U.S. Offshore Wind Farms

Offshore drilling has certainly caused some excitement lately. And while that idea would eventually deliver new oil to market, the quantity would be less than impressive and it would still be priced in a global market with a limited supply. It’s not like you get U.S. offshore oil any cheaper than you get Saudi Arabian oil…

Offshore oil is a short-term fix–if it’s even that. I’d be placing my money on offshore wind farms in the U.S.

Obviously, the U.S. is already trailing Europe in this field. This is same thing we allowed to happen with the advent of the modern solar industry and with land-based wind energy.

While we’re playing catch-up, here are some things you should know.

By my count, there are 21 active wind farms in the world. The largest, called Q7-WP is in the Netherlands and has a capacity of 120 megawatts (MW). It was built with Vestas (CPH: VWS) turbines and owned by Econcern.

In fact, four of the five largest offshore wind farms in the world are using Vestas turbines, so that gives us an idea of a developing trend. Between Vestas and Siemens (NYSE: SI) the turbine supply side of the offshore game is nearly on lockdown.

In the U.S., the first planned offshore wind farm is to be located in Rehobeth Beach, Delaware. It will be a 450 MW farm, owned operated, and developed by both Babcock & Brown Wind Partners (ASX: BBW) and Bluewater Wind LLC. No word yet on who is providing the turbines for that project.

Interestingly, the Rehobeth project faced staunch opposition from Delmarva Power, a subsidiary of Pepco Holdings (NYSE: POM) and the area’s largest utility. I don’t know what the issue was there. I guess Delmarva didn’t want to shell out the dollars to purchase wind-generated electricity.

But the emergence of renewable portfolio standards has made it such that local utilities must begin purchasing renewable energy. That means a guaranteed market for renewable energy investors. Sorry, Delmarva.

Planned U.S. Offshore Wind Farms.

The next largest planned U.S. wind farm is Cape Wind and would have a proposed generation capacity of 420 MW. It would be located on the Nantucket Sound and use about 130 wind turbines.

Next is the South Coast Offshore Wind Project, slated for a 300 MW generation capacity in Buzzards Bay, Massachusetts.

There are two other smaller projects in the works. One called Hull, named for the town in Massachusetts where it’s located. And another, called Winergy, off the New Jersey coast.

To conclude, the best way to play this emerging market is through Vestas. You can also gain secondary exposure through Siemens or GE, and it’s probably worth taking a look Babcock & Brown Wind Partners.

Going forward, there will probably be some new wind farm developers to look at, but the turbine dynamic will likely remain the same.

One of those emerging developers is Naikun Wind Energy (TSX.V: NWV), but it’s still too early to make an official call.

To green energy and green profits,

Chris
www.CleanEnergySector.com