U.S. tapping rich new energy source (and it's not oil)

U.S. oil production may be booming, but America is also hitting another gusher in expanding the nation's energy supplies: wind.

Late next month, the U.S. Department of Interior will auction off more than 742,000 acres in the waters off Massachusetts for the development of commercial wind energy. Twelve companies have qualified to take part in the January 29 auction for the Massachusetts Wind Energy Area, located about 12 nautical miles off the Massachusetts coast.

The Department of Energy's National Renewable Energy Laboratory (NREL) says that, if fully developed, the area could support between 4 and 5 gigawatts of commercial wind energy. That would generate enough electricity to power more than 1.4 million homes.

"This sale will triple the amount of federal offshore acreage available for commercial-scale wind energy projects, bringing Massachusetts to the forefront of our nation's new energy frontier," Interior Secretary Sally Jewell said in a statement last month.

Bay State officials have high economic hopes for the project. "This offshore wind energy area not only has the capacity to generate enough electricity to power half the homes in Massachusetts," noted Governor Deval Patrick, "but it will create local jobs and a renewable and home-grown source of power."

The initiative highlights that, even with dramatic drop in oil and gas prices, 2015 could be a big year for wind power in the U.S. According to the U.S. Energy Information Administration, wind power generated 4.1 percent of total U.S. energy last year, up from 3.5 percent a year earlier.

In contrast solar power generated just 0.23 percent of the total electricity generated in the U.S. in 2013. Offshore wind power projects have provided just over two percent of all wind power installations worldwide.

But that figure is also expected to grow over the next several years. Research and consulting firm GlobalData expects the market value of offshore wind turbine and foundation installation projects to increase fivefold over the next few years, from an estimated $560 million now to $2.9 billion by 2020.

Most of those projects are expected to take place in European waters. Prasad Tanikella, GlobalData's senior analyst covering power, concedes the offshore wind projects are more expensive, larger and more complex than their on-shore counterparts. Despite those higher costs, offshore winds are stronger and steadier, producing more energy, Tanikella noted.

The U.S. Bureau of Ocean Energy Management has established seven commercial wind energy leases off America's Atlantic Coast, and is expected to hold another competitive offshore wind auction for an area off the New Jersey coast next year.