This year or next, wind farms will overtake hydroelectric dams as the top renewable energy source in the United States, providing roughly 7% of the country's total electricity demand from an installed base of over 90,000 megawatts. And almost all the turbines will be located on land, with offshore projects kicking in a paltry 30 megawatts, or 0.033%, of that total. 

While offshore wind power in the United States is not very impressive today, there are signs that the sleepy industry may finally be waking up. According to the U.S. Department of Energy, the country currently boasts a pipeline containing 28 commercial offshore projects with a combined capacity of 23,735 megawatts.

Not every project will become a reality, and those that do may not come on line until the mid-2020s. But investors may want to begin preparing for this renewable energy opportunity. Here are three of the early movers and top stocks in offshore wind power.

Offshore wind turbines at dawn.

Image source: Getty Images.

First in flight, or close enough

Just off the coast of Kitty Hawk, North Carolina, where the Wright brothers made their pioneering flight, the renewable energy subsidiary of Avangrid (NYSE:AGR) is planning a 1,500-megawatt project on a 122,000-acre site. 

It's still in the earliest stages of development, but the company is keen to be a first mover in the American offshore wind industry. On the fourth-quarter 2017 earnings conference call, CEO Laura Beane told shareholders, "whoever gets started first is likely going to be the foundation, or one of the primary foundations, for the U.S. offshore industry." Not wanting to waste any time, Avangrid is actively engaged in securing the development rights to other plots in the Atlantic Ocean. 

The Kitty Hawk project isn't expected to begin construction until after 2020 (perhaps a good thing for shareholders, considering that the cost of offshore wind power is falling rapidly each year). But the company is still one of the largest owners of renewable energy assets in the United States, with 6,000 megawatts of total installed onshore wind and solar spread across 22 states. 

Avangrid has used low-cost renewable energy to its advantage, rewarding investors with three-year total returns of 51% (beating the S&P 500) and sporting a 3.5% dividend yield. While 81.5% of common shares are owned by Spanish utility Iberdrola, the stock's relatively low float hasn't been an obstacle to individual investors. This could be an under-the-radar renewable energy stock worth a closer look.

An offshore wind farm.

Image source: Getty Images.

Empire state of mind

Equinor (NYSE:EQNR), formerly known as Statoil, is also sizing up America's incredible potential in offshore wind power. The company thinks it can leverage its expertise from decades of offshore oil and gas operations in the rough waters of the North Sea to tackle some of the biggest challenges in offshore wind. Such as, you know, how exactly does a company go about erecting hundreds of wind turbines, each hundreds of meters tall, in a field that's 10 to 20 miles away from the closest land?

The oil major thinks it can supply the global industry with much-needed answers. While it has used waters closer to its European home as a test bed of sorts, Equinor is also in the early stages of planning a 1,500-megawatt wind farm in a 79,000-acre plot off the coast of Long Island, New York. Construction for the Empire Wind project is expected to begin in 2023 and wrap up in 2025, although delays are always possible for an industry still trying to establish itself.  

If Equinor succeeds with the Empire Wind project and other projects in Europe, then it should be well positioned to drive global growth for the offshore wind industry, which boasted just 19,000 megawatts of installed capacity at the end of last year. That was well behind the nearly 500,000 megawatts of wind capacity on land. So, securing a leadership position in the offshore industry would no doubt accelerate the company's move away from its legacy operations in fossil fuels. 

A view looking up at a wind turbine.

Image source: Getty Images.

Tapping the mid-Atlantic for renewable energy growth

Navigating the sweeping changes underway in American energy has not been easy for Dominion Energy (NYSE:D). The company's geographic locations just below the Mason-Dixon Line and in coal-friendly states out West mean it has historically relied on coal-fired power plants for power generation, while also slightly handicapping operations with relatively poor wind and solar potential. That has made it more difficult to retire aging assets, power up cleaner assets, and invest in energy efficiency projects (where it ranks pretty poorly).

But Dominion is keen to become a leader in renewable energy, and it sees offshore wind power as a crucial part of its long-term viability. In early August, Dominion Energy took the first step to begin the lengthy development process for what could be a massive offshore wind farm. Initially, the company will install just 12 megawatts of wind-power capacity off the coast of Virginia, which it will use to study a larger, adjacent 112,000-acre plot it owns the development rights to.

If the economics work out, then the site could one day support 2,000 megawatts of offshore wind power. The company appears to be taking the opportunity very seriously. Dominion Energy tapped the planet's leading offshore wind developer, the Danish company Orsted, to build the first leg of the project. The partnership, combined with the power generator's commitment to have 3,000 megawatts of new wind and solar in development or operating in the State of Virginia by 2022, hints that it will become a leading offshore wind developer in the next decade. 

A hand being held out with various clean energy icons hovering over it.

Image source: Getty Images.

Can this industry finally get off the ground?

Despite the slow start, the United States has the best offshore wind potential of any country in the world thanks to the Atlantic Ocean, Pacific Ocean, Gulf of Mexico, a handful of Great Lakes, and the coastal waters of Alaska (which boast more technical offshore wind potential than all other states combined). As the country's current pipeline of projects demonstrates, there's a renewed excitement domestically for the future of the industry.

While there are still obstacles, like economics and construction difficulty, the early days of wind power on land were accompanied by a similar laundry list of hurdles. Today it's the cheapest source of electricity in the United States. Some of the early movers in onshore wind have also been some of the best stocks to own in the last decade (including NextEra Energy and Xcel Energy). So investors might want to begin paying attention to the awesome potential of offshore wind power.

Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.