Unleashing Offshore Wind Power:

The Department of the Interior is preparing to lease portions of the Outer Continental Shelf for offshore wind farms. The WSJ reports here.

The Interior Department's Minerals Management Service expects to finalize its proposed rule governing leasing of offshore acreage for alternative-energy production by the end of the year, clearing the way for development to start soon after. Already, the agency is doing environmental analyses on 10 offshore parcels that it is considering leasing this fall for wind projects. If the agency approves the leases, companies could begin exploring the areas for possible wind-turbine sites. . . .

wind accounts for only about 1% of total electricity generated in the U.S. And so far, all the wind power in the U.S. is produced onshore. The states that crank out the most -- Texas, followed by California -- boast vast stretches where the wind blows hard and where there is enough land to install hundreds of turbines to catch it.

But the onshore wind industry in the U.S. is beginning to be hampered by a lack of electrical-grid capacity to carry the power from the isolated places where wind typically blows hardest to the population centers that need the juice. Offshore wind provides a potentially big source of energy close to major coastal cities. . . .

Big obstacles remain. Wind power is more expensive than fossil-fueled energy. In the U.S., the tax breaks necessary to make it competitive are due to expire Dec. 31. Several proposals to renew the wind-power tax breaks have failed to pass Congress, typically because the bills also included controversial measures to remove existing tax breaks for other industries, notably oil producers. Whether Congress will resolve the dispute and extend the wind-power tax breaks when it returns from its recess is unclear. In the past, it has let the tax credits expire three times, prompting a lull in wind-power construction until the credits later were renewed.

Once the rules are finalized, they could help make offshore wind a reality in the U.S., particularly in the northeast. Unlike projects closer to shore that have been held up or delayed by local NIMBY organizations, federally authorized wind farms on the Outer Continental Shelf would not face such obstacles. Still, without the renewal of federal tax credits, it is unclear whether wind power will be able to compete in the marketplace.