Navigant Consulting has just published the first annual Offshore Wind Market and Economic Analysis. There is some great stuff in the report. The analysis also provides a clear picture of how pathetic the current situation is in the US, but it also shows the tremendous potential of offshore wind development to rejuvenate East Coast manufacturing. I have not read the entire report from cover to cover, but the Executive Summary is an excellent overview.
First, the pathetic:
The U.S. offshore wind industry is slowly transitioning from early development to demonstration of commercial viability. While there are no projects in operation or even in the construction phase, there are nine U.S. projects in advanced development, defined as having either having been awarded a lease, conducted baseline or geophysical studies, or obtained a power purchase agreement. There are panels or task forces in place in at least 13 states to engage stakeholders to identify constraints and sites for offshore wind. U.S. policymakers are beginning to follow the examples in Europe that have proven success in stimulating offshore wind technological advancement, project deployment, and job creation.
There are approximately four gigawatts (GW) of offshore wind installations worldwide. Nearly all of this activity has centered on northwestern Europe, which has led the industry’s development since 1999, but China is gaining market position. Europe has seen 3 GW of offshore capacity additions over the past five years (2007-2011), and the rate of annual installations has grown from 225 MW installed in 2007 to nearly 1,258 MW installed in 2010.1 The emerging Asian offshore market has also gained ground in recent years, with China adding 107.9 MW in 2011, bringing its cumulative installed capacity to more than 200 MW. Various forecasts have predicted between 55 and 75 GW of cumulative offshore wind capacity by 2020.
Thirty-three announced offshore wind projects lay in varying stages of development in the U.S., primarily along the Atlantic Coast. Nine of these projects have reached what this report considers an advanced stage of development.
To sum up: zero watts installed capacity for offshore wind in the US, 4 gigawatts installed capacity in the rest of the world, mainly northern Europe and China. Projections show that this worldwide capacity will grow more than 10 times in the next 8 years. Pathetic. At least we can say that there is nowhere to go but up from zero.
For a single hypothetical wind farm:
The Offshore JEDI model shows that a 500 MW reference wind plant could support approximately 3,000 job-years over the construction period and drive $584 million in local spending over the same period. During operation, the plant (and the resulting local impacts) could support 313 jobs each year in the local economy and $21 million per year in local spending. These numbers are strongly dependent upon the percentage of local assumptions and would increase by three to fourfold if all components and services were sourced from the region.
In the high-growth scenario, the U.S. offshore wind industry could drive $70 billion (in 2011 dollars) per year by 2030 but in the low-growth scenario it could be ~$10 billion. Given the supply chains and industry dynamics of the offshore wind industry, most of the economic activity is in indirect and induced industries. These results are strongly dependent on the domestic sourcing assumptions. For the North Atlantic region alone over the same time period, construction and operation of offshore wind plants in the region could drive $14 billion per year in the high-growth case and $3.5 billion per year in the low-growth case. These results are strongly dependent on the local sourcing assumptions. If more components and services were sourced locally, the numbers could increase by three to fourfold.
So, once again, the US is faced with a choice. Do we just keep importing electronic crap from China and cling to an obsolete electricity system to pump power into our iphones? Or do we built something real that puts people to work and builds a strong infrastructure for our grandchildren’s future?
Failed longshoremen’s local business manager Frank Sabotka said it best at the end of season two of David Simon’s The Wire: “You know what the trouble is, Brucey? We used to make shit in this country, build shit. Now we just put our hand in the next guy’s pocket.”
Manufacturing and shipbuilding in Sabotka’s city, Baltimore, could be completely rejuvenated by offshore wind development. If the US has the guts to do it. We’ll see.