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Offshore wind energy is picking up in the U.S. energy sector, drawing European wind developers and global energy giants to the country’s coastlines.

Offshore wind projects are not a major feature of the U.S. energy sector, but the tide appears to be turning. Massachusetts-based Vineyard Wind is currently moving through the approval process for a $2 billion project, which requires permits and approvals from more than 30 agencies. If successful, it would be the first utility-scale offshore wind energy farm in the U.S.

Shallow waters, high wind speeds and millions of energy consumers make the north-eastern U.S. ideally suited to offshore wind development. At a site about 14 miles off the coast of Massachusetts, Vineyard Wind’s proposed 84-turbine, 800-megawatt plant would provide energy to that state’s utilities. Lars Pedersen, Chief Executive of Vineyard Wind, is optimistic: “It’s a challenging regulatory system, it’s litigious and so on, but if you can deliver jobs and clean energy at an affordable price”, he said, “I believe this is a huge opportunity.”

The Vineyard Wind project could be a bell-weather for the future of the offshore wind industry in the U.S., where progress has accelerated in the past few years. In 2015, the government auctioned a site off the Massachusetts coast for $281,285. In an auction in Massachusetts in December 2018, each lease sold for over 400 times that amount.

European developers, including Danish firm Orsted, Shell, and Germany’s EnBW, are eager to enter the burgeoning U.S. wind market. Vineyard Wind itself is a partnership of Copenhagen Infrastructure Partners and a subsidiary of Spain’s Iberdrola. In February a number of European energy sector giants, including Shell, EDF, Equinor and Orsted, bid to build New York’s first offshore wind project. “Other plans are moving forward, from Virginia to New Hampshire,” The Economist reports.

At the same time America is still a risky market for wind developers, due in part to a legacy of opposition, mainly from fishermen and wealthy waterfront landowners. This has driven many wind developers to invest in Europe instead or to build land-based wind farms in America’s vast interior. The U.S. is now home to some of the world’s largest wind farms on land. But offshore wind development faces another obstacle in uncertainty over the supply chain needed for turbine construction. America’s ports may not be capable of handling the work.

It comes down to the risk-benefit ratio for global energy firms thinking of entering the American wind market. Technology could mitigate some issues. More advanced technology now makes it possible to build bigger turbines farther from shore. Because they are large and powerful, fewer turbines are needed to generate the same amount of power. This lowers development costs, and makes wind energy more affordable for consumers. There is also support from state governments, as well as tax credits at the national level, though these are set to expire in 2020.

Wood Mackenzie, an energy, chemicals, renewables, metals and mining consultancy, anticipates that growth in offshore wind will slow after the tax credit expires, but then pick up again in the mid-2020s as technology advances further and factories open.

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