In Europe, wind energy is moving offshore. It’s simple, really: Europe is densely-populated, land is scarce and hence valuable, and so anyone wanting to develop new wind projects is looking at putting turbines in the Baltic Sea. A side benefit is that the wind resource is more plentiful offshore, not subject to disturbance from hills and trees.

In the U.S., prospects for offshore wind are not as rosy. With the continued NIMO (Not In My Ocean) efforts by local residents to scuttle the proposed Cape Wind windfarm off Nantucket, it’s hard to see much development coming to fruition there, or along the similarly aesthetically-picky Pacific Coast. As for the South Atlantic and Gulf Coasts, they are so vulnerable to hurricanes that would-be project developers are likely to be scared off.

FPL is developing a 140 megawatt windfarm off Long Island, and this one has a chance of actually being built. But this is because Long Island faces very high energy prices and future shortages that are almost unparalleled in the U.S. Electricity prices approach 20 cents/kwh, based almost solely on natural gas and oil burning powerplants located on the island, and there is limited additional power import capability from the mainland. (Of course, it helps that the project is being developed off the coast of Jones Beach, rather than the Hamptons.)

In the Midwest, there may be a brighter long-term future for offshore wind. There is likely to be ample good wind resource in the Great Lakes; Lake Erie looks especially promising, and has the added advantage of being rather shallow. Perhaps in a few decades, there could be gigawatts of wind generating capacity in the Great Lakes.

But, the problem remains economics. Excluding the PTC, onshore wind projects produce power at roughly 5-8 cents/kwh, whereas in contrast offshore wind costs reportedly are about double that level – even factoring in better wind and correspondingly higher capacity factors that are available offshore.

Offshore wind technology can improve. Most wind turbines available for offshore application are enlarged “marinized” versions of onshore designs. A clean-sheet approach to offshore wind designs offers the prospect of cutting costs by perhaps 50%, though such improvements are likely to take several years to achieve. Some observers (such as The Economist, recently) suggest that vertical axis designs, rather than the dominant horizontal axis “propeller” approach, may lead to better economics for offshore application.

But that’s all in the future. With so much vacant and windy land in the Plains and West, windfarm developers in the U.S. can well afford to ignore offshore for now and focus on onshore project opportunities for the foreseeable horizon.