May 21, 2020

Studies Find Gulf of Mexico Has Untapped Potential for Offshore Wind Development

Holland & Knight Alert
Jacob J. Lawler

The Gulf of Mexico is an attractive location for offshore wind development according to two recent studies conducted by the U.S. Department of Energy's National Renewable Energy Laboratory (NREL) and funded by the U.S. Bureau of Ocean Energy Management. In fact, more than 508 gigawatts (GW) of potential offshore wind development may be possible in the Gulf. Taken together, the studies suggest that the Gulf may be a new frontier in the development of the rapidly growing offshore wind industry.

The first NREL study examined several offshore renewable energy technologies to determine which is best suited for electric utility-scale development in the Gulf. The study concluded that offshore wind has the greatest potential, a result driven in part by the technology's maturity and track record. The other offshore renewable energy resources evaluated in the study were wave, tidal, ocean current, offshore solar, ocean thermal energy conversion, deep water source cooling, and hydrogen conversion and transport.

The study noted that the Gulf of Mexico has several positive features, including shallow waters, lower average wave heights, and nearby existing oil and gas infrastructure. However, the study warned that the Gulf poses technological challenges, including slower wind speed, softer soils and hurricanes. These challenges will require — and the studies assume — advancements in offshore wind technology.

The second study examined economic feasibility of offshore wind for certain reference sites in the Gulf of Mexico. These reference sites include Port Isabel, Galveston and Port Arthur in Texas; Pensacola and Panama City in Florida; and New Orleans, Louisiana. The study concluded that some sites will become economically competitive in the market without subsidies by 2030. This result requires two material assumptions: Offshore wind development costs must decline progressively over the next decade and the technology must adapt to compensate for the Gulf's hurricanes and slower wind speeds.

The study also indicated that a single 600-megawatt (MW) offshore wind project would be expected to support approximately 4,470 jobs and add $445 million to gross domestic product (GDP) during construction. Once complete, the project could provide 150 jobs and add $14 million to the GDP annually from its continued operations. These figures are based on a reference project at Port Arthur, Texas, with a commercial operation date of 2030.

The studies, which began in 2017, are part of a larger effort by the NREL to inform federal, state and local strategic renewable energy planning over the next decade. 

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.

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