Dallas--The next frontier for offshore wind could be the Midwest.

The first offshore wind project on the Great lakes moved a step closer to reality with the signing of a Memorandum of Understanding (MOU) between GE Energy (GE) and the Lake Erie Energy Development Corporation (LEED).

The MOU was announced by Ohio Governor Ted Strickland at the opening session of WindPower 2010, the annual conclave put on by the American Wind Energy Association and thought to be the biggest U.S. energy event. The MOU commits GE to providing five of its 4-megawatt (MW) state-of-the-art direct-drive offshore turbines, along with maintenance services, for a 20-megawatt installation just off Cleveland's shores in Lake Erie. Governor Strickland described it as "a first step."

Offshore industry sources confided that while GE's 4MW turbine is an impressive machine, it has yet to prove itself in the rugged offshore environment and will be especially hard-pressed to perform up to expectations in the brutal and frigid waters of Lake Erie. But savor the irony: the pollution on the once-flammable waters of Lake Erie helped prompt the birth of Earth Day and the modern environmental movement.

LEED President Larry Wagner stressed that 11 of GE's 3MW turbines have been successfully operating in a nearby and similar onshore environment close to the shoreline for five years.

If successful, LEED hopes to proceed with the development of 1,000 megawatts of offshore capacity in the same Lake Erie waters. According to Wagner, a rigorous seven-layer GIS analysis conducted by the Ohio Department of Natural Resources (ODNR) has identified the potential for much more offshore generation in sectors of the lake unencumbered by environmental, commercial, recreational or military considerations. "The Ohio portion of Lake Erie could easily support 10 thousand to 20 thousand megawatts," Wagner said.

LEED plans for the 20MW GE installation to go online in 2012, preparing the way for the fulfillment of the 1,000MW goal by 2020. Michigan, Iowa, Ontario and Pennsylvania, among other regional states and provinces, are actively courting green energy and manufacturing facilities, as well.

When asked about financing, Wagner said LEED is interviewing developers. "A developer has come to us with a plan," he said.

One industry source who cautioned the GE turbines were unproven speculated that the project was small enough that GE Energy might be able to arrange financing but would be unlikely to obtain money to go ahead with a large-scale project until the money people see the turbines perform to expectations for two years.