Note: This is part two of a series of blogs highlighting recent progress in onshore and offshore wind energy, as well as discussing some of the continued opportunities, challenges and threats the industry faces in the near term. The series was originally published by the Natural Resources Defense Council.

By KELLY McCOY

The U.S. offshore wind industry is a relatively new one — the nation’s first commercial project, the 30 megawatt (MW) Block Island Wind Farm off the coast of Rhode Island, came online in December 2016. Block Island replaced old diesel generators that had powered the island for decades.

Interest in the offshore wind industry is growing at an extraordinary rate, and the Department of Energy (DOE) estimates that nearly 2,000 gigawatts (GW) of offshore wind technical potential (excluding Alaska) could be accessed in federal waters along the coasts and Great Lakes. Roughly half the U.S. population lives in these regions, making offshore wind one of the nation’s largest untapped energy resources.

However, supportive federal policy is crucial to the sustained growth of this nascent industry. Legislation like the recently proposed Incentivizing Offshore Wind Power Act, which would offer tax credits to the first 3,000 MWs of offshore wind projects placed in service, would help significantly accelerate the development of this promising industry and create a new, clean source of domestic power.

Last year was a defining one for the U.S. offshore wind industry, and the coming years can build on this momentum to push the industry further. Some of the recent developments in offshore wind are detailed below, as reported in this year’s 2016 Offshore Wind Technologies Market Report from the Department of Energy’s National Renewable Energy Lab.

State level action is playing a key role

Some state renewable energy policies now require utilities to procure certain percentages of their electricity from offshore wind — such as 1,600 MW by 2027 for Massachusetts and 2,400 MW by 2030 for New York.

In addition, some states are taking other initiatives to tap into their offshore wind potential. For instance: Maine has created a program to fund small pilot offshore wind projects; California is collaborating with the federal government to create a task force to map out their offshore wind resource; Maryland has established tradable offshore renewable energy credits for two new projects; and Massachusetts is upgrading local facilities for R&D and marine infrastructure for the deployment and assembly of offshore turbines.

Wind characteristics promise better turbine performance

Offshore wind blows stronger and more consistently than onshore wind, allowing for more energy to be captured. In the U.S., the northeast region has some of the highest offshore wind speeds, and projects located there are expected to have higher capacity factors than projects located in southern regions. In fact, Block Island is expected to have a capacity factor of 47.5%, as compared to the average capacity factor of the still strong onshore wind turbines of about 35%.

This is also comparable to some of the best turbines in Europe and almost as high as average U.S. natural gas combined cycle capacity factors of 56%. Higher capacity factors make it easier to integrate offshore wind into the grid, weakening the argument of intermittency and creating higher renewable energy penetration.

Wind can be paired with other clean energy sources

Offshore wind’s characteristics allow for offshore turbines to be paired with other clean energy technology, amplifying both emissions and cost reductions. In some states, such as California, offshore wind patterns complement solar generation patterns: in the evening as the solar resource decreases, the offshore wind resource increases. During winter in the northeast, when the solar resource is especially low, offshore wind can provide low-cost, reliable clean energy.

Offshore wind has found another potential partner in battery storage. While utility-scale storage is a blossoming technology itself, it is already being proposed as a complement to offshore wind in the U.S. In Massachusetts, Deepwater Wind has partnered with Tesla Energy to propose a 144 MW wind farm and 40 MWh storage system. This opens the door for cost reductions and technological advancement of two technologies key for meeting our climate goals.

The project pipeline is growing exponentially

As of June 2017, 24,000 MW of offshore wind projects — equivalent to roughly 30% of the total installed onshore wind capacity in the U.S. — were in some stage of the project pipeline, most of which are in Massachusetts, New Jersey, and North Carolina. These projects would get the U.S. halfway to the DOE’s Wind Vision goal of 86 GW of offshore wind by 2050, and is a testament to the very promising short-term outlook for offshore wind.

Costs are already competitive

While U.S. cost data is still limited, European cost declines signal potential viability of a burgeoning U.S. market. European contract prices have dropped from around $200/MWh for a commercial operation date of 2017 to $65/MWh for an operation date of 2025. Block Island, completed in 2016, is under a 20-year power purchase agreement for $244/MWh for the first year. As a pipeline of U.S. offshore wind projects is created and the offshore wind supply chain grows in the U.S., dramatic price decreases are expected. In some locations, where electricity prices are high and transmission is constrained, offshore wind is already competitive with other energy sources.

R&D investments will drive crucial technology advancements

Globally, there is a push to develop floating turbines, since most of the offshore wind potential is in deeper waters than fixed-bottom turbines can handle. In the U.S., nearly 60% of the potential wind resource is in these deep waters. Although the technology isn’t ready for mass deployment, government and industry are investing significantly in floating turbine R&D. For example, the DOE has several offshore wind R&D and pilot program funding opportunities emphasizing floating turbine technology. This is just one more reason why it is so important that DOE have a robust budget to continue investing in this important research and working with industry to support technological innovation for offshore wind deployment.

This is an exciting time for offshore wind, as with onshore wind, since roughly half of the U.S. population is living in coastal regions with ambitious clean energy goals and limited land, offshore wind is set to deliver large economic, public health, and environmental benefits. Onshore wind and solar have significant health benefits, and adding the enormous amount of offshore wind potential to the mix can only improve them.

With the right state and federal policies, focus on need technology research and rapidly decreasing technology costs, we can expect offshore wind to sail smoothly towards becoming a big player in the U.S. electricity mix, and help the U.S. reach its long-term climate goals.

Kelly McCoy is a Schneider Fellow with the National Resources Defense Council.