Mar 15, 2019

Why U.S. offshore wind is finally going big

Illustration: Lazaro Gamio/Axios

HOUSTON — Power from offshore wind is finally poised for liftoff in the U.S.

Why it matters: The U.S. has long been a laggard, but that's poised to change thanks to a convergence of forces that analysts see bringing enough coastal wind online over the next decade to power millions of homes.

What's happening: A huge energy conference here in the nation's oil-and-gas capital offers a window into what's prompting giant energy companies to plan multibillion dollar investments. It's a story of...

  • Atlantic Coast states moving ahead with zero-emissions power procurement policies.
  • Oil-and-gas majors expanding their low-carbon power portfolios.
  • Technology evolution and falling costs.
  • The Trump administration supporting the development even as it abandons Obama-era climate programs.

What they're saying: "The missing piece for some time was actually an interest from the states up along the coast to acquire this power from this industry," says Christer af Geijerstam, who heads U.S. wind efforts for the oil-and-gas giant Equinor.

  • "That's where we have seen the significant shift the last 2–3 years being led by New York and Massachusetts," he tells Axios while at the big CERAWeek by IHS Markit conference.

ICYMI: In December, Equinor was among the winning bidders in a federal auction of development sites that are off the Massachusetts coast.

  • This adds to another site in federal waters off New York that it had acquired in 2016.
  • They paid $135 million for the Massachusetts site in the Interior Department auction that brought in a record-shattering $405 million.
  • I asked if Equinor would bid in federal lease auctions in the planning stages off New York and California. He said yes and offered no caveats.

The big picture: IHS Markit's current forecast sees 7 gigawatts of offshore wind coming online in the U.S. by 2030, up from almost nothing today. But that estimate could rise.

  • "We will be looking carefully at what the outcome of solicitations in Massachusetts and New Jersey and New York is going to be," IHS associate director Max Cohen says.
  • Bloomberg NEF already projects 11.4 gigawatts of capacity by 2030. They've upped their estimate thanks to a combination of specific solicitations and long-term targets by state governments in Virginia, New Jersey and elsewhere.

Where it stands: Equinor is among several deep-pocketed companies in the space planning projects. Here are some other players...

  • Danish wind giant Orsted bought the U.S. firm Deepwater Wind last year.
  • A joint venture between Shell and EDP also had a winning bid in the recent Massachusetts sale. "The U.S. has a magnificent wind resource right next to a large population and highly densely populated areas," Enrique Alvarez Uria of EDP Renewables said at a panel here yesterday. He estimated EDP's effort with Shell could be a $4 billion to $6 billion capital investment.
  • Vineyard Wind, which is co-owned by Copenhagen Infrastructure Partners and Iberdrola's Avangrid Renewables, snapped up a lease that adds to their plans for a separate project in the region.

What we're hearing: One real but hard to quantify factor is the role shareholder pressure plays in the moves by oil majors to diversify into renewables.

  • “The changing ESG [environmental, social and governance] landscape is really going to move capital,” Jonathon Kaufman, the co-head of the power and renewables group at Credit Suisse, said at a separate panel discussion yesterday.
  • Kaufman tells me that for oil majors, the growing moves into renewables require a balance between competing goals, particularly when fossil fuel projects deliver higher margins.
  • "There's this tension between putting money into something that's much lower returns, but also evolving their business mix," he adds.

The intrigue: Offshore wind has long been a big thing in Europe. But one irony of the U.S. delay in entering this sector is the upside of being a late mover — lower costs.

  • "The U.S. came late to the show, but they’re certainly sort of reaping the technology benefits from Europe," af Geijerstam said, noting the projects here start "really, really low on the cost trajectory."

Go deeper

Acting Navy head apologizes for calling fired captain "stupid"

Acting Secretary of the Navy Thomas Modly testifies on Capitol Hill in December. Photo: Saul Loeb/AFP via Getty Images

Acting Navy Secretary Thomas Modly apologized Monday for calling Capt. Brett Crozier, the ousted commander of the USS Theodore Roosevelt, "too naive or too stupid" over his letter pleading for help following a coronavirus outbreak onboard.

The big picture: His apology came after President Trump told a news briefing earlier Monday he would "get involved" following a leak of Modly's remarks to the ship's crew on Crozier, who has since been diagnosed with coronavirus, which were obtained by CNN.

Go deeperArrowUpdated 18 mins ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 9:30 p.m. ET: 1,346,299 — Total deaths: 74,679 — Total recoveries: 276,636Map.
  2. U.S.: Total confirmed cases as of 9:30 p.m. ET: 367,507— Total deaths: 10,908 — Total recoveries: 19,598Map.
  3. 2020 update: Wisconsin Supreme Court blocks governor's attempt to delay in-person primary voting delayed until June.
  4. States latest: West Coast states send ventilators to New York and other states with more immediate need — Data suggest coronavirus curve may be flattening in New York, Gov. Andrew Cuomo said.
  5. World update: U.K. Prime Minister Boris Johnson moved to intensive care as coronavirus symptoms worsen.
  6. Stocks latest: The S&P 500 closed up 7% on Monday, while the Dow rose more than 1,500 points.
  7. What should I do? Pets, moving and personal health. Answers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk.
  8. Other resources: CDC on how to avoid the virus, what to do if you get it.

Subscribe to Mike Allen's Axios AM to follow our coronavirus coverage each morning from your inbox.

Former Vatican treasurer George Pell's sexual abuse convictions overturned

Cardinal George Pell at the County Court in Melbourne, Australia, in 2019. Photo: Michael Dodge/Getty Images

George Pell, the former Vatican treasurer, has won his appeal and had his child sexual abuse convictions overturned by Australia's High Court.

Why it matters: The cardinal became last year the highest-ranking Catholic Church official to go to trial and be convicted for sex abuse. But the High Court's ruling means he can be immediately released from prison, where he was serving a six-year sentence.

Go deeperArrowUpdated 1 hour ago - World