Definitely, offshore wind farms are increasingly appearing in the US. Interestingly, according to Diane Cardwell from the New York Times, companies from Europe are taking a dominant role.
U.S. Offshore Wind Farm, Made in Europe
Carl Horstmann strode around the floor of his factory here, passing welders honing head-high metal tubes as sparks flew. He is one of a dying breed: the owner of Mass Tank, a steel tank manufacturer in a down-at-the-heels region that was once a hub of the craft.
Four years ago, having heard of plans to build a $2.6 billion wind farm off the shores of Cape Cod, he saw opportunity. Much of the work, the developers and the politicians promised, would go to American companies like his, in what would be the dawn of a lucrative offshore wind industry in the United States.
Now, after Mr. Horstmann has spent more than $500,000, much has changed. Cape Wind, the wind farm’s developer, won a court case over an important approval on Wednesday but is still caught up in legal and financial wrangling and faces a tenuous future. And even if the project is completed, most of the investment and jobs for supplying the parts will go not to American companies like Mass Tank, but to European manufacturers.
Mr. Horstmann’s company lost a bid to build support structures to a German company it had brought in as a partner, and last month Cape Wind completed arrangements for other major components, including the giant blades, towers and turbines, to be built in Denmark.
Those deals have provoked a strong reaction from suppliers like Mr. Horstmann, but they also illustrate the difficulty of creating a new energy industry from scratch, even one that has financial support from the government.
“We’ve seen this in other industries. We don’t have the volume and the guaranteed market that China, for example, or some of the European countries that keep those jobs in their countries, can provide to investors,” said Thomas A. Kochan, a professor at the Sloan School of Management at the Massachusetts Institute of Technology. “It’s a catch-22,” he said, because without a steady flow of projects, companies would not build plants and “therefore, we don’t get the jobs.”
For Mr. Horstmann, the issue is personal. “As Americans, we are really upset that all this money is going overseas,” he said at the factory. As a ratepayer to a utility, he added, “I’m going to be getting my monthly bill and if Cape Wind goes through it’s going to have this premium on it.”
Offshore wind farms are inherently risky ventures, requiring enormous investments not only from developers and financiers but also from governments and, ultimately, ordinary citizens.
And none is riskier than Cape Wind, whose plans call for 130 turbines slowly spinning on Horseshoe Shoal of Nantucket Sound, supplying 75 percent of the power for Cape Cod, Martha’s Vineyard and Nantucket.
The project has been a source of bitter resistance since it was proposed in 2001, with opponents, who include the billionaire William Koch as well as local fishermen and business owners, saying it would increase utility rates and spoil the pristine view.
But proponents say that offshore power plants like Cape Wind are worth the gamble because they deliver cleaner, more efficient electricity and also spur economic development.
As evidence, supporters point to Europe, where billions have gone into helping companies build factories to make, transport and install the behemoth windmills needed to harness wind and withstand conditions miles out to sea. That has yielded dozens of offshore farms and roughly 60,000 jobs, according to industry estimates..
But even there — where policies and subsidies have helped create a robust supply chain — the upside has been fickle. On Germany’s coast, for example, an estimated $1.3 billion went into revitalizing ports and factories to serve the industry, creating about 10,000 jobs. But demand frequently drops off when projects stall, at times leaving factories in coastal towns like Cuxhaven, on Germany’s North Sea, sitting idle with hundreds of workers laid off.
In the United States, which has yet to put a wind farm in the water, the Interior Department is leasing sections of the ocean and the Energy Department has handed out grants and considered loan guarantees, like one that is pending for Cape Wind.
The potential economic impact of a new offshore wind industry is enormous, supporters say. The Energy Department estimates that the Atlantic coast could support as many as 70,000 jobs by 2030.
Cape Wind was to be the catalyst, leading to the first 1,000 jobs, with equipment from General Electric and other domestic suppliers.
But a major setback came around 2009, when G.E. decided to back away from the offshore wind business, saying it was still too expensive to compete with land-based wind power. In response, Cape Wind turned to Vestas and Siemens, dominant players based in Northern Europe with factories in the United States that make onshore wind machines. In December, Siemens and Cape Wind completed the contract, itime, executives said, for the project to qualify for a federal tax credit valued at 30 percent of its cost.
Siemens plans to make the giant turbines in Denmark, though it is arranging for some work to be done with a company based in Maine. Offshore wind development is not yet far enough along to justify the expense of building a factory in the United States, industry executives say. Because of their size, the turbines and support structures require different factories and equipment, and are generally too heavy to transport over normal roads.
Aside from Cape Wind, there are only two projects off the Atlantic coast that could come to fruition soon, both relatively small, with just five turbines each: a project by Deepwater Wind, which would rise from the waters near Rhode Island, and one by Fishermen’s Energy, near Atlantic City.
“It’s very difficult to build a new factory on the back of one order,” said Mark Rodgers, Cape Wind’s chief spokesman. He said that the original estimates of creating 600 to 1,000 jobs still held, even though those included the manufacturing work as well. “We may have been overly conservative initially in our forecast.”
As for Mass Tank — which had already agreed to lease a derelict building for its factory at the once-thriving Quincy Shipyard in Quincy, Mass. — it lost out on the Cape Wind bid to Erndtebrücker Eisenwerk, or EEW, a much more established German company that Mass Tank had brought in as a partner.
“There is an inherent risk to be in this industry and you have to be big enough to withstand it,” said Timothy Mack, head of offshore wind development for North America for EEW. “Mass Tank never came forward with any legitimate plan of financing.”
Mr. Horstmann said he was well aware of the risks, so he lined up a team, including EEW, to help land the project. The politicians soon came running, eager to promote the hundreds of jobs the project would bring.
In 2010, Gov. Deval Patrick of Massachusetts, in a tight re-election race at the time, nudged the deal forward and then joined Mr. Horstmann to announce it at the opening of a plant to test turbine blades in Boston. “This agreement between Cape Wind, Mass Tank and EEW will create hundreds of new manufacturing jobs in Massachusetts as we take the lead on offshore wind energy in the United States,” Governor Patrick said at the time, according to a statement. “This is what our clean energy future is all about.”
By April 2011, under a joint venture named East Coast Offshore Fabricators, or Eco Fab, the partners submitted their proposal to Cape Wind in the hope of signing a $137 million contract.
But Cape Wind’s president, Jim Gordon, rejected the proposal as too expensive.
“Then things got quiet,” said Randy Kupferberg, Mass Tank’s chief operating officer.
Accounts differ over how the deal fell apart. Cape Wind expected Mass Tank to contribute or find financing before awarding the contract, while Mass Tank needed the contract to raise the roughly $35 million or $40 million that its plant would cost. Under those circumstances, Mr. Mack of EEW said, there was not a profitable way to go forward.
Despite the disappointment, Mr. Horstmann and his team are pursuing other possibilities. There is interest in New Jersey, they say, in their participation in a factory planned for the Fishermen’s project. But their chance to put Mass Tank at the forefront of serving the Atlantic coast offshore industry may have slipped through their fingers.
“We tried to hit a home run with this,” Mr. Horstmann said. “And we didn’t.”