Offshore Wind Power USA 2013 Speaker Interviews:

Jim Lanard, President, Offshore Wind Development Coalition

Read Jim's Interview

What key hurdles need to be overcome in order to maximize US offshore wind potential?

There are three key hurdles that need to be overcome to maximize the potential of the US offshore wind industry.  First is regulatory certainty, which requires well-established federal and state permitting policies.  Federal and state agencies will need to be prepared to thoroughly review applications for offshore wind farms in a fixed time period so that applicants can adequately prepare their development, procurement, construction and installation and financing plans.  Second is revenue certainty, which requires federal (and perhaps state) policies to support first-mover offshore wind projects.  In the US, traditional power sources have received nearly a half-trillion dollars of federal support over the past five decades.  Offshore wind, new to the US, should be eligible for Investment Tax Credits, cash grants and loan guarantees similar in scale to what our existing power generation sources have benefited from for the past 50 years.  Third is market development.  Without markets in which to sell their power, offshore wind developers -- and their investors -- will be hesitant to make the necessary investments that will turn this nascent industry into a large economic engine for the US, creating thousands of jobs and numerous economic development opportunities.

How can the US offshore wind power industry increase capital flow and improve investor confidence?

Offshore wind developers are actively advocating for policies to jump start the industry in the US.  They have established excellent relationships with the investor community and expect that the necessary debt and equity will be available when they are needed.  Interest from European developers and investors continues to grow and we expect to see this interest translated into investments at the appropriate time.

What will be the most important topic of discussion at Offshore Wind Power USA 2012? 

The European offshore wind industry is driven by energy policies that seek to address issues such as climate change, energy security and energy independence.  US policies generally do not consider these issues when the efficacy of offshore wind is considered.  Hence, the question at Offshore Wind Power USA 2012 likely will be: "What is it going to take to get the US offshore wind industry up and running?"  The answer:  Regulatory certainty, revenue certainty and market development, as we discussed in the answer to Question One above.  Those three points serve, if you will, as the three legs of a tripod that all support job creation and economic development -- the primary driver that will allow the US offshore wind industry to reach its full potential.

What role does the OffshoreWindDC play in the US offshore wind market?

OffshoreWindDC represents most of the offshore wind developers that have expressed interest in developing wind farms in US waters.  We also represent a broad swath of the supply chain industry ranging from turbine suppliers to cable manufacturers to cable laying companies to fabrication, construction and installation businesses. We also represent resource assessment firms, environmental permitting experts, law firms and marine interests.  Our mission is simple:  We advocate on behalf of the entire offshore wind industry for federal and state policies that will support the development, growth, and sustainability of the offshore wind industry in the US and the associated jobs and economic development opportunities it will provide to our work force.

 

Jim Gordon, PresidentCape Wind

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What do you think has been the most recent interesting developments in the market?

That after so many years of waiting, America’s offshore wind industry is finally ready to launch.

What changes need to be made on a state or federal level to further progress offshore wind development?

Federal and State policymakers must ensure there is market support for offshore wind.  This comes in the form of Federal and State incentives to developers and requirements that utilities to enter into long term power contracts with renewable energy providers.

How do you envisage the utility’s demand for offshore wind power evolving in the coming years?

With the proper policy signals, utilities demand for offshore wind power should grow because offshore wind provides a unique package of benefits including significant wind resources in close proximity to areas of high electric demand, that offshore wind power production occurs coincident with electric demand, significant regional job creation and port development, and substantial price suppression to the wholesale electric market which benefits all electric consumers.

How can the industry bolster investor confidence in offshore wind?

Nothing is more important at this juncture to boost investor confidence in offshore wind than in getting steel in the water and building the first project.

What will be the most important topic of discussion at Offshore Wind Power USA 2013?

Moving forward with the nation’s first offshore wind projects.

 

Chris Smith, Chief Financial Officer, Cape Wind Chris Smith, CFO, Cape Wind

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What key hurdles need to be overcome in order to maximize US offshore wind potential?

What's most important for Offshore Wind is also what's most important for the United States generally:  A commitment over the long run to diversify the country's sources of energy away from volatile fossil fuel energy sources.  This commitment at the regulatory and policy level is crucial now because offshore wind, like all infrastructure projects, entails long lead times and large scale capital requirements.  

How can the US offshore wind power industry increase capital flow and improve investor confidence?

We need to get turbines in the water.  Once people see that it works -- and works very well -- there will be much greater emphasis on the adoption of offshore wind.  Offshore wind has a number of key advantages.  These have been widely discussed but what's most important, I think, is that offshore wind brings scale in supply in ways that other technologies in the densely populated areas of the United States cannot.  And, this important generation source is located close to major population centers and delivers it during the peak when most needed, making it higher value and the most realistic option for meeting the important renewable energy goals set forth by States and the Federal Government.

But it's not easy and like all the great industries before it -- railroad, telecommunications and aerospace -- a commitment cutting across industry and government is required to launch it.

What will be the most important topic of discussion at Offshore Wind Power USA 2012?

The United States is facing an important election that will significantly influence its future.  We can continue the policies of the past -- a dependence on foreign energy sources and a failure to account for the real costs of fossil fuels -- or we can endeavor now to harness sources of energy that are unlimited and, often, free, such as wind.  It's important we do this. Like the national debt and entitlement reform, putting things off only makes the cost significantly greater.  At the same time, we in industry need to educate decision makers what the benefits really are and establish a credible roadmap to cost reductions in the future in return for action now.

Infrastructure projects -- by design -- reflect tradeoffs, but they represent at their core an investment in the future - our future.  A road, a railroad, a port or a transmission line are the keys to fundamental economic productivity, and it is an improvement that last for generations, not just a few years.  If we let a small, self-interested group hinder America achieving her goals through legal high jinx and threats, don't we all pay the price, as well as those who come after us?  So Cape Wind is not just about offshore wind, it's about whether we are moving ahead or not.  

This really matters.  A little over twenty years ago India and China had about the same gross domestic product ("GDP").  China choose to invest in its infrastructure and to train its workers for the economy of the future and India did not.  Today China has a GDP of around $5 trillion while India is struggling to maintain $1.5 trillion - China is today 3x richer than India.  What I find shocks people is that this is not the first time this kind of race has been lost. America and Argentina around 1900 also had about the same GDP, but America, by investing in itself, building its future, and embracing change, as difficult as it may have been, eclipsed.

What role does Cape Wind play in the US offshore wind market?

Cape Wind is a symbol for America's energy future, and recognized globally by those who question whether the United States is willing to embrace the kind of necessary change going forward that made it great in the past.   When I travel abroad many people are familiar with the project; more so than in the US.  They ask, "Where is America going and will she lead again?" Cape Wind is a marker of success for all of industry, not just offshore wind.

 

Brian Redmond, Managing Director, Paragon Energy Holdings

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What do you think has been the most recent interesting developments in the market?

  • Support for Continued PTC/ITC 
    - The 1 year extension of the Production Tax Credit (PTC) and the Investment Tax Credit (ITC) provides the basis for market incentives to be allocated to offshore wind projects as part of a long-term budget deal.  There is the real potential for offshore wind as an emerging industry to be decoupled from onshore wind, and for the offshore PTC/ITC to be phased out over a longer time period given the longer development schedules.
  • DoI Announcement for Renewable Energy Lease Sale in RI/MA and VA. 
    - The RI/MA lease areas are located near power markets that are constrained by transmission bottlenecks and therefore have higher marginal pricing.  Offshore wind projects in these markets make economic sense.  Specifically, an offshore wind project in RI/MA can provide sufficient economies of scale to serve the NE and Long Island markets as a low-cost, large-capacity solution that isolates customers from the commodity price risk of thermal fuels.  In addition, an offshore wind project can deliver power directly to coastal areas that are at risk in the event of storms causing the loss of transmission and generation resources.
  • NY/Long Island Energy Highway
    - Two actions recommended by the NY Energy Task Force were: (i) to provide $2 - $5mm to characterize offshore wind resources and evaluate cost recovery opportunities associated with offshore wind, (ii) to conduct a competitive solicitation for renewable resources in NY as part of NY's Renewable Energy Portfolio Standard.   In a related development the Bureau of Ocean Energy Management (BOEM) issued a request to determine whether or not there is competitive interest in leasing a 127 square mile area offshore New York that the New York Power Authority has proposed for developing 350MW of offshore wind energy. Offshore wind has the opportunity to play a key role in the development of NY's energy future through these two initiatives.  Specifically, offshore wind is the best solution to meet the energy needs of Long Island given the extensive (200 - 500 miles) of transmission development required to bring upstate renewable energy to the Long Island market.

What changes need to be made on a state or federal level to further progress offshore wind development?

  • Federal  - Institute a PTC/ITC for offshore wind that is separate from PTC/ITC for onshore wind.  The offshore wind industry is an emerging industry that requires longer development and construction lead-time given the marine environment and the lack of US experience in permitting and constructing this type of wind project.   Separately designating a PTC/ITC for offshore wind would allow for a longer sunset period for an offshore PTC/ITC that would enable this new industry to reach a sustainable level of growth.
  • Streamline and simplify the permitting process and jurisdictional issues with state and federal agencies.
  • State - Provide for offshore wind RECs to receive preferred status in meeting state RPS requirements.  This change, in coastal states, will spur offshore wind farms to locate nearby and will provide job creation through supply chain development.
  • Include the in-direct benefits of offshore wind in the cost/benefit and the resource planning analyses performed by or on behalf of Public Utility Commissions evaluating offshore wind vs. other types of generating technologies.  Specifically, (i) job creation supporting ports and shipping with limited impact on onshore transportation infrastructure, (ii) limited need for onshore transmission infrastructure - shortening permitting delays and reducing on-shore land use issues, (iii) ability to deliver power directly to coastal areas that would be hardest hit in the event of further hurricanes.

How do you envisage the utility’s demand for offshore wind power evolving in the coming years?

  • There are several current trends that support the use of offshore wind as a capacity solution:
    o  As the alternative uses for natural gas increases (power generation, transportation, export, industry), the price of natural gas will rise increasing power costs and increasing the benefits of the natural hedge provided by renewable energy.
    o  Environmental regulations will only increase in limiting air and water emissions from thermal plants, increasing the offsets offered by renewable energy
    o  Increasing development and population concentration near coastal areas will make it ever more difficult to install new transmission infrastructure - offshore generation eliminates this need.
    o  The price point for offshore wind continues to fall as lessons learned from Europe benefit the US market.
  • Utilities will integrate on-shore dispatchable generating resources with off-shore wind farms to provide a low-cost base-load supply of energy.

How can the industry bolster investor confidence in offshore wind?

  • Successful installation of larger more efficient offshore WTGs (e.g. the Siemens 6M) will demonstrate a continued reduction in the $/MW installed costs as well as MWh performance for offshore wind projects.  Successful US projects such as the Block Island Wind Farm  (offshore RI) that use these larger, more efficient WTGs will provide a solid base of cost and performance information that will reduce the financial and operational risk premiums allocated to off
  • The construction of the Block Island Wind Farm and the Cape Wind project will provide visual example as to the limited environmental impacts of these projects.
  • Focus on the success stories in Europe where there are 4GW of installed offshore wind capacity.  Make the US public aware that these 4GW have significantly reduced Europe’s exposure to volatile prices for coal, oil, natural gas as well as to political instability in Russia and the Middle East.

What will be the most important topic of discussion at Offshore Wind Power USA 2013?

  • The impact of ongoing budget discussions on the extension of the PTC and DoE loan guarantee for offshore wind.
  • The status of current projects:  Specifically, Deepwater’s Block Island Wind Farm, and Cape Wind.
  • Potential initiatives to create onshore demand for offshore wind – NY/LI.

 

Jeff Grybowski, Chief Administrative Officer and Senior Vice President of Strategy and External Affairs, Deepwater Wind

Read Jeff's Interview

What key hurdles need to be overcome in order to maximize US offshore wind potential?

There are two policy hurdles that developers in the US face.  First, uncertainty about the future of federal tax incentives, such as the Investment Tax Credit, threatens the industry's near-term chances of success.  Fossil fuel-based energy sources have long enjoyed substantial tax and other financial incentives from federal and state governments in the US.  Those incentives reaped over many decades allowed those industries to develop into the powerhouses they are today.  The US must support nascent, but critical, alternative energy sources like offshore wind.  Developing offshore wind at utility-scale will diversify our national energy portfolio, reduce emissions of carbon and other pollutants by the electricity sector, increase national energy security, and allow us to compete successfully in the global market for the jobs these projects create.  Second, the process for leasing offshore wind sites by the federal government is yet to be tested fully.  The industry needs aggressive action by federal agencies to speed the development of offshore wind sites and to reduce uncertainties about the process going forward.

How can the US offshore wind power industry increase capital flow and improve investor confidence?

The best way to boost investor confidence is to put a project into operation here in the US and prove to the finance sector that offshore wind has finally arrived in the US.  We at Deepwater Wind believe that our Block Island Wind Farm has a good chance to be the first offshore wind farm installed in the US.  All of its output will be sold to National Grid under an approved 20-year power purchase agreement and it is located within state waters in a site that the state has already designated as an offshore renewable energy zone.  At 30 MW of capacity, it is a manageable project to finance, even in these uncertain times.  Further, we recently signed an agreement with Siemens to deploy five of their latest 6 MW direct drive offshore wind turbines at our Block Island project.  It is a path-breaking project, and the kind of success that our industry needs at this time.

What will be the most important topic of discussion at Offshore Wind Power USA 2012? 

As an industry, we need to bring down the unit cost of energy from offshore wind farms.  We need to find better, more efficient ways to develop, construct, and operate wind farms.  The technology of offshore wind turbines is already driving down the unit prices of power through the development of larger, more efficient machines.  But developers need to continue to push the envelope and look for ways to make our power more competitive with traditional sources of electricity.

What role does Deepwater Wind play in the US offshore wind market?

Deepwater Wind is developing several major projects in the northeast US in our three core markets:  New England, New York, and New Jersey.  We believe that our Block Island Wind Farm has a good chance to be the first offshore wind farm installed in the US.  We are also developing three separate 1,000 MW projects in those core markets.  Our philosophy is that the future of offshore wind in the US is to build larger projects, using larger turbines, farther offshore than we have generally seen proposed to date in the US.  Larger turbines produce more power per structure.  Larger wind farms take advantage of scale economies.  And project sites further offshore take advantage of stronger, more reliable winds.  We couple those projects with regional transmission systems linking wind to multiple markets. We think that's the formula for driving costs down, making us competitive with new fossil fuel plants in our core markets.

 

Peter Mandelstam, President and Founder, NRG Bluewater Wind

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What key hurdles need to be overcome in order to maximize US offshore wind potential?

Mainly, there’s no way to finance offshore projects at this moment. Although there’s a bill in Congress to extend the Investment and Production tax credits, it’s only part of the story.  There still needs to be a loan guarantee or equivalent financing mechanism and it seems to me that the federal government is the only player big enough to fill that role at this moment. That may change, but first we’ve got to get at least two or three projects in the water, which will also generate many jobs and launch a new industry. 

How can the US offshore wind power industry increase capital flow and improve investor confidence?

The industry needs to continue educating state legislatures and public service commissions about the value of offshore wind. As with the offshore wind legislation enacted into law in Delaware and New Jersey, this effort produced real projects that led to private developer interest and investment.  Capital and investment flow to countries with consistent energy policy and a portfolio of projects; the supply chain then follows those projects, further increasing capital flow and private investment. 

What will be the most important topic of discussion at Offshore Wind Power USA 2012? 

Tax credits, continued education of European banks on the attractiveness of the US Market, and the increased number of active lease areas under competition in the US, which by then could include New Jersey, Maryland, Virginia, and Massachusetts.  

What role does NRG Bluewater Wind play in the US offshore wind market?

NRG Bluewater is one of several developers—more than a dozen—active along the Northeast and Mid-Atlantic. Bluewater plays a leading role in helping state and federal officials and the public better understand the benefits of offshore wind, both directly and through the media. We’re also continuing to introduce manufacturers and service companies to state and local officials with the idea that they’ve got to set up shop along the Eastern Seaboard to make this work for everyone. 

Tim Ryan, Chief Executive Officer, Force 5 Wind

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What do you think has been the most recent interesting developments in the market?

a.  Since last year’s conference, the US Department of Energy has announced $180 million in potential grant funding for demonstration-scale offshore wind that would pay large shares of development and construction costs for several projects. 
b.  Also, it is great news that Dominion Power, working closely with the Commonwealth of Virginia, seems to be embracing offshore wind as a part of their future energy mix.

What changes need to be made on a state or federal level to further progress offshore wind development?

What is clearly lacking is a stable long-term commitment to offshore wind on the part of states and the federal government. This is largely due to effective opposition messaging about the “high cost” of offshore wind. Given that energy supply is strictly a state issue, the federal government is doing its part by the game-changing DoE funding program and DoI's steady progress toward offshore site leasing. Rather than only looking at large in-state projects and local supply chains, states should rally around those research-scale projects that are selected to receive DoE funding, even if they are in neighboring states. 


How do you envisage the utility’s demand for offshore wind power evolving in the coming years?

I expect that demand for offshore wind power will evolve very slowly for the next several years. Generally, offshore wind doesn’t seem to be needed for carbon goals, in light of lower gas prices driving out coal and driving down CO2 emissions. Also, there will be record amounts of land-based wind and solar installed in 2012, satisfying most states’ renewable portfolio standards without needing offshore wind.

How can the industry bolster investor confidence in offshore wind?

I believe that there is ample investor confidence in US offshore wind projects that achieve all of the preconditions for funding construction. However, there is a very high level of uncertainty about the prospects for long-term project revenues for all but demonstration-scale projects. Therefore, the industry would be well-served by carefully controlling spending except on projects that have clear viability signals.

What will be the most important topic of discussion at Offshore Wind Power USA 2013?

By the time of the conference, the US Department of Energy will have selected six demonstration-scale projects to receive significant grant funding. Conference participants will want to learn as much as possible about these projects.

 

Doug Copeland, Regional Development Manager, EDF Renewable Energy

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What do you think has been the most recent interesting developments in the market?

The federal lease competition is interesting, but it is disconnected from state policy. Leases aren’t in states that have or have envisioned off take markets.  Seeing states take the lead to reduce site risk (RI, MD) is encouraging.

What changes need to be made on a state or federal level to further progress offshore wind development?

The creation of an off take market. If no one can commit to buying power, no development will move forward.

How do you envisage the utility’s demand for offshore wind power evolving in the coming years?

There is no demand now, but if state policy supports offshore wind, it will grow considerably.

How can the industry bolster investor confidence in offshore wind? 

We need to have a clear off take market. If this exists, investors can choose which developers to support.

What will be the most important topic of discussion at Offshore Wind Power USA 2013?

Who will buy the power?

 

Andrew Eckhardt, Vice President, Senior Business Development Officer, KfW-IPEX Bank 

Read Andrew's Interview

What changes need to be made on a state or federal level to further progress offshore wind development?

The single most important factor to boost onshore and offshore wind is the renewal of federal tax incentives. Washington has to understand the number of high quality jobs depending on the wind industry.

How can the offshore wind industry bolster investor confidence?

The proof of the pudding is in the eating - US offshore needs a project going to the finish line and reach construction. This will be the sign for the public, policy makers and - probably most importantly - the supply industry that offshore wind is to be factor in the US.
 
How does offshore wind stack up against other renewable energy sources in terms of attractiveness for banks? 

Offshore wind from or senior project debt provider means higher project risk. Banks have to fully understand the nature of offshore wind projects. Higher project uncertainties have to be reflected in more conservative financing structures and pricing.

What will be the most important topic of discussion at Offshore Wind Power USA 2013?

Any project that has made substantial steps to start of construction by February, will steal the show.

 

Robert Mitchell, Chief Executive Officer, Atlantic Wind Connection

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What do you think has been the most recent interesting developments in the market?   
 
The most important recent event for offshore wind is the re-election of President Obama.  The President and his administration have played a strong role in outlining a regulatory and support framework that will provide a foundation for future development.  Their work includes the recent DOE announcement that targets seven specific projects for grants, an improved Department of Interior leasing process/schedule that has already produced several leases conducted by BOEM, and of course, the support and advancement of the Atlantic Wind Connection regulatory process (Determination of No Competitive Interest) to develop a backbone transmission system for potential and currently planned projects.


What changes need to be made on a state or federal level to further progress offshore wind development?
 
The opportunity is right in front of us to create a new industry and create new jobs, new business opportunities, new sources of revenue and more available clean energy.  On the Federal level the Congress needs to support offshore wind with the passage of a workable Investment Tax Credit subsidy. The Administration needs to create a new offshore wind loan guarantee program to help make the offshore wind industry a priority.  FERC can help by insisting that ISO’s and RTO’s comply with Order 1000; a Federal law requiring regional electric grid planners to have a system in place to plan and pay for transmission lines connecting offshore wind and other renewables needed to meet State’s mandated renewable energy portfolio standards. New Jersey has been a strong leader for offshore wind, but needs to finalize its OREC program.  Further implementation of that program will set an important standard for other states that may want to pursue offshore wind.  The strong push last year in Maryland to encourage legislation for offshore wind similar to what New Jersey passed came up a little short of passage in the Senate after passing the Assembly.  It continues to have firm support by Governor O’Malley and the Maryland legislature can make a big step forward with passage of the bill this year by April.


How do you envisage the utility’s demand for offshore wind power evolving in the coming years?
 
Certainly utility participation will be essential in the development of offshore wind. It is only with their participation that states will achieve their renewable energy portfolio standards.  It will likely entail growing and expanding existing programs like the NJ OREC program in order to provide additional incentives for utility participation 


How can the industry bolster investor confidence in offshore wind?
 
There are many ways the offshore industry can bolster investor confidence, including completing early stage projects that will set the bar for future development.  This type of advancement will also underscore the need for future supply chain opportunities that will further bolster investor, community and political confidence.  Wind developers and their advocates need to be fully engaged with state legislatures, governors, community officials and local business leaders to create a foundation of political and economic capital that will provide a positive influence on the sector and how it is perceived.  Finally, the real story of potential job growth and economic opportunity of the potential supply chain will be an important case for keeping confidence in the industry.


What will be the most important topic of discussion at Offshore Wind Power USA 2013?
            
People will be discussing what will be the positive/negative offshore wind developments in 2013.  I will be presenting my list of predictions and firmly believe there will be many positive developments in 2013.  Although there have been advances in 2012, there have been set backs as well that have been discouraging.
 
We are proud to join you because OWPUSA is one of the premier venues for the complete look at the state of the industry.  It is a key time right now given the incredible progress we are seeing on projects, on transmission and in the potential supply chain.  But there is no doubt that we still have a significant road to travel on issues like technical advances, reducing project costs (which we think plans like AWC will do longer term) and the overall confidence in the direction of this infant industry.  There are so many important topics it is truly hard to say one is a bigger priority than another.  We are creating an industry sector than will have a lasting impact on the regional economy, the power supply and our future.  So we look forward to the discussion and sage insights of the many panelists and speakers that will join us there.