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U.S. Offshore Wind: Up in the Air No More

|Includes:General Electric Company (GE), VWDRY
We have not had much to celebrate in the wind sector since our November 2009 article “Opportunities in the Wind Energy Value Chain”, but today’s landmark decision deserves a celebration. After a mere nine years pondering the issue, the federal government has finally given the green light for the first offshore wind farm in the U.S., off Cape Cod (read The New York Times article). This marks a major milestone for renewable energy in the U.S.

Bordered by two oceans and thousands of miles of coast line, the U.S. has one of the largest offshore wind energy resources. Recent studies place the upper limit of our potential annual offshore wind production at 37,000,000 gigawatt hours, over 10 times the total U.S. annual electricity consumption. Currently, electricity produced from U.S. wind farms satisfies slightly less than 2% of total U.S. electricity demand. This is a far cry from the U.S. Department of Energy goal for wind power to supply 20% of the nation’s electricity needs by 2030.

While it is certain that many twists and turns remain in the Cape Wind project saga, including likely legal challenges, this decision opens the door for dozens of additional offshore projects that have been kept in limbo due to politics and NIMBY-ism (Not-In-My-Back-Yard).

Major companies involved in offshore wind turbines such as General Electric Co. (NYSE:GE) and Vestas Wind Systems (OTCPK:VWDRY) will undoubtedly benefit from the opening of this new gigantic market.

Seeking Alpha author Garrett Beauvais contributed to this article and to The Green Investor May issue which features wind energy investment opportunities.

Disclosure: No positions
Stocks: GE, VWDRY