Eight Years.  That’s how long it took what will likely be the nation’s first offshore wind farm to obtain a federal lease.  It is little wonder, in light of Cape Wind’s struggle, that wind advocates have been pushing for greater federal support.  Earlier this week, the Department of Energy (DOE) and the Department of the Interior continued efforts to answer that call, jointly announcing the release of “A National Offshore Wind Strategy” aimed at developing the tremendous wind resources off the nation’s coastlines.  This interagency effort is backed by 50.5 million dollars in DOE funding to support research and development of offshore wind installations.

The nation’s potential for offshore wind power is impressive: according to DOE, wind resources off the U.S. coastline (including the Great Lakes) could theoretically produce an estimated 4,150 gigawatts (GW) of energy—more than four times the current generating capacity of nation’s electrical system.   As the new strategy recognizes, however, the difference between theory and reality is significant.  Currently, offshore wind farms have considerably higher capital costs than land-based installations, due in part to increased equipment, installation, interconnection, and infrastructure costs.  For example, existing installation and maintenance procedures involve the use of specialized vessels that simply do not exist in the U.S.

Further, as a new industry, offshore wind faces unique and novel permitting challenges.  Multiple state and federal agencies have jurisdiction over the development of offshore wind farms.  In the case of the Great Lakes, for example, DOE notes that eight states and a Canadian province claim jurisdiction—with the U.S. Army Corps of Engineers serving as the “lead agency” for purposes of the National Environmental Protection Act (NEPA).  Adding to the complexity is the relative lack of data regarding the environmental and social effects of offshore wind installations.

On September 7, 2010 Energy Secretary Steven Chu announced the issuance of the first loan guarantee under the Department of Energy’s (DOE) Financial Institution Partnership Program (FIPP).  The DOE issued the partial guarantee for a $98.5 million loan being made by John Hancock Financial Services to a subsidiary of the Nevada Geothermal Power Company (NGP) in respect of the 49.5 megawatt Blue Mountain geothermal project (PDF) located Humboldt County in Northwestern Nevada.  The blended interest rate for the loan was determined