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Block Island Wind Farm simulated view from Southeast Lighthouse on Block Island. Source: Deepwater Wind

Mired in the quicksands of politics and litigation, offshore wind energy has experienced its share of ups and (mostly) downs. Now, seven years after Deepwater Wind first proposed the project, construction is under way in the waters off of Block Island, Rhode Island. Though prevalent across Europe, turbines are absent off of U.S. shores. That is about to change, and when it does, GE (NYSE:GE) will be a major force behind it.

The farm
Scheduled to be operational in 2016, the Block Island Wind Farm is a 30 MW project that is expected to meet at least 90% of Block Island's electricity needs. Deepwater Wind's power purchase agreement, or PPA, with utility National Grid (NYSE:NGG) will result in the sale of electricity for $0.244 per kilowatt-hour during the first year the project is operational. The PPA is the only extant one of its kind; National Grid had previously signed a PPA for the Cape Wind project in Nantucket Sound but the project is facing significant headwinds and is unlikely to be finished. 

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Alstom's Haliade offshore wind turbine         Source: Alstom

Although the wind farm will use five of Alstom's turbines, GE has a vested interest in the project. GE is currently involved in the acquisition of Alstom's thermal power, renewable energy, and electricity grid businesses. Awaiting approval from the European Union, the acquisition is expected to be finalized soon, according to sources close to the deal.

Power partners
According to the terms of the deal, GE and Alstom will form a 50/50 joint venture in which offshore wind will be a part; onshore wind will remain completely under GE's control. Both companies have lacked a significant presence in the more mature European offshore wind market. At the end of 2014, Alstom accounted for only 0.1% of installed capacity; GE accounted for 0.4%. Neither GE nor Alstom accounted for any of the 584 offshore wind turbines connected to the European power grid during the first six months of 2015. But, that's not to say that Alstom has completely written off the market. In July, the company signed a supply agreement for 66 of its Haliade turbines for a German offshore wind farm to be located in the North Sea. Construction is expected to begin in 2016.  

The windy forecast
Although wind turbines aren't dotting the horizons off of U.S. beaches today, they may be visible in the future. According to the Department of Energy, there are more than 4,000 GW of offshore wind potential -- that's more than four times the nation's annual electricity production. And with the release of President Obama's Clean Power Plan, there is renewed interest in both onshore and offshore wind energy, presenting GE with ample opportunity to gain a presence in coastal waters. 

In addition to National Grid, other utilities are expressing interest in wetting their feet in offshore wind projects. Dominion Virginia Power, a subsidiary of Dominion Resources (NYSE:D) for example is looking to make one of these projects a reality. Located 27 miles off of the Virginia shore, the farm is expected to use two of Alstom's offshore wind turbines. Further demonstrating interest, Dominion bid $1.6 million and won an auction run by the Bureau of Ocean Management. The utility now has the rights to 112,800 acres of federal land off the Virginia shore. Dominion believes the site is large enough to develop an offshore wind farm capable of generating 2,000 MW of electricity -- enough to power 500,000 homes. Dominion has a goal of achieving 15% renewable power by 2025 in Virginia. Having already chosen to partner with Alstom, Dominion represents a likely choice with whom GE can partner in the future. 

Threatening winds
GE's attempt to capture a share of this burgeoning market won't go uncontested. One of the company's most formidable competitors in the wind market is Siemens AG (NASDAQOTH:SIEGY). The German industrial conglomerate has a significant presence in both onshore and offshore markets throughout the world. According to Navigant Research, Siemens ranked as the second largest wind turbine supplier in the world, though it did capture the No. 1 spot in the European offshore wind market, with 65.2% of total installed capacity. GE's competitive advantage is demonstrated in the domestic market where it came in first, accounting for 60% of the market in 2014; Siemens accounted for only 26%. Perhaps this will translate to the offshore market.

Foolish final words
Whereas the first offshore wind farm, located in Denmark, began operations in 1991, it has taken nearly 25 years for the United States to begin construction on its first offshore wind farm. It has taken a long time for the U.S. to catch up, but Alstom and GE are making it happen. GE already has a dominating presence in the U.S. onshore market, and, through its acquisition of Alstom, stands to prosper from the offshore market should it take off. 

It's a nascent industry which is sure to experience volatility. Uncertainty regarding tax credits and other financial incentives have led many investors to avoid this renewable energy market, but the current landscape is much more encouraging than what it was just a few years ago. This is certainly not a story one should just breeze past.

Scott Levine has no position in any stocks mentioned. The Motley Fool recommends Dominion Resources and National Grid. The Motley Fool owns shares of General Electric Company. 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.