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Winds of Change in Maryland

State Could Become a Leader in Clean, Renewable Offshore Wind Energy

Kiley Kroh and Erin Gustafson outline how offshore wind is a good long-term investment for the state and its residents.

Maryland has the opportunity this week to go where no state has gone before. Not exactly deep space, but a big leap into uncharted territory nevertheless. The Maryland Offshore Wind Energy Act of 2012, spearheaded by Gov. Martin O’ Malley, places a good bet on offshore wind by incentivizing the development of what could be the nation’s first offshore wind farm—providing stable, renewable wind power to the state’s residents and positioning Maryland to become a leader in the manufacturing and development sectors for decades to come. The measure passed the state House of Delegates last week and moves to the Senate for this, the final week of Maryland’s 2012 legislative session.

Though Europe and even China have realized the vast economic and environmental potential that accompanies harnessing the power of offshore wind for years, there are currently zero turbines operating in U.S. waters. The upfront costs of creating an entire industry are high, but the prize for winning the race to develop the nation’s first offshore wind farm will be gaining a foothold for tremendous potential economic development opportunities in turbine manufacturing and maintenance that will come to a regional hub for a burgeoning industry.

Here’s a look at what Maryland has to gain from the state’s Senate passing a law promoting offshore wind.

Why Maryland?

Like solar in Colorado or land-based wind in Iowa, Maryland’s vast natural resources and preexisting infrastructure make the state prime territory for offshore wind development. In fact, the Department of Energy classifies the state’s wind resource as “outstanding” and stronger than any land-based wind resources in the nation. Add the existing port facilities, manufacturing capacity, and marine expertise, and the case for developing a wind farm off Maryland’s shores becomes even clearer.

Additionally, Maryland’s offshore topography and existing industrial facilities make development of an offshore wind farm even more cost-effective. As The Washington Post explains, “Off its coast, Maryland has a large expanse of shallow waters, where wind turbines can be erected at comparatively low cost. By contrast, offshore wind would be substantially more expensive in California, because the big drop-off in the ocean floor is closer to the coast.”

Maryland imports approximately 30 percent of the electricity it consumes each year. As a result, transmission lines become congested and power is lost throughout the process, all of which raises rates for Maryland residents. By comparison, a 310 megawatt offshore wind pilot project would supply enough electricity to power half the homes on the eastern shore of Maryland or more than a third of the homes in Baltimore City—all with clean, homegrown energy.

Why do they need this bill?

The most significant obstacle to making offshore wind a reality in the United States is the lack of financing and certainty for developers. The Maryland Offshore Wind Energy Act would incentivize the development of up to 500 MW of offshore wind capacity by creating a carve-out in the state’s renewable energy portfolio standard to include that a specified amount of energy would be derived from offshore wind. Maryland’s RPS requires that 20 percent of the state’s electricity be generated from renewable energy sources by 2022. Similar carve-outs for solar or wind have been successfully implemented in several states to spur investment and development of a local resource.

Additionally, the bill would plan and implement financing of a multibillion-dollar offshore wind farm roughly 11 miles off the coast of Ocean City, which would ensure the turbines are only faintly visible from the beach. This subsidy would be created by adding a fee of $1.50 to every Maryland resident’s electric bill and a fee of 1.5 percent to large industrial and commercial electricity users beginning in 2017 and continuing for 20 years.

After similar legislation was voted down last year, the bill was reworked to provide greater protection to Maryland’s energy consumers. For instance, the new version specifies that the Public Service Commission can only approve a project that benefits Maryland’s health, economy, and environment. In addition, the bill stipulates that any unanticipated costs are the responsibility of the developers, not electric ratepayers, and that any increase in costs for consumers not exceed $1.50 a month for the average residential ratepayer.

The measure is also critical if Maryland is to have any hope of meeting its lofty goal of achieving 20 percent of the state’s energy from renewable sources by 2022. Currently, only 7 percent is derived from renewables and without a boost for offshore wind, the state loses out on the chance to capitalize on the resource freely blowing right off their shores.

In a recent editorial supporting the measure, The Baltimore Sun explains, “If the state has any hope of achieving its aggressive goals for renewable energy—and particularly if it hopes to do so in a way that benefits Maryland’s economy—offshore wind needs to be part of the picture.”

What are the benefits?

Offshore wind would bring big economic benefits. A regional employment model analysis by the Maryland Department of Business and Economic Development found that the total economic impact of offshore wind over five years is almost $2 billion, with $8.7 million in additional state tax revenues.

A 2010 study conducted by the National Renewable Energy Laboratory found that a 310 MW project would create almost 1,300 manufacturing and construction jobs for five years and an additional 250 ongoing supply and operations and maintenance jobs thereafter. But these numbers are just the tip of the iceberg.

The job-creating potential of offshore wind will extend far beyond the construction of this single project. Neighboring states like Delaware, New Jersey, and Virginia are also seeking to develop offshore wind projects and would be able to take advantage of infrastructure already established in Maryland, whose central location and available port facilities are well-positioned to service future projects.

The potential for building out the clean energy infrastructure through offshore wind extends far beyond an initial pilot project. A study by the University of Delaware shows that offshore wind farms could generate more than enough energy to meet Maryland’s annual electricity consumption if the wind farms were to extend into deeper waters. Even using only commercially proven shallow-water equipment—such as the equipment that would be used in the project off the coast of Ocean City—Maryland could produce enough energy to meet 70 percent of the state’s annual energy demand.

Then there are the health benefits. Relying on dirty, fossil fuel-based electricity sources is costing Maryland residents dearly. A report from the National Academy of Sciences found that health impacts caused by burning fossil fuels for electricity cost the average Maryland household nearly $73 per month. A 310 MW pilot project will reduce the emission of carbon pollution by 586,000 tons per year—leading to cleaner air, cleaner water, and healthier residents. According to the NAS report, the pilot project would ultimately save Maryland’s economy over $27 million per year in public health costs.

Given these benefits, it’s no surprise the Maryland Wind Energy Act has attracted a broad and diverse network of supporters—labor unions, students, religious groups, physicians—all with the same goal of bringing offshore wind to Maryland.

Maryland residents have shown consistent and solid support for the measure in multiple polls. A mid-December survey done by OpinionWorks of Annapolis on behalf of a coalition of environmental groups found nearly two-thirds of voters statewide favor developing offshore wind power even if it would raise their utility bills by $2 a month. It mirrors the result of an earlier poll in September, in which 62 percent of those asked supported offshore wind and were willing to pay up to $2 a month for it.

As The Baltimore Sun editorialized, the unsuccessful 2011 bill “would have benefited the state—and its electricity customers—through predictable, clean energy for decades to come. The 2012 version of the legislation should be a no-brainer.”

Gov. O’Malley’s forward-looking legislation is part of true progressive vision for his state. Rather than hedging their bets by allowing other states to get off to a massive head start in the race to develop the clean energy economy of the future, the state’s legislature now has the opportunity to land Maryland in pole position. A vote from the state’s Senate this week could clear a path to a clean energy future for Maryland and the nation.

Kiley Kroh is the Associate Director of Ocean Communications and Erin Gustafson is an Energy and Environmental Policy intern.

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Kiley Kroh

Senior Editor, ThinkProgress