't like their seagulls getting battered around and it might block a slither of their sunlight.

  • Report this Comment On September 08, 2013, at 5:40 PM, rcmansid wrote:

    I want to copy the Propeller design GE has done on their wind turbines for my rubber powered model airplanes. Those have to be the most efficient ever built.

  • Report this Comment On September 08, 2013, at 5:43 PM, rcmansid wrote:

    Tidal and wave action is another efficient way to recover earth's energy. Sadly little attention has been paid to that. I guess the environmentalists have struck again with their tiny focused brains.

  • Report this Comment On September 08, 2013, at 6:01 PM, randydevinney wrote:

    With offshore wind power we will have an abundance of electricity. When the wind is blowing. For storage we could use lithium ion cells. Except that the planet is running out of lithium. Maybe big springs?

  • Report this Comment On September 08, 2013, at 8:07 PM, cwclothier wrote:

    What they ought to do is design a wind turbine plus a water turbine, then take advantage of both the Gulf Stream and constant sea breezes.

  • Report this Comment On September 09, 2013, at 3:10 AM, garyrich2000 wrote:

    The key with offshore turbines is to establish a robust supply chain focused on building floating windmills with high resale value (long lasting parts to reduce overhead costs).

    For parts which don't last long, these items need to be designed for quick swapping and redundant systems to buy time for swapping when the wind is at a minimum.

    Despite higher O&M costs the amount of good paying jobs per GWhr can make up for lost permanent petrochemical jobs that no one realizes will impact us in a big way.

    Some argue that there are other energy sources which are dirt cheap or promise to free you from the grid but I see this as a Red Herring which distracts the evolution of technologies replacing the need for human labor.

    What's in your wallet?

  • Report this Comment On September 09, 2013, at 9:11 AM, pixelpusher220 wrote:

    Batteries do not require heavy metals. Just a gas storage tank. Use power to electrolyze(sp?) water into hydrogen and store that.

    Instant portable fuel source that's no worse than gasoline.

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