Offshore wind farms gaining traction in NA and Europe

by Jeff Siegel, Energy & Capital

Those on the right are blasting it as a treehugging boondoggle. Those on the left are praising it as an opportunity to diversify the state's energy portfolio. And those looking to profit yet again from the transition of our global energy economy are sniffing out the money trails.

The latter is where we'll focus our energy today.


Waiting on the Free State

Earlier this year, Maryland Governor Martin O'Malley reintroduced offshore wind legislation that would've ultimately led to the construction of more than 80 turbines off the coast of Ocean City.

A couple of weeks ago, it passed the House. But stiff opposition kept it from coming to a vote before the Senate Finance committee.

Those who opposed the bill were unhappy with the proposal that called for ratepayers to pony up an additional $1.50 a month to help pay for the wind farm. That fee would've been tacked on once the farm went online – which would've been around 2017.

However, most surveys have found that more than half of Maryland ratepayers actually support the plan – even with the $1.50 monthly fee. The most recent survey showed 62% of those polled back the legislation. And I suspect that despite some angry message board posts and a handful of fear-based political ads, support for offshore wind in Maryland will not go gently into that good night.

Although this will take time, I have little doubt that within the next few years, an offshore wind bill will finally get approved. And when that happens, I definitely look forward to finding out which turbine and transmission companies will land the big deals.

My money's on ABB (NYSE: ABB), Siemens (NYSE: SI) and Gamesa (PINK SHEETS: GCTAF), which last year launched the Offshore Wind Technology Center in Chesapeake, VA with Northrop Grumman (NYSE: NOC). Northrop's looking for a piece of the offshore wind business as it could offer a big boost for the company's ship building arm.

Of course, Maryland's eventual expansion into the offshore wind space will still only represent a very small portion of the overall offshore wind market.

But about 3,600 miles to the east, it's a completely different story.

European Windstorm

According to Pike Research, offshore wind growth is expected to soar over the next five years. In fact, the firm has suggested offshore wind power production will reach $104 billion in revenues by 2017. This is a 53% annual growth rate based on 2011 revenue numbers.

Much of this growth – about 75% – will come from Europe.


In the UK, offshore wind energy development is strong. A recent government report actually shows that offshore wind could account for as much as 50% of the total electricity in the United Kingdom by 2050.

Denmark currently has about 4,000 megawatts of wind power capacity installed (which covers about 20% of the nation's electricity needs), and a few weeks ago approved an additional 1,000 megawatts of offshore wind that's expected to be online by 2020.

Germany actually has plans to have 10,000 megawatts of offshore wind sending juice to its grid by 2020, and 25,000 megawatts by 2030. This is massive, and to put that in perspective, Maryland's looking to add – at most – 500 megawatts.

Now if you're a regular reader of these pages, you know that Germany's in the process of transitioning to a nuclear-free energy mix, of which 80% would come from renewable sources by 2050. This is truly an aggressive goal that, if met, could singlehandedly alter the face of renewable energy investment in the future.

Certainly Germany accomplished this once already by turning the once-niche-based solar industry into a multi-billion-dollar powerhouse.

I wouldn't bet against Germany falling short on its goals.

France also recently dipped its toes into these waters.

Last week, government officials in France finally decided which companies would be selected to build 3,000 megawatts of offshore wind. State-owned EDF, in partnership with Alstom (PINK SHEETS: AOMFF) won most of the deals with Iberdrola (PINK SHEETS: IBDRY) of Spain picking up a fourth deal.

Interestingly, this news came about a month after the Court of Auditors in France published a report that revealed the cost of producing nuclear energy is set to surge as old plants need updating and new safety standards will be put in place. The court suggested that nuclear will require significant investment in the short- and medium-term at a rate of at least double the current level of investment.

Ontario green energy producers facing reviews, price cuts for new projects

By John Spears, Toronto Star

Solar power producers are bracing for price cuts of up to 25 per cent as Ontario reviews its renewable energy policies, according to industry insiders.

Energy Minister Chris Bentley says the review will formally be released next week.

“We’re all expecting to take a haircut,” said one solar developer – although the new prices will apply only to developments going forward, not contracts already signed.

At the same time, Premier Dalton McGuinty has already signaled to rural municipalities that he’ll give them some say in where controversial wind farms place their turbines.

The Liberals were devastated in rural ridings where wind was an issue – in part because the Green Energy Act tied the hands of local councils in dealing with wind developers.

“Legally, they have to come to the table. But they don’t need to listen,” said Mayor Bill Hill of Melancthon Township, which is dealing with several wind developments. “That isn’t fair.”

The impact of renewable power on Ontario’s power system is often exaggerated: Renewable sources other than water provided only 3.4 per cent of Ontario’s power last year; that’s expected to grow to 13 per cent by 2030.

But the prices paid for renewable power have become a political lightning rod for the Liberals.

The government had promised to review prices under its feed-in tariff (FIT) program for renewable energy when it was introduced in 2009.

Solar prices – which vary considerably depending on the size of the array, and whether they’re mounted on rooftops or at ground level – will take the biggest hit.

For example:

• Large solar arrays planted on the ground currently get paid 44.3 cents a kilowatt hour. Industry observers expect to see that drop as low as 33 cents, though it could be a few cents higher.

• Small rooftop arrays on commercial buildings now get 71.3 cents a kilowatt hour. Look for the low 60s, or even high 50s.

• Householders with very small solar arrays now get 80.2 cents a kwh. Expect to see that drop to the mid-60s.

Bentley refused in an interview to comment on pricing. But he said whatever new prices announced next week will apply to contracts going forward, not to those already signed, which typically have a 20-year term.

It’s no secret that solar costs have been dropping. A U.S. market survey found that the price of solar panels has dropped 40 per cent in the past year. Racks supporting the panels have also become cheaper and easier to assemble, lowering labour costs.

Renewable energy lobby groups themselves have accepted that lower prices are on the way.

The Canadian Solar Industries Association submitted a brief to the review calling for prices ranging as low as 35 cents a kilowatt hour for large, ground-mounted development.

Bentley said in an interview that the prices aren’t just about energy developers and consumers.

The Green Energy Act was also conceived to stimulate a new industry in Ontario, he said.

“It is an energy and jobs policy,” he said. That was a deliberate decision from the beginning. Sometimes that’s missed.”

To qualify for the premium prices, developers must source up to 60 per cent of their inputs from Ontario suppliers.

“We have an industry today where we didn’t have one two years ago – an industry not only of manufacturing but of planning, designing, locating these project,” Bentley says.

And the intent is to build an industry supplying renewable power developments not just in Ontario, but in export markets, Bentley said.

The debate over wind is less about price and more about rules. Wind farms currently get 13.1 cents a kilowatt hour for their power.

But local councils have no say in zoning or the location of wind farms.

Mayor Bill Hill in Melancthon – whose township has two large wind farms and is now contemplating a proposal for another – would like to have a role.

“I don’t think we want total control,” says Hill. “We want to be heard.”

“We’ve sat in living rooms of people’s houses, and they’ve said: When I’m sitting in my easy chair and I look out my front window, I’ll see that turbine, if you put it where you say you’re going to. But if you moved it over 50 feet, I can’t see that and it doesn’t bother me.”

Not all opposition would be that easily satisfied. But current rules provide no leverage pushing developers to make accommodations , Hall said.

The devil may well be in the bureaucratic details.

Wind developers first get a contract from the Ontario Power Authority, then move through an environmental permitting process.

Groups opposed to wind power worry that even if rules are changed, they won’t affect projects already in the approval pipeline.

Trump is such an A-hole; vacuous hyperbole over offshore wind farm

Donald Trump blasts plans for Scottish wind farm

By BEN McCONVILLE, Associated Press – 10FEB12

EDINBURGH, Scotland (AP) — The feel-good era between New York property tycoon Donald Trump and Scotland's political leaders seems to have come to a dramatic end.

Trump has launched a blistering attack on Scotland's First Minister Alex Salmond over plans to build a "horrendous" wind farm off the coast of his luxury Scottish golf resort. In an open letter, Trump accuses Salmond of being "hell bent on destroying Scotland's coast line and therefore Scotland itself."

The bitter words are a far cry from the love-in the two men enjoyed four years ago when Salmond backed Trump's 750 million pound (US$1.2 billion) golf development 12 miles (16km) north of Aberdeen despite protests from environmentalists and locals about damage to rare sand dunes.

Back then, Trump invited Salmond to join him and actor Sean Connery to be the first to tee off on what the businessman described as "the world's greatest golf course." Trump also heaped praise on Salmond's government after it overruled local lawmakers who rejected the planned golf resort.

The Scottish leader backed the golf course by claiming it would create hundreds of tourism jobs around the Aberdeenshire area.

Locals and environmentalists campaigned in vain to save the sand dunes which were home to numerous species of wading birds and wildlife, but the dunes were bulldozed to make way for the fairways in 2009 and 2010. The course is due to open in July.

Salmond's support for the wind farm is consistent with the Scottish government's plan to position itself as a leader in the provision and technology of renewable energy. The wind farm's turbines will be visible from the beach and the golf course.

Salmond has refused to comment on Trump's letter, but Niall Stuart, chief executive of Scottish Renewables, which represents the wind farm industry, reacted with anger to the intervention.

"Who is Donald Trump to tell Scotland what is good for our economy or environment?" Stuart said in a statement. "He completely over-blows the impact of the proposed wind farm and to be honest there are so many mistakes in this 'trumped up' nonsense that it's difficult to know where to begin."

Trump tells Salmond in the ill-tempered letter: "With the reckless installation of these monsters, you will single-handedly have done more damage to Scotland than any event in Scottish history!"

He adds: "I will never be 'on board,' as you have stated I would be, with this insanity."

The tycoon warns Salmond that he will be using his wealth to fight his government's renewables policy.

"I have just authorized my staff to allocate a substantial amount of money to launch an international campaign to fight your plan to surround Scotland's coast with many thousands of wind turbines — it will be like looking through the bars of a prison and Scottish citizens will be like prisoners!"

He ridicules the Scottish National Party's renewable energy policies, claiming the economic benefit is going to China and other countries, not Scotland.

"Jobs will not be created in Scotland because these ugly monstrosities known as turbines are manufactured in other countries such as China. These countries, who so benefit from your billions of pounds of payments, are laughing at you!" Trump said.

Trump concludes the attack by referring to his mother, who was raised in Scotland.

He adds: "I'm doing this to save Scotland and honor my mother..."

Offshore wind moratorium a chickenshit move

February's election-minded announcement that the Ontario government has placed a moratorium on offshore windfarm development was a cowardly, backwards-looking decision. Fearful of voters' groups opposed to wind turbines "ruining" their lake views, the government caved against unwarranted and limited protests.

It is time for the government to choose 2 or 3 Lake Ontario projects and a few more in other lakes as a test project, and then expand the program as more data and opportunities surface. Our province needs to phase out both coal-fired and atomic fission electricity generation, and both land-based and offshore wind energy developments will be core components of our 21st Century energy infrastructure mix.