You can now add WindFloat Pacific, in Oregon, to the list of innovative, U.S. Department of Energy-backed offshore wind projects struggling to get built.

A year ago, the feds whittled their way from seven proposed projects, each of which had received $4 million in design and planning support, to a trio that would get as much as $47 million apiece to help fund construction. The goal was to have the projects up and running in 2017, but all three – Fishermen’s Energy in New Jersey, Dominion Virginia Power’s VOWTAP and now WindFloat – are facing potentially fatal cost-related challenges.

The 30-megawatt Oregon project has been tripped up by an inability to find a buyer for the relatively expensive power that would flow from a five-turbine array about 20 miles off Coos Bay.

A bill in the Oregon Legislature’s current session would have required the state’s two big investor-owned utilities, Pacific Power and Portland General Electric, to buy WindFloat’s ouput, with the above-market costs flowing through to ratepayers. But the utilities wanted no part of it and the bill went nowhere. The DOE has said developers can’t continue on the funding track without a power off-take agreement, and all three projects are facing an end-of-July deadline to report on their progress.

WindFloat’s backers in Oregon are hoping the Obama administration will cut WindFloat a little slack.

“With additional time, I think there’s a chance something will open up,” Rep. Caddy McKeown (D-Coos Bay), a cosponsor of the failed bill, said in an interview.

McKeown, a former Coos Bay Port Commissioner, said she backs the project as a source of clean energy for the state and for its economic development potential. “We could be a leader, a hub, in bringing offshore wind power to the West Coast,” she said.

Leapfrogging to More Advanced Technologies

The DOE’s hope was that WindFloat, and the other projects it selected, would help the virtually nonexistent U.S. offshore wind sector leapfrog from early-generation technologies to ones that could ultimately prove to be more viable economically and geographically.

The U.S. is the world’s leading producer of electricity from land-based wind power, but the country’s first offshore array is only now being built – Deepwater Wind’s 30 MW Block Island Wind Farm off Rhode Island, which is supposed to be operating before then end of next year. This despite the fact that most scenarios for deep adoption of carbon-free energy count on offshore wind eventually being a contributor, in Oregon and even more so off the Eastern Seaboard.

The challenge has been costs well above other renewable energy technologies, let alone fossil fuels. Advocates invoke the solar experience, with its big price-tag plunge in the past decade as adoption soared. In Europe, where more than 7 gigawatts of offshore wind has been deployed, costs have come down, although not as precipitously as with solar or land-based wind. 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.

Floating turbines could be a breakthrough in a couple of ways.

The Rhode Island turbines will go in waters less than 30 meters deep, just like most European offshore turbines, and their foundations will be driven right into the sea floor, also standard practice. That won’t work on the West Coast because the Pacific Ocean drops off so quickly. WindFloat’s semi-submersible technology, successfully demonstrated in Portugal with a single, smaller turbine since 2012, is seen as the avenue to access a formidable wind resource in deep waters farther offshore.

These big, steady winds could be had at no greater cost than today’s standard offshore turbines, according to a new study from the Carbon Trust, a UK nonprofit that tries to help commercialize low-carbon technologies.

“Floating wind has the potential to reach cost parity with fixed-bottom offshore wind, with the higher CAPEX of the platform, moorings, and anchors negated by lower installation costs and lower OPEX driven by cheaper repair costs for major components,” the report said. “Demonstrating and validating the cost reduction potential is a critical next step for the industry.”

But in a chicken-or-egg predicament, the floating turbine folks need to do high-priced demonstration projects to move along the validation path. And even with the DOE’s support, WindFloat is so far proving to be too pricey for Oregonians’ tastes, the state’s ultra-green reputation notwithstanding.

“If he can get the cost down, that would help a lot,” McKeown said.

“He” is Kevin Banister, the Portland-based point man on the project for Principle Power, the company that developed the WindFloat technology. Banister wouldn’t divulge the price WindFloat Pacific was asking for its power but said it would be “competitive with other demonstration projects that have been done in the state.”

Expensive Solar

Some of those programs have been very expensive – for instance, a 27.5 MW solar incentive called the Volumetric Incentive Rate (VIR) Pilot Program began in 2010 paying solar producers as much as 65 cents per kilowatt-hour, a staggering sum in a state where the average retail price of electricity is 10.5 cents/kWh. Even in the most recent VIR solicitation, earlier this year, the rates ranged from 16 to 35 cents, depending on the size and location of the system.

Nonetheless, in a letter to legislators arguing against the WindFloat bill, Pacific Power and Portland General Electric said WindFloat power would cost them “3-4 times what we pay for onshore wind” and would amount to “an extremely inefficient and expensive way for utilities to purchase renewable power.” Onshore wind can generally be had for less than 5 cents/kWh these days.

Deepwater Wind, which has contracted to develop the WindFloat Pacific project, will sell power from the Block Island Wind Farm to the utility National Grid at an initial price of 24.4 cents/kWh, which might not seem so high in a state where the average retail price of electricity is 20 cents.

Banister said an above-market price was to be expected for a first-of-its-kind demonstration project and that any cost to ratepayers “would be very modest,” although neither he nor McKeown could put a hard figure on what that cost might be.

“As states and the region begin to embrace more aggressive renewable energy policies, being a leader in offshore wind has the potential to be a huge benefit,” he said. “The state has so much to gain from this, in economic development and in diversifying its energy resource, I’m optimistic that we’re going to get there.”

One strategy to make the project more palatable might be to downsize to two or three turbines, thus reducing the impact on ratepayers. It’s been widely reported that WindFloat will cost $200 million. Banister wouldn’t comment on that figure one way or another, but indications are it could be quite a bit higher. Deepwater Wind’s Block Island project is expected to cost well over $300 million when you include the tab for a 20-mile undersea transmission cable and various shoreside substation upgrades.

In any case, WindFloat’s first task will be to convince the DOE that it should get more time to work out the power purchase issue (the project’s next opportunity with the Oregon Legislature won’t come until early next year). Via email, the DOE avoided answering specific questions about WindFloat or the other projects. It has said that projects failing to meet benchmarks could see their funding shifted to alternates, but hasn’t quite said the end-of-July review is an inflexible deadline.

The department might have little choice but to be patient, given that all three of the innovative offshore wind projects are stumbling: Fishermen’s Energy has been unable to convince state regulators to approve a power purchase agreement that would start around 20 cents/kWh, and Dominion Virginia Power in April said its project would be delayed at least a year because the lone bid to build it came in around twice as high as was expected.