Although the U.S. currently does not have any offshore wind farms in operation, the industry seems to have overleapt the hurdles previously plaguing it -- preventing it from deploying the first turbines in coastal waters. This past week has seen further developments in the ongoing journey toward realizing the nation's offshore wind power potential.
Off the Cape
Developed by Energy Management, Cape Wind may very well be the nation's first commercial-scale offshore wind-powered facility. The proposed 468 MW wind farm is planned to be situated in Nantucket Sound off of the Cape Cod coast, and it recently took a large step closer toward beginning construction. This week, the Energy Department announced a conditional commitment of a $150 million loan guarantee toward construction of the offshore project which would provide the majority of electricity needed by Cape Cod, Martha's Vineyard, and Nantucket. Touting the announcement and suggesting that it may be a harbinger of further advances in the offshore wind market, Energy Secretary, Ernest Moniz, said, "The Department's loan guarantees have assisted the launch of new industries in the U.S., and today's announcement of a conditional commitment to the Cape Wind project demonstrates our intent to help build a strong U.S. offshore wind industry." Siemens AG (NASDAQOTH:SIEGY) will be supplying the facility with 130 of its 3.6 MW turbines.
This announcement is the latest example of the government's commitment to develop the nation's offshore wind resources as detailed in The National Offshore Wind Strategy -- an initiative which has targeted the deployment of 54 GW of offshore wind capacity by 2030. Should Cape Wind realize all 468 MW of planned capacity, the project would represent about 9% progress toward the 54 GW target.
Looking to steal the spotlight from Massachusetts, Maryland drew attention this week regarding its interest in developing its offshore wind potential. The state will be holding a commercial lease auction in mid-August for nearly 80,000 acres located about 10 miles off the coast of Ocean City. According to the National Renewable Energy Laboratory, or NREL, the site, if fully developed, could represent between 850 MW to 1,450 MW of commercial wind capacity. In addition to Cape Wind developer, Energy Management, 15 other companies have expressed interest in participating in the sale.
This follows a June announcement from the Bureau of Ocean Energy Management that a 742,000 acre site, located on Massachusetts' outer continental shelf, would be divided into four separate leases and auctioned off by the end of the year. Although full development of the site would be challenging due to the 50 meter average depth, according to the NREL, the location could represent between 4 GW to 5 GW of wind power capacity. One possible solution for the challenges posed by a deepwater site is a floating wind turbine.
This has been demonstrated off the Portuguese coast by Principle Power with the use of a 2 MW Vestas (NASDAQOTH:VWDRY) turbine. Following success deployment of the project in 2012, the WindFloat design will be used in a 27 MW array to be situated off of the Portugal coast. In addition, a 30 MW project is planned off the Oregon coast.
The Foolish conclusion
Despite any operational projects, the U.S. government, along with numerous companies, states, and utilities, is working hard to develop offshore wind resources. Wind turbine manufacturers like Siemens and Vestas are global leaders and are well-positioned to profit from advances in the American wind market.
Scott Levine has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.