It’s microscopic compared to the massive offshore wind farms that have been going up in European waters over the past decade, but Deepwater Wind’s Block Island project, 18 miles from mainland Rhode Island, is under construction. In the United States, that’s a first, and Jeffrey Grybowski believes the importance can’t be overstated.

“This is what offshore wind power needs in the United States,” the Deepwater CEO said in an interview on Monday, a few hours after the state’s governor and congressional delegation joined in ceremonies marking the beginning of work on the five-turbine, 30-megawatt project.

“Right now, I don’t think we need to come up with a grand strategy to get offshore wind power moving in the United States. We need to build good projects that can show utility companies, regulators and policymakers that this is a real thing, not something theoretical.”

Solar power and land-based wind have dominated the U.S. renewable energy discussion in recent years, and have expanded rapidly. But every scenario for a big ramp-up in renewables relies on offshore wind to some extent. For many East Coast states, it’s seen as the big player in the long run.

“We’ve been making enormous progress with wind and solar,” said Bruce Nilles, senior campaign director of the Sierra Club’s Beyond Coal Campaign, “but for the East Coast, offshore wind will play a critical role in making the final transition to clean energy.”

It faces a lot of challenges. The most significant is in finding markets for energy that is, right now at least, very expensive. Under a 20-year power purchase agreement, the energy from Block Island will go to National Grid at 24.4 cents per kilowatt-hour, more than double what the utility might pay for energy from conventional sources. In New Jersey, the 25-MW Fishermen’s Energy project has been “shovel-ready for three or four years,” according to the developer, but the Board of Public Utilities is blocking the project, saying it will cost 26.3 cents/kWh, too high to be of benefit, not the 19.9 cents/kWh the developer claims.

In Europe, where more than 7 gigawatts of offshore wind has been deployed, costs have come down, but not as quickly as hoped. A February report (PDF) to the UK government showed the levelized cost of energy of offshore wind falling 11 percent from 2010 to 2014. In March, Ernst & Young, in a paper (PDF) prepared for the European Wind Energy Association, said “offshore wind is still very expensive under commonly used metrics,” but went on to say that higher-capacity turbines, improved project pipelines and increased supply-chain competition could make offshore wind cheaper than coal, gas or nuclear by 2025, when all costs and benefits are included in the assessment.

Deepwater’s Grybowski said the European industry was “incredibly focused on bringing down the price of offshore wind” and that the U.S. stood to gain from those efforts. Plus, he said, the experiences of solar and land-based wind show how subsequent projects at larger scale can be much less expensive than the initial wave.

“We certainly see the cost of larger projects that we hope to build being significantly lower,” he said. “For a project in this part of the world that’s of utility-scale, we anticipate a first-year energy price in the low teens (per kilowatt-hour).”

Deepwater has a federal lease for a project about 30 miles offshore from the eastern end of Long Island, and a year ago sought a contract from the Long Island Power Authority for about 200 MW of what the company ultimately hopes will be a 1 GW wind farm. Late last year, LIPA chose solar projects instead and said “wind projects were not selected primarily because of their total cost relative to other alternatives, including financial risks inherent in those proposals.”

That sense of risk around U.S. offshore wind wasn’t helped by the apparent collapse of the Cape Wind project early this year, after more than a decade of effort to get it built.

“That’s what makes Block Island so important,” said Nilles of the Sierra Club. “It can change the perception of wind power in the United States.”

Steel-jacket foundation fabrication for the Block Island project is under way now in Louisiana and Rhode Island; those pieces to the puzzle will be put in the water this summer, Grybowski said. Cables and the turbines would then be installed next summer. If all goes as planned, by fall 2016, Block Island Wind Farm will be sending power to the island itself, dramatically slashing its reliance on diesel generation, and interconnecting to the mainland grid.

While land-based wind farms typically have capacity factors around 30 to 35 percent, Grybowski said the superior offshore wind regime and advances in offshore technology lead him to expect Block Island to operate at a capacity factor of 48 percent.

“The East Coast is a fantastic place to do wind power,” he said. “It’s a much more consistent wind regime, and we love winter storms, and in the summer, tropical storms – those are huge energy producers. We’re eager to demonstrate that to people.”