Ocean & Offshore Energy Projects and Policy Blog

Some Encouraging Developments: Submerged Land Leases in the Mid-Atlantic to Be Issued in 2012; New Funding Opportunities from DOE

2012-01-25T12:14:00.000-08:00

Although we are already well into the first quarter of 2012, there are still a number of unresolved 2011 matters that deserve some attention. We are still grappling with the biggest elephant in the room-- that is, the on-going congressional effort to extend and/or authorize certain tax incentives (e.g., the Offshore Wind Investment Tax Credit ) designed to promote renewable energy projects. However, despite the ongoing lethargy and frustrations with respect to tax incentives, the Obama Administration continues to authorize agency initiatives supporting the development of a U.S. offshore renewable energy industry. In the last two days, both the Department of the Interior ("DOI") and the Department of Energy issued important and (pardon the pun) groundbreaking announcements impacting offshore wind.

DOI Announces Three Important Things in One Week!

Industry participants and observers alike are likely reeling from the sheer volume of industry-moving announcements issued by DOI in the last week.

First, on February 2, 2011, DOI Secretary Ken Salazar and Bureau of Ocean Energy Management ("BOEM") Director Tommy P. Beaudreau announced the results of the National Environmental Policy Act ("NEPA") environmental assessment ("EA") performed with respect to proposed Wind Energy Areas ("WEAs") located on the Outer Continental Shelf ("OCS") off the coasts of New Jersey, Delaware, Maryland and Virginia. The Environmental Assessment, which was published today in the Federal Register, concluded that there would be no significant environmental and socioeconomic impacts from issuing wind energy leases in the designated mid-Atlantic WEAs.

The EA considered potential impacts arising out of site characterization and assessment activities that would need to occur before developers could build generation facilities on the OCS. These activities include geophysical, geotechnical, archeological and biological surveys and the installation and operation of meteorological towers and buoys. The EA will provide baseline data and provide substantial context for BOEM's consideration of future leasing proposals in the mid-Atlantic Wind Energy Areas and in the Bureau's review of developers' site assessment plans. If a lessee proposes a wind energy generation project on its lease, BOEM would prepare a separate site- and project-specific analysis under NEPA of its construction and operations plan, and provide additional opportunities for public involvement.

Although the NEPA clearance should enable developers to move forward more quickly with projects proposed for the mid-Atlantic WEAs, BOEM and DOI have yet to finalize the lease auction process through which developers must compete with one another for leases. Notwithstanding the pending auction methodologies, Secretary Salazar stated today that submerged land lease proposals for projects in the mid-Atlantic WEAs will be vetted before the end of 2012.

In DOI's press release, Depute Secretary of the Interior David J. Hayes offered the following comments on the EA and FONSI:

“Today’s announcement opens up the ‘sweet spots’ off the mid-Atlantic coast for development of our nation's remarkable offshore wind resource... Interior will continue to do its part to build a world-class offshore wind industry that provides clean, reliable, home-grown power and the American jobs that come with it.”

Second, in a surprisingly efficient move for BOEM, the Bureau simultaneously published Calls for Information and Nominations ("CFI") for WEAs located off of Maryland and Virginia. The CFIs were issued to solicit lease nominations from potential project developers and to request public comments regarding site conditions, resources and multiple uses of the Wind Energy Areas.

Finally, BOEM published a new submerged land lease form in the Federal Register. BOEM developed the lease form following consultation with the public and with industry representatives with the hope that the form will "streamline the issuance of renewable energy leases on the OCS." The lease form will be effective 15 days following publication, i.e., on February 17, 2012.

Readers, I know it's a lot to take in. But wait. There's more!!

DOE Wants to Give You Money!

On February 1, 2012, the US Department of Energy's Wind and Water Program published a notice in the Federal Register announcing its intention to release a Funding Opportunity Announcement ("FOA") tentatively entitled "U.S. Offshore Wind: Advanced Technology Demonstration Projects." The preliminary notice of the FOA has been published to solicit comments from the public and from prospective FOA applicants in advance of the final FOA publication on February 29, 2012.

This FOA is being issued in furtherance of one of the two primary goals set forth February 2011 DOE/DOI inter-agency Strategic Work Plan, an initiative designed to implement the Obama administration's National Offshore Wind Strategy. The two essential goals of the Strategic Work Plan included the creation and implementation of DOI's Smart from the Start program, and the creation of oversight of incentives and funding by DOE for innovative processes and technologies that will help lower the cost of offshore renewable energy to DOE's 2020 goal of $.10/kWh.

According to the Federal Register notice, DOE distributed $26.5 million to 19 offshore wind technology projects and $16.5 million to 22 "market-barrier removal" projects in 2011. The Federal Register notice does not indicate how much money will be available through this round of funding.

In addition to accepting comments by postal and electronic mail, DOE has scheduled a public meeting on February 7, 2012 from 9:30am to 12:30pm at the L'Enfant Plaza Hotel, 480 L'Enfant Plaza Southwest, Washington, D.C. to address comments and questions from the public and from prospective applicants.

2011 Wrap Up, Part 1: Northeast Projects Update

2012-01-03T14:04:00.000-08:00

For offshore wind industry participants (and spectators), 2011 was a bit of an emotional roller coaster -- and some of the most intense drama occurred in the last days of December. From Congressional battles over expiring tax incentive legislation, to highly influential and precedential court decisions and project specific developments, the events of 2011 have set the stage for what could become a climactic 2012.

The next several posts will be dedicated to addressing where some high-profile projects left off in 2011 and considering where those projects may go in 2012 by geographical region. This post will discuss New England projects including Cape Wind, Deepwater Wind's Block Island project, and Anbaric Transmission's recently announced Bay State Offshore Wind Transmission System.

Massachusetts - Cape Wind: Another Year of Courtroom Battles Comes to a Close

As has been the case for most of the last decade, the bulk of activity relating to the proposed Cape Wind Offshore Wind farm in 2011 took place in the Courtroom. See e.g, Circuit Court ruling remanding FAA’s No Adverse Effect Decisions. However, in the final days of 2011, Cape Wind secured a favorable ruling from the Massachusetts Supreme Court upholding its proposed power purchase agreement (PPA) with National Grid. See Alliance to Protect Nantucket Sound et al., v. Department of Public Utilities, et al., No. SJC-10934 (Dec. 28, 2011).

On December 28, 2011, the Massachusetts Supreme Court issued its decision to uphold the PPA between Cape Wind and National Grid (National Grid PPA). The National Grid PPA requires National Grid to purchase 50% of the energy, capacity and Renewable Energy Credits (RECs) produced by Cape Wind —i.e., up to 234 megawatts—and will extend for fifteen years beginning on the date that Cape Wind begins commercial operation. The National Grid PPA was the first to be approved under a provision of Massachusetts’ Green Communities Act that allows renewable energy generators to enter directly into long term contracts with utilities.

The lawsuit was filed in late 2010 after the Massachusetts Department of Public Utilities (DPU) issued a formal approval of the PPA. The plaintiff group, comprised of long-standing opposition group Alliance to Protect Nantucket Sound, trade organizations Associated Industries of Massachusetts and New England Power Generators Association, and Canadian energy distributer TransCanada Power Marketing, Ltd, alleged that (1) the National Grid PPA violates the commerce clause of the United States Constitution; (2) the DPU improperly found that the National Grid PPA was in the public interest and cost-effective; (3) the National Grid PPA should have been solicited through a competitive bidding process; and (4) the DPU made a mistake when it both approved a method for recovering project costs from all distribution customers and required the National Grid PPA to include financing provisions sufficient to fund development of a renewable energy generation source.

Massachusetts Supreme Court Justice Margot Botsford wrote in the decision that while the Massachusetts Green Communities Act does not explicitly address the authority of state regulators to approve cost-recovery methods for renewable power:

[I]t is well established that the (Massachusetts Department of Public Utilities)
has the statutory authority to rule on the appropriateness of proposed
cost-recovery formulas…

(T)he department's decision in this proceeding is not precluded by the fact that the proposed cost recovery method is novel, particularly in light of the new emphasis on development of renewable energy in the (Green Communities Act)…

The department permissibly determined that the environmental benefits of (the power purchase agreement) … will accrue to all National Grid customers, and it is therefore appropriate to require all customers to share in the costs of acquiring these benefits, in accordance with departmental precedent…

Although the affirming Supreme Court decision removes the uncertainty associated with outstanding legal challenges to the National Grid PPA, it remains to be seen whether the resolution of that challenge will yield sufficient confidence to inspire another utility to enter into a PPA with Cape Wind for the remaining 50% of its projected output.

Rhode Island- Block Island 5-Turbine Demonstration Project: 2012 Could Be The Year.

Following the resolution of a much belabored challenge to the Rhode Island Department of Public Utilities’ approval of its PPA, Deepwater Wind hopes that 2012 will be the year that they can begin construction on its five-turbine wind farm -- and recent events suggest that they may be able to bring that goal to fruition.

In late December, Rhode Island news sources reported that Deepwater Wind’s Chief Administrative Officer Jeff Grybowski has stated that the company will announce the involvement of a major new investor in early 2012. Although the identity of the new investor has not yet been announced, Grybowski said it is a “major global industrial company that sees a bright future for offshore wind.” The unnamed new investor will partner with investment management firm D.E. Shaw to fund the development of the Block Island wind farm, which is slated to be constructed within three nautical miles of Block Island in Rhode Island state waters.

Also in December 2011, Deepwater Wind hosted a public meeting to ensure sufficient public involvement and support for the proposed 15-mile transmission line that would connect the Block Island wind farm to the grid. The current plan shows the transmission line beginning at the 5-turbine Block Island Offshore wind farm, making landfall at the Narragansett Pier through the seawall and then following a route through Narragansett’s shorefront. The transmission line would and end at a private transmission station in South Kingstown before feeding into National Grid’s network. Deepwater has commited to spending $6 million to conduct environmental surveys of the sea floor and along the entire route where the transmission line would be constructed proposed, and along the route of a 14-mile cable that would link the project, and Block Island, to the Rhode Island power grid.

Deepwater Wind has stated that it hopes to complete the transmission line and the Block Island Wind facility by 2014.

New England Coastal Waters - Anbaric Transmission: An Offshore “Backbone” Transmission Line for the Northeast

Following the positive feedback from government agencies and some industry insiders in response to Atlantic Wind Connection’s proposed “backbone” transmission project for the Mid-Atlantic region (a/k/a, the "Google project"), it was only a matter of time before someone proposed to construct a similar project in the northeast. And so, it was not a huge surprise when Anbaric Transmission, an experienced subsea transmission project developer, announced in mid-November 2011 that it had filed a request for interconnection with the New England ISO for what it calls the “Bay State Offshore Wind Transmission System.”

The Bay State Offshore Wind Transmission system is designed to accommodate 2,000 MW of offshore wind energy and will serve generation developers who responded to the Bureau of Ocean Energy Management’s Requests for Interest for designated Wind Energy Areas off of New England coastlines. See here, pg. 12-14. BOEM has received responses from ten developers proposing to build a total of 8,000 megawatts of offshore wind.

Anbaric Transmission has been involved with two previous subsea transmission projects: the Neptune Regional Transmission System, a 660-MW submarine connection between New Jersey and Long Island, and the Hudson Transmission System, a 660-MW line under construction beneath the Hudson River between New Jersey and Manhattan.

Federal Update: BOEM Requests Comments on Proposed Lease Auction Process

2011-12-07T14:05:00.000-08:00

BOEM Issues Auction Format Information Request; Public Comments Due on January 12

On December 5, 2011, the Bureau of Ocean Energy Management (BOEM) published a notice in the Federal Register entitled “Request for Information on the State of the Offshore Renewable Energy Industry—Auction Format Information Request (AFIR)” (AFIR) which seeks comments on proposed lease-sale auction procedures designated for offshore wind energy development on the Outer Continental Shelf. The AFIR provides for a 45-day public comment period set to expire on January 12, 2012. BOEM has also announced a workshop designed to educate stakeholders about the proposed auction format options and to solicit feedback. The workshop will take place on Friday December 16, 2011 from 8:30 a.m. to 3:30 p.m at the South Interior Building in Washington, D.C. Additional information about the workshop can be found here.

The auction methods proposed in the AFIR were designed in consideration of BOEM’s program objectives, which include:

BOEM’s statutory obligation to seek a “Fair Return” for leases granted on the OCS;
economic efficiency;

program efficiency and manageability;

“lease boundary flexibility” to enable bidders to select optimal lease areas within the confines directed by BOEM;

fair competition among all interested bidders;
process transparency;

equal treatment and consideration of all bids by BOEM; and

consistency.

The AFIR proposes several potential auction formats for use in a variety of circumstances including single lot leases and multiple lot leases. For example, for single lot auctions, BOEM proposes to employ a “simultaneous ascending clock auction” or SACA format. Under a SACA, BOEM would set the minimum bid price for a specific lot. If more than one bidder is willing to meet the asking price, BOEM would increase the price incrementally, requesting bidder acceptance at each increase until only one bidder remains. If all bidders drop out at the same price point, BOEM has indicated a number of possible approaches to break the tie. BOEM has also suggested a number of rules that would apply to bidders in a SACA, such as minimum and maximum numbers of lots that a prospective bidder can bid upon.

For multiple lot auctions, BOEM proposes a number of alternative auction formats including variations on the SACA approach. One proposed alternative to the SACA approach would ask bidders to submit bids at or above the designated minimum lot price in each round of bids. The auction would end when each subsequent round of bidding yields the same bid prices as the previous round. BOEM would then award the lease to the bid producing maximum revenue.

A general description of the proposed auctions is provided in the AFIR. A more comprehensive explanation of the auction formats along with BOEM’s commissioned study of various auction formats for the issuance of renewable energy leases (conducted by Power Auctions LLC) is available here.

Court Orders Reconsideration of FAA Approvals for Cape Wind Offshore Wind Project

2011-10-31T15:15:00.000-07:00

On Friday October 28, 2011, the United States Circuit Court of Appeals for the District of Columbia issued a decision vacating and remanding the Federal Aviation Administrations’ ("FAA") 130 identical Determinations of No Hazard which were issued with respect to the proposed Cape Wind 130-turbine offshore wind farm. See Town of Barnstable, et al, v. Federal Aviation Administration, No. 10-1276 (D.C. Cir. 2011).

Summary of the Decision

The lawsuit, filed by long-standing opposition group Alliance to Protect Nantucket Sound (the “Alliance”) and the town of Barnstable, MA (together, the “Petitioners”), alleged that the FAA “violated its governing statute, misread its own regulations, and arbitrarily and capriciously failed to calculate the dangers posed to local aviation.” The FAA, along with intervening party Cape Wind Associates, LLC, responded by alleging that the petitioners had no Article III standing to challenge the FAA determinations. Id. at 3. Although the Court’s decision is likely to lead to additional delays for Cape Wind, the ruling does not per se negate the validity of the submerged land lease issued by the Department of the Interior (“DOI”) to Cape Wind in October 2010.

With respect to the threshold question of standing, the FAA argued that even if the Petitioners could allege harm, the fact that “FAA’s hazard determinations, by themselves, have ‘no enforceable legal effect’” means that reversal of the FAA hazard determinations would not redress the grievance. Id. at 5. Although the Court agreed that the FAA hazard determinations were not enforceable on their own, the DOI incorporated a provision into the submerged land lease requiring that Cape Wind abide by “any future mitigation measures that the FAA might deem necessary to reduce or eliminate a hazard on Cape Wind.” Id. at 6. Accordingly, the Court held that the DOI’s inclusion of the FAA hazard mitigation provision is sufficient basis to find it “‘likely as opposed to merely speculative,’ that [DOI would cancel or retract the Cape Wind lease] if faced with an FAA determination that the project posed an unmitigatable hazard.” Id. at 10 (additional citations omitted).

The Court then considered whether FAA properly issued its No Hazard Determinations. Although the petitioners’ alleged that the FAA violated both its governing statute (49 U.S.C. Sec. 44718(b)) and its own internal guidelines (“Procedures for Handling Airspace Matters”, FAA Order 7400.2G (April 10, 2008)), the Court’s ultimate ruling regarding the FAA’ hazard determinations rests solely on the FAA’s application of its internal guidelines. Id. at 10. Importantly, the Court did not issue a declaration stating that the Cape Wind turbines present a hazard – mitigatable or otherwise. Rather, the Court merely remanded the determinations to FAA “to require the FAA to address the issues and explain its conclusion.” Id. at 13-14.

What Happens Next?

There are at least two possibilities as to what will happen in the wake of the Circuit Court’s decision. First, the FAA and Cape Wind Associates could appeal the decision by submitting a writ of certiorari to the Supreme Court of the United States. However, if the Supreme Court does not grant certiorari, the decision of the Appeals Court will stand. Moreover, even if the Supreme Court does choose to hear the matter, a Supreme Court affirmation of the lower court ruling could further dampen the perception that the U.S. offshore wind industry has the support of the U.S. government.

The alternative is for FAA to follow the Circuit Court’s order. FAA would be within its authority to re-issue all 130 Determinations with a “No Hazard” finding provided FAA includes further explanation of its conclusions. Under principles of administrative law, the FAA’s hazard determinations must not be "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A). In other words, the agency must “adequately explain its result…." Public Citizen, Inc. v. FAA, 300 U.S. App. D.C. 238, 988 F.2d 186, 197 (D.C. Cir. 1993).

Nevertheless, even if FAA finds that it must issue one or more determinations indicating a hazard, the Circuit Court decision indicates that FAA may make recommendations for mitigation measures to overcome these hazards. Accordingly, the only circumstance under which DOI may need to reconsider Cape Wind’s lease is in the event that FAA finds that there are unmitigatable hazards associated with the Cape Wind turbines.

Litigants’ Statements About the Case

Given the longstanding enmity between Cape Wind Associates and the Alliance, both parties issued public statements regarding the decision of the Circuit Court.

The Alliance to Protect Nantucket Sound issued a press release stating that the decision is "a resounding victory for the Cape and Islands community and the citizens of Massachusetts" and that the "FAA case is the first of multiple federal lawsuits challenging this poorly sited and expensive project and is just the tip of the iceberg of the problems the courts will consider relative to the Nantucket Sound location."

Cape Wind spokesman Mark Rodgers issued Cape Wind's official response to the decision: "The FAA has reviewed Cape Wind for eight years and repeatedly determined that Cape Wind did not pose a hazard to air navigation," he said. "The essence of today's court ruling is that the FAA needs to better explain its Determination of No Hazard ruling."

Offshore Wind Investment Tax Credit: House Companion Bill Introduced

2011-10-20T06:56:00.000-07:00

On October 18, 2011, Representative Bill Pascrell, Jr. (NJ-D) introduced H.R. 3238. H.R. 3238 is the companion bill to S. 1397 (previously discussed here) which was introduced on July 21, 2011 by Senators Tom Carper (D-DE) and Olympia Snowe (R-ME). The bills, both titled the “Incentivizing Offshore Wind Power Act”, propose an extension of the investment tax credit (“ITC”) for qualified offshore wind energy generation projects.

The bills, which contain nearly identical provisions, call for the Treasury to select up to 3000 MW of offshore wind projects which will qualify for tax credits if they are placed into service over a 5 year period. The tax credit would be the same 30% ITC that is granted to many other renewable energy sources. The five year extension of the ITC for offshore wind projects has been proposed in recognition of the longer siting, permitting and finance process required for offshore renewable energy projects-- a process that is currently estimated to take between 5-7 years. The existing ITC has a sunset provision expiring in 2012 that will render nearly all of the proposed offshore wind projects ineligible for the credit.

Co-sponsors for the Senate bill include Sen. Sherrod Brown (OH), Sen. Benjamin Cardin (MD), Sen. Susan Collins (ME), Sen. Christopher Coons (DE), Sen. Frank Lautenberg (NJ), Sen. Robert Menendez (NJ), Sen. Jack Reed (RI), and Sen. Sheldon Whitehouse (RI), all of whom represent states hosting active offshore wind development projects. The co-sponsor for the House bill is Representative Frank LoBiondo (NJ-R). There are at least three offshore wind generation projects proposed for both state and federal waters off the coast of New Jersey.

AWEA Offshore 2011: The Highlights

2011-10-14T13:06:00.000-07:00

At last year's American Wind Energy Association Offshore Windpower Conference and Exhibition in Atlantic City, Secretary of the Interior Kenneth Salazar and Jim Gordon from Cape Wind signed the first-ever submerged land lease for an offshore wind farm on the United States' federally managed outer continental shelf. Many of those in attendance last year fully expected that the lease-signing would signal an increase in project momentum-- and many industry participants and observers fully believed that construction on the Nation's first offshore wind farm might begin in 2011.

At this year's Offshore Windpower Conference and Expo, attendees spent three days discussing what has happened-- and what has not happened-- since October 2010. Here are some quick highlights from the event:

Secretary Salazar and Maryland Governor O'Malley Present Keynote

The Conference kicked off with a keynote address presented by Department of the Interior Secretary Ken Salazar, Maryland Governor Martin O'Malley, AWEA CEO Denise Bode, Michelle Siekerka from the New Jersey Department of Environmental Protection, and program co-chairs Aileen Kenney (Deepwater Wind) and Jim Lanard (Offshore Wind Developers Coalition).

Following last year's lease signing, Secretary Salazar's comments seemed a little more subdued this year. Although the Secretary did not release any industry-shaking news, he affirmed that both he and the Obama administration are committed to creating an offshore wind industry in the United States. To that end, Secretary Salazar announced that the Bureau of Ocean Energy Management expects to announce lease agreements for as many as five wind farms in as little as a few weeks or months.

Deepwater Wind Announces Siemens as Turbine Supplier

Deepwater Wind announced that it signed an agreement with Siemens Energy to buy the company’s latest offshore wind turbines for deployment in the Block Island Wind Farm, a project that remains on track to be the nation’s first offshore wind farm.

Under the agreement, Siemens will supply five of its new 6.0-megawatt direct drive offshore wind turbines for the Block Island Wind Farm. This will be the first project in the United States, and one of the first anywhere in the world, to use the new turbine, which will be commercially available for the project.

The Block Island Wind Farm is one of several proposed small demonstration-scale offshore wind projects (such as Fishermen's Energy's proposed 6-turbine project to be located 2.8 miles off of Atlantic City, NJ) that may become the first offshore wind farm built in North America. The Block Island Wind Farm is a 30-megawatt project to be located in Rhode Island state waters. The project also includes a transmission cable connecting the island to the mainland grid for the first time. Pursuant to a heavily litigated but now approved 20-year power purchase agreement, National Grid has agreed to buy all of the output from the project.

The project is scheduled to be in the construction phase in 2013 or 2014, although the timing of construction is dependent on the permitting process and final turbine specifications.

Highlights from the Developers' Panel

The last session of the conference offered attendees to hear updates from two full panels of offshore wind developers actively pursuing offshore wind projects in the United States. The thirteen developers on the two panels represented the largest number of developer panelists ever put on stage at an AWEA Offshore Windpower Event.

Developers represented on the panel included: Tim Ryan (Apex Wind/ North Carolina), Ian Hatton (Baryonyx/ Texas), Bill Moore (Deepwater Wind / Rhode Island), Doug Copeland (enXco / California), Andy Kinsella (Mainstream Renewable Power/ United Kingdom), Erich Stephens (Offshore MW), Dennis Duffy (Cape Wind Associates/ Massachusetts), Daniel Cohen (Fishermen's Energy/ New Jersey), Chris Wisseman (Freshwater Wind/ Ohio), Robert Gibbs (Garden State Offshore Energy/ New Jersey), Peter Mandelstam (NRG Bluewater Wind/ Delaware), Carolyn Heeps (RES-Offshore), and Theo de Wolff (Seawind Renewable Energy Corp.).

Following an opportunity for each developer representative to provide an overview of his/her company and project status, the panel responded to questions from the audience. One of the most compelling responses was offered up by Theo de Wolff from Seawind Renewable Energy. Jim Lanard asked the panel to consider whether the Department of Energy's recent grants (bestowed upon research and development facilities seeking to lower the cost of offshore renewable energy projects) were supporting the right technologies. Mr. de Wolff responded by saying that, with all due respect to the Department of Energy, at least some of the $43 million in grant money would be better spent deploying existing offshore wind technology and getting "steel in the water." Mr. de Wolff's comments echoed the frustration of many industry participants in the audience who responded with enthusiastic applause.

Finally, Jim Lanard presented his closing remarks by setting forth three challenges. His first challenge was to the federal government. He asked federal officials to be prepared to respond to the question, "what have you done for this industry lately?" at next year's Offshore Windpower event in Virginia Beach. Second, Jim challenged state officials to work harder to develop markets and market-promoting mechanisms that will enable developers to get projects into the water sooner. Finally, he challenged the non-governmental organizations to report back on how to reach consensus among parties with different opinions, approaches, objections and concerns about offshore wind.

DOI, BOEMRE issue new Call for Information

2011-08-22T08:54:00.000-07:00

On August 17, 2011, the Department of the Interior and the Bureau of Ocean Energy Management, Regulation and Enforcement’s announced a Call for Information and Nominations (“CFI”) for the development of offshore renewable energy projects on the Outer Continental Shelf adjacent to the state waters of Massachusetts and Rhode Island. The Federal Register notice of the Call for Information and Nominations is available here.

The CFI invites developers to identify proposed project locations within the Area of Mutual Interest (“AMI”, also known as “the Call area”) identified by the state of Rhode Island and Massachusetts in a landmark agreement in July 2010. The Call area was designated in consideration of the Rhode Island Special Area Management Plan and through a process involving BOEMRE’s Rhode Island and Massachusetts Renewable Energy Task Forces, which include federal, state, and tribal government partners.

BOEMRE is also seeking public comment – through a Notice of Intent to Prepare an Environmental Assessment – on important environmental issues and reasonable alternatives related to the proposed leasing, site characterization and assessment activities in the offshore area under consideration. The Notice of Intent to prepare the EA is available Request for Interest (RFI) regarding another area of the Outer Continental Shelf adjacent to Massachusetts state waters. BOEMRE is currently reviewing the information and nominations received in response to the RFI and will be drafting a separate Call to determine competitive interest after consulting with the BOEMRE – Massachusetts Renewable Energy Task Force. Once BOEMRE has completed its review of the RFI responses and public comments, the agency plans to issue a Call for Information and Nominations and will prepare an environmental assessment.

On August 18, 2011, Neptune Wind, an ocean-based renewable energy developer headquartered in Winchester, MA, announced its plan to respond to the CFI with a proposal to develop, construct and operate a 500 MW offshore wind farm approximately 20 nautical miles south of the Massachusetts/Rhode Island border. The project, entitled Nomans Wind, would be constructed in depths ranging from 20 to 40 meters and will employ turbines featuring a jacket structure foundation press release, Neptune Wind stated that it expects to submit its response and proposal by the October 3, 2011 deadline.

Federal Legislative Update: Politics and Geography

2011-07-25T06:48:00.000-07:00

Offshore wind project developers and industry supporters have spent almost as much time clamoring for a comprehensive tailored legislative package as they have working on their own projects. Although some progress has been made at both the state and federal levels, there is nearly universal agreement that the absence of coordinated federal and state regulatory schemes has seriously impeded project progress and, worse, has discouraged investors from committing to capital-intensive offshore wind projects in the United States. While everyone seems to agree that top-down legislation would help streamline offshore wind in the United States, legislators have yet to agree on what that legislation will look like.

Since June 2011, three pieces of proposed legislation affecting offshore renewable energy have been introduced on Capitol Hill. The first two bills, H.R. 2170 and H.R. 2173, propose to fast track offshore wind projects abating certain prerequisite environmental studies and curtailing the associated public comment periods. The third bill, S.1397, proposes to extend the Investment Tax Credit (“ITC”) for offshore wind. Notably, the congressmen who are sponsoring the first two bills are mostly from states without active offshore wind projects. These bills have been met with significant industry resistance. In contrast, the congressmen who introduced the third bill all hail from states with active offshore wind projects. This bill has been widely lauded by industry members and advocates.

H.R. 2170 and H.R. 2173

On June 14, 2011, United States Representative Rob Wittman (VA-1) introduced two bills: H.R. 2170, “Cutting Federal Red Tape to Facilitate Renewable Energy Act”; and H.R. 2173, “Advancing Offshore Wind Production Act”. These bills seek to streamline the development of offshore energy projects by limiting or entirely eliminating certain obligations normally required under the National Environmental Policy Act (“NEPA”).

Unless a proposed action is eligible for a categorical exclusion, NEPA requires federal agencies to consider detailed evaluations of the environmental impact of any (a) the proposed action; (b) a no action alternative; and (c) alternative courses of action.

Proposed bill H.R. 2170 limits the scope of environmental assessments associated with offshore wind projects. Accordingly, H.R. 2170 eliminates the need to consider alternative courses of action in the environmental assessment as follows:

a Federal agency shall—
(1) consider only the proposed action and the no action alternative;
(2) analyze only the proposed action and the no action alternative; and
(3) identify and analyze potential mitigation measures only for the proposed action and the no action alternative.

See H.R. 2170. In addition, H.R. 2170 shortens the public comment period from the statutory minimum of 45 days to 30 days.

H.R. 2173 legislates a categorical exclusion for offshore meteorological site testing and monitoring projects. Accordingly, offshore wind developers would be allowed to install meteorological site testing and monitoring projects without preparing the otherwise mandatory environmental assessments and/or impact statements.

Although both H.R. 2170 and H.R. 2173 would have the potentially desirable effect of shortening the list of regulatory mandates for developers, both industry representatives (see testimony of Chris Taylor on behalf of AWEA) and environmental advocacy groups (see Brandi Collander on behalf of NRDC) have indicated strong opposition to both bills on the grounds that reduced or eliminated opportunities for public involvement will lead to an increase in litigation volume, which, in turn, will cause more development delays.

Both bills were co-sponsored by the same nine additional House members: Rep. Paul Broun (GA-10), Rep. Jeff Duncan (SC-3), Rep. John Duncan, Jr. (TN-2), Rep. Bill Flores (TX-17), Rep. Doc Hastings (WA-4), Rep. Raul Labrador (ID-1), Rep. Doug Lamborn (CO-5), Rep. Jeffrey Landry (LA-3) , Rep. Tom McClintock(CA-4), Rep. Steve Southerland (FL-2). With the exception of Representatives Wittman (VA) and Flores (TX) whose districts are not directly involved with offshore wind, none of the bills’ sponsoring congressmen hail from states with active offshore wind. Notwithstanding the opposition testimony, both bills were approved by the House of Representatives’ Natural Resources Committee on July 11, 2011.

S. 1397

On July 21, 2011, Senators Tom Carper (D-DE) and Olympia Snowe (R-ME), filed S. 1397, the “Incentivizing Offshore Wind Power Act.” S. 1397, also known as “A Bill to Amend the Internal Revenue Code of 1986 to Provide For an Investment Tax Credit Related to the Production of Electricity from Offshore Wind.” Although the text of S. 1397 is not yet available, Sen. Carper’s office has issued a press release describing the terms of the bill as follows:

Specifically, the Incentivizing Offshore Wind Power Act provides the offshore wind industry with enhanced stability by extending investment tax credits for the first 3,000 MW of offshore wind facilities placed into service – which is an estimate of 600 wind turbines. These tax credits are vital for this new clean energy technology because there is a much longer lead time for the permitting and construction of offshore wind turbines, compared to onshore wind energy. Once awarded a tax credit, companies have five years to install the offshore wind facility. Companies cannot receive other production or investment tax credits in addition to the offshore wind investment tax credit.

See, Offshore Wind Development Coalition ("OWDC") have announced their support for S. 1397. In fact, the OWDC had previously identified legislation extending the ITC as a key goal.

Co-sponsors for S.1393 include: Sen. Sherrod Brown (OH), Sen. Benjamin Cardin (MD), Sen. Susan Collins (ME), Sen. Christopher Coons (DE), Sen. Frank Lautenberg (NJ), Sen. Robert Menendez (NJ), Sen. Jack Reed (RI), and Sen. Sheldon Whitehouse (RI). Significantly, all of S.1397’s sponsoring legislators represent states hosting active offshore wind development projects.

Rhode Island Supreme Court Affirms Block Island PPA

2011-07-05T13:17:00.000-07:00

On Friday July 1, 2011, the Rhode Island Supreme Court unanimously voted to uphold the Rhode Island Public Utilities Commission’s approval of a power purchase agreement between utility National Grid and offshore wind developer Deepwater Wind with regard to a proposed wind energy installation to be located three nautical miles southeast of Block Island in Rhode Island state waters (the “PPA”). See In re: Review of Proposed Town of New Shoreham Project, No. 2010-273-M.P. (4185)(July 1, 2011)(“New Shoreham”).

The New Shoreham decision resolved a challenge brought by third party intervenors, Conservation Law Foundation (“CLF”), Toray Plastics (“TP”) and Polytop Corp.(“PTC”) (together, the “intervenors”) as to the legality of a PPA submitted by Deepwater Wind and National Grid in 2010 ("2010 PPA"). Under the 20-year 2010 PPA, National Grid will pay up to 24.4 cents per kilowatt hour for electricity in the first year of operation with an annual 3.5% increase over the lifetime of the project. The intervenors alleged that the rates set by the PPA are nearly three times higher than the 6.9 cents per kilowatt hour that National Grid pays for electricity from traditional generation sources such as natural gas-fired facilities and nuclear power plants, and therefore are not “commercially reasonable” as required under R.I. Gen. Laws § 39-26.1-7 (2010) (Rhode Island’s Long Term Contracting Standard for Renewable Energy statute) (the “LTC statute”).

At the heart of the parties dispute is the definition of the term “commercially reasonable”. Under the original LTC statute passed by the General Assembly in 2009, the PUC was required to review the Block Island PPA using the definition set forth at § 39-26.1-2(1): “terms and pricing that are reasonably consistent with what an experienced power market analyst would expect to see in transactions involving newly developed renewable energy resources.”

In 2009, National Grid and Deepwater Wind submitted their initial PPA to the PUC (the “2009 PPA”). Citing the above definition of “commercially reasonable”, the PUC rejected the 2009 PPA. Specifically, the PUC found that when it compared the terms and pricing of the 2009 PPA to any renewable energy project, “regardless of sizing restrictions, technology, location or novelty”, the 2009 PPA was not “commercially reasonable.” See 2009 PUC Decision.

Subsequently in 2010, the Rhode Island General Assembly issued an amended version of the LTC statute ("Amended LTC"). The Amended LTC included, among other changes, a special new definition of the term “commercially reasonable” which was to be applied solely with regard to the PUC’s review of a Block Island offshore wind project PPA. The Amended LTC definition provides that the PPA’s “terms and conditions [will be considered] commercially reasonable [if the] terms and pricing…are reasonably consistent with what an experienced power market analyst would expect to see for a project of similar size, technology and location, and meeting the policy goals in [§ 39-26.1-7(c)(i); (c)]."

Following the enactment of the Amended LTC, National Grid and Deepwater Wind resubmitted their PPA to the PUC ("2010 PPA"). The 2010 PPA contained pricing and terms that are virtually identical to those set forth in the 2009 PPA. The PUC approved the 2010 PPA in August 2010.

The intervenors appealed the PUC’s decision to the Rhode Island Supreme Court through a petition for certiorari filed in September 2010. The intervenors argued that the PUC had “exceeded its authority or acted illegally, arbitrarily, or unreasonably” when it approved the 2010 PPA.

Following exhaustive briefing and oral arguments by both parties (see here), the Rhode Island Supreme Court issued its decision on July 1. In its 75 page opinion, the Court unanimously rejects the intervenors’ challenge and upheld the PUC’s approval of the PPA. In so doing, the Court stated:

Although we view with trepidation the General Assembly’s unwavering quest to sink this demonstration wind farm into the sediment of Rhode Island’s continental shelf, we nonetheless are constrained by our standard of review and the bounds of the revised [long-term contracting] statute.

Notably, the Court held that the Amended LTC statute did not require the PUC to balance the costs of the project against the benefits. Rather, the PUC’s review of the PPA needed only to consider the criteria set forth in the Amended LTC statute. Thus, held the Court, the PUC acted appropriately when it considered only potential positive impacts of the project.

The Court concluded the Opinion with what could be construed both as a critique of the General Assembly's 2010 amendments to the LTC as well as a whimsically quaint wish for the ultimate success of the Block Island offshore wind project, and for the U.S. Offshore Wind industry generally:

...it is this Court's fervent hope that our Legislature's William Seward-esque policy decision championing this amended purchase-power agreement proves as lucrative and majestic as the Alaska Purchase of 1867.

Because the case does not concern federal law or a federal constitutional challenge to Rhode Island state law, this decision is final and is not eligible for review on certiorari to the U.S. Supreme Court. Nevertheless, while this particular obstacle to development of the project has been eliminated, Deepwater Wind still has significant hurdles to overcome before it can begin construction of its Block Island project. For example, Deepwater Wind must still secure permitting from, among other agencies, the Rhode Island Coastal Resources Management Council and the U.S. Army Corps of Engineers. Hopefully, the affirmation of its PPA with National Grid will bolster investor confidence and help Deepwater Wind to procure the over $200 million in front-end financing needed for the project.

The New Shoreham case is among the first of what will likely be many challenges to PPAs fashioned for offshore wind installations. Because the upfront development, permitting, supply-chain, and construction costs for offshore wind are so high, PPAs negotiated for these projects typically present rates that are significantly higher than rates associated with traditional and/or existing generation sources. As in Rhode Island, states will most likely be forced to enact legislation that authorizes exceptional terms (see e.g., New Jersey) and/or requires state utility commissions to employ special analytical criteria for new renewable generation projects if these projects have any hope of being built.

And we're back!

2011-06-22T08:56:00.000-07:00

Dear Friends and Colleagues,

You may have noticed that things have been very quiet for the last month here at the Ocean and Offshore Energy Projects and Policy Blog—and it isn’t for lack of developments in the offshore renewable energy world.

I have recently relocated from Philadelphia to join Nixon Peabody LLP’s Environmental and Energy Practice Group in the firm’s Boston office. Among the many reasons that factored into my decision is Nixon Peabody’s unparalleled expertise with the legal issues that impact ocean-based renewable energy projects and the firm’s commitment to and enthusiasm for working with developers and other interested entities who want to see the United States’ offshore renewable energy industry flourish.

Nixon Peabody has one of the broadest energy practices in the country and has served the needs of energy industry clients for more than 100 years. Our energy practice includes a wide variety of renewable energy clients including developers of wind, solar, biomass and other renewable
technologies.

With regard to marine-based renewable energy projects, Nixon Peabody’s attorneys have:

Assisted developers to prepare Responses to Requests for Proposals and Requests for Information with regard to potential offshore wind installations in the Northeast, Mid-Atlantic, and Great Lakes regions;

Assisted developers to negotiate leases to install met towers in both state and federal waters;

Assisted a developer to secure a Memorandum of Understanding for a Power Sales Agreement;

Provided clients with advice and analysis regarding the permitting requirements involved in both offshore generation and transmission plans;

Advised clients with regard to structuring a practicable financing plan for developments;
Assisted clients through all stages of submarine electric transmission project development and financing, including state and federal siting and permitting issues, commercial agreements such as supply chain and construction contracts, federal market-based and incentive rate proceedings, transmission capacity purchase and sale agreements, and financial structuring; and

Advised and assisted clients to comply with various legislative and regulatory schemes including those governed by BOEMRE, the United States Army Corps of Engineers, NOAA, and various other local, state, and federal authorities.

The energy practice has 5 attorneys listed in Chambers USA America’s Leading Lawyers for Business (2011), and supported by additional teams of lawyers in such areas as intellectual property, creditor’s rights and workouts, and litigation and arbitration.

Nixon Peabody attorneys are frequent speakers at conferences presented by national industry trade groups such as SEIA, AWEA, and ACORE. The firm is also an active member of these groups. Many of our attorneys also speak at conferences presented by commercial sponsors such as Infocast, EUCI, Euromoney, Platt’s, and LSI.

I am extremely honored and excited to join the team here at Nixon Peabody LLP and hope that you will feel free to contact me at my new professional home.

Thanks for being patient during this transitional period. Keep an eye out for my next post where I will resume my usual analysis of timely events in offshore renewable energy development and policy!

Best,
Jennifer Simon Lento, Esq.
Nixon Peabody LLP
100 Summer St.
Boston, MA 02110
jsimonlento@nixonpeabody.com
617-342-1352
http://www.blogger.com/www.nixonpeabody.com

Offshore Wind State Update: Mid-Atlantic Edition (New Jersey, Maryland, Virginia, North Carolina)

2011-05-17T15:01:00.000-07:00

New Jersey

Offshore Wind Renewable Energy Credit Program:

On Monday May 16, 2010, the New Jersey Board of Public Utilities announced and confirmed that they have begun accepting applications for offshore wind projects in state waters. Applications must be received by or before June 14, 2011.

Under the recently adopted Offshore Renewable Energy Credit regulations, applications will enter a six-month review process after they have been received and deemed administratively complete.

Fishermen's Energy:

Fishermen's Energy, the developer spearheading an effort to build a windfarm in New Jersey state waters off of Cape May, NJ, has announced that the New Jersey Department of Environmental Protection (NJDEP) has issued the major environmental permits to build its demonstration-scale six turbine Fishermen's Atlantic City Windfarm to be located in New Jersey State waters off the coast of Atlantic City.

In a May 6, 2011 press release, Fishermen’s Energy announced that they have now received approval from the New Jersey State House Commission for a Green Acres permit and the Tidelands Council for an electric line easement and turbine locations license required to build its demonstration-scale six turbine Fishermen's Atlantic City Windfarm. These were the remaining State permits required for the project to
commence construction.

This wind energy project will be located in New Jersey State waters off the coast of Atlantic City. Fishermen’s Energy also announced the completion of a year of pre-construction avian and marine mammal monitoring, keeping the project on target for a Fall 2012 commissioning.

Earlier this spring, NJ DEP issued the project's CAFRA Individual Permit, Waterfront Development Permit and Water Quality Certificate after technical, legal, and staff review of the project application and after a public notice and comment period which garnered only positive support from a variety of stakeholders.

Maryland

Despite strong support from Maryland's Governor O'Malley, the Maryland legislature has decided to shelve proposed legislation which would have required state utilities to enter into power purchase agreements with offshore wind generation facilities to be developed off of Maryland's coastline.

Supporters of the legislation, entitled the Maryland Offshore Wind Energy Act, hope to reintroduce the proposed law again early next year.

Virginia

On May 10, 2011, the Associated Press reported that Virginia Utility Dominion Power announced that it will not include offshore wind as part of its generation portfolio until that offshore wind power becomes cost-competitive with traditional forms of generation. Dominion issued this statement in response to the launch of VA4Wind, a consortium of environmental and green economy offshore wind energy advocates.

“The costs must become competitive with other conventional or renewable forms of generation for the technology to be chosen,” Jim Norvelle, a Dominion spokesman, wrote in an e-mail to the Associated Press. “Dominion continues to pursue cost reduction options and would put plans in place to build when it is cost effective to do so.”

North Carolina

On April 19, 2011, Republican State Sen. Fletcher Hartsell filed a bill in the North Carolina legislature entitled An Act to Encourage the Development of the State's Offshore Wind Energy Resources and to Attract Jobs and Economic Development. The bill was filed just short of the deadline for bills that can be considered during the current legislative session.

The Hartsell bill, which follows (but does not replicate) both New Jersey's 2010 Offshore Wind Economic Development Act and the now-shelved Maryland Offshore Wind Energy Act, requires the North Carolina Utilities Commission to issue regulations mandating that state utilities enter into power purchase agreements for up to 2,500 megawatts of offshore wind energy. The legislation stipulates that the offshore wind generation facilities would be built over a period of seven to ten years, and requires the first project to begin producing power by Dec. 31, 2017. The legislation also sets the goal of building 5,000 megawatts of offshore nameplate capacity by 2030.

The regulations issued by the State Utilities Commission pursuant to the bill set forth a series of aggressive deadlines in order to meet the 2017 project completion date:

January 1, 2012: The Commission must issue a request for proposals soliciting bids from offshore wind project developers.

April 30, 2012: Responses to the RFP from potential project developers are due.

October 31, 2012: The Commission must review the Responses and award bids.

Offshore Wind: An Argument for Aesthetics

2011-04-28T06:38:00.000-07:00

Many of those opposed to offshore wind power have argued that offshore wind turbines are an aesthetic blight. Typically, my response to that position has been, "Ok, but have you ever seen a coal fired power plant?" With the understanding that aesthetics are somewhat subjective, I think we can all agree that this:

is not as ugly as this:

In the spirit of wind-favorable aesthetic comparisons, a California-based non-profit organization which advocates for electric vehicles recently issued the following public service announcement. This may be the first domestic video advertisement in support of offshore wind:

Ocean & Offshore Energy Projects and Policy Blog is one of LexisNexis' Top 50 Blogs for 2011!

2011-04-21T11:36:00.001-07:00

Dear Offshore Energy Blog Readers, Colleagues and Friends:

Thanks to your support and readership, the LexisNexis Environmental Law & Climate Change Community has selected this blog as one of the top 50 blogs of 2011.

I look forward to continuing to publish timely analysis of cutting edge developments in ocean energy project development, regulation, and policy making in 2011 and beyond.

Best,
Jennifer Simon Lento, Esq.

Secretary Salazar Announces Approval of Cape Wind's Construction and Operations Plan!

2011-04-19T08:26:00.000-07:00

At 10:30am on April 19, 2011, Department of the Interior Secretary Ken Salazar announced that Cape Wind's Construction and Operations plan has been approved. Secretary Salazar made the announcement at the Charlestown Navy Yard in Boston and was accompanied by Jim Gordon, the President and CEO of Cape Wind, LLC and Massachussetts governmental representatives.

The Department of the Interior posted the following >press release at the DOI website:

WASHINGTON, DC – Secretary of the Interior Ken Salazar today announced that the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) has approved a Construction and Operations Plan (COP) submitted for the Cape Wind Energy Project, which is required before construction may begin on the generation facility planned in Nantucket Sound. The timeframe reported in the COP submitted by Cape Wind Associates suggests that construction of the nation’s first offshore wind farm could begin as early as the fall.

“The Department has taken extraordinary steps to fully evaluate Cape Wind’s potential impacts on environmental and cultural resources of Nantucket Sound,” said Secretary Salazar. “By signing the Construction and Operations Plan today, we are even closer towards ushering in our Nation’s first offshore wind energy facility while creating jobs.”

“After a thorough review of environmental impacts, we are confident that this offshore commercial wind project – the first in the nation – can move forward. This will accelerate interest in the renewable energy sector generally and the offshore wind sector specifically, and spur innovation and investment in our nation’s energy infrastructure,” said BOEMRE Director Michael R. Bromwich.

"With today's announcement by Secretary Salazar, we are one step closer to benefiting from the clean energy, green jobs and long-term economic benefits that will result from creating the nation's first offshore wind farm," said Governor Deval Patrick. "States up and down the East Coast are now looking to Massachusetts with envy as we launch this brand new American industry." ?

The proposed action, including its size and location, remain substantially the same as analyzed in the Cape Wind Final Environmental Impact Statement (FEIS) that was published in January 2009. The Cape Wind energy project calls for 130 3.6± megawatt wind turbine generators, each with a maximum blade height of 440 feet, to be arranged in a grid pattern on the OCS in Nantucket Sound, offshore Cape Cod, Martha’s Vineyard, and Nantucket Island.

As part of its evaluation of the COP, the bureau conducted an Environmental Assessment (EA) under the National Environmental Policy Act (NEPA) to determine whether there were any significant impacts that had not been discussed in the 2009 FEIS or other environmental assessments, and concluded that all impacts had been properly examined. BOEMRE also issued a Record of Decision for the COP approval, which details the terms and conditions that Cape Wind Associates will need to follow these terms and conditions are in addition to those established in the lease agreement.

A notice about the preparation of an EA was posted on the BOEMRE website in February which initiated a comment period and provided an opportunity for public input. BOEMRE received and considered approximately 160 comments during the comment period. Issues considered in the EA include: additional surveys and sampling, conflicts with aviation traffic and fishing use, emergency response, migratory birds, microclimate, oil within wind turbine generators, permits issued by other federal agencies and consultations with other agencies.

For more information about the Cape Wind energy project, including the COP, previous environmental reviews, Record of Decision, lease and related documents, please visit: http://www.boemre.gov/offshore/RenewableEnergy/CapeWind.htm.

Offshore Wind State Update: New England Edition (Maine, Massachusetts and Rhode Island)

2011-04-06T09:32:00.000-07:00

The States have been busy this year. Maine has been focusing on developing new technologies. Massachusetts and the Cape Wind project have finally (fingers crossed here!) overcome the worst of the legal obstacles but now must find solutions to financial challenges. Rhode Island's Deepwater Wind Block Island project is still ensnared in legal challenges related to financing issues. See the below for more detailed updates.

MAINE

WindFloat Maine LLC of Camden, a subsidiary of Principle Power Inc., and a member of the DeepCwind Consortium at the University of Maine's Advanced Structures and Composites Center, received a grant of $500,000 from the Maine Technology Institute. The money will be used towards the development of a floating wind turbine platform design, also called Windfloat. WindFloat Maine also brought in a $500,000 matching investment.

The significance of viable floating wind turbine technology should not be underestimated. The turbines that are presently installed at offshore wind farms must be secured to the ocean floor via monopile or gravity offset mechanisms. For this reason, all currently installed offshore windfarms worldwide are installed in waters that are <30 meters. Although new advances in marine turbine technology has made it practicable to install turbines off the eastern seaboard of the United States at depths of up to approximately 40-50 meters.

However, the western seaboard of the United States has significantly steeper ocean bathymetry-- that is, the ocean floor drops off precipitously relatively close to shore. This makes the western seaboard a poor candidate location for offshore windfarms regardless of the available wind resources (and Pacific coastal wind resources are not insignificant). See, e.g., NREL Offshore Wind Resource Map for Washington State. However, proposed floating turbine technology would allow offshore windfarms to be constructed at depths of 40-900 meters, thus effectively opening up the Pacific coast of the United States.

Massachussetts

Cape Wind may begin construction as early as this year. However, Cape Wind Associates, LLC, the developer of the 130-turbine 420MW project, may be in trouble if it cannot obtain sufficient financial backing.

At present, half of the power generated from Cape Wind will be sold to National Grid PLC subject to a 15-year power purchase agreement. Cape Wind has not been able to secure a power purchase agreement for the remaining name plate capacity. The guarantee of a back-end revenue stream yielded through a power purchase agreement provides lenders with the assurance and comfort that loans for front-end costs (like construction) will be repaid. Therefore, Cape Wind's inability to secure a PPA for the entirety of its production does not bode well.

The first phase of construction will cost approximately $1.7 billion. Cape Wind now hopes to find a "strategic partner" that would invest a significant portion of the estimated $500 million of equity needed before debt financing can be launched to round out the complete financing package.

Rhode Island

On Wednesday April 6, the Rhode Island Supreme Court heard oral arguments in a case wherein the Rhode Island Attorney General along with a variety of intervenors (most vocally, the Conservation Law Foundation (“CLF”), Toray Plastics (“TP”) and Polytop Corp.(“PTC”)) have challenged the legality of an amended power purchase agreement between National Grid and Deepwater Wind (In re: Review of Amended Power Purchase Agreement between Narragansett Electric Company d/b/a National Grid and Deepwater Wind Block Island, LLC pursuant to R.I. Gen.Laws § 39-26.1-7, Docket No. 4185). The power purchase agreement governs National Grid’s purchase of certain quantities of power generated by a proposed 8-turbine offshore wind farm planned to be located off of Block Island in the jurisdictional waters of Rhode Island.

The court's decision is expected within 60 days. If the Supreme Court finds the intervenors’ arguments convincing, it will likely mean that Deepwater Wind’s Block Island wind farm will not get built.

The history of the case is somewhat confusing. Back in December 2009, the Rhode Island Public Utilities Commission received for its review a power purchase agreement between National Grid and Deepwater Wind. This PPA was subject to Rhode Island Gen. Laws § 39-26.1-1 to 8. The relevant provision of the law required National Grid to “solicit proposals for one newly developed renewable energy resources project of ten (10) megawatts or less that includes a proposal to enhance the electric reliability and environmental quality of the Town of Shoreham.” See R.I. Gen. Laws §39-26.1-7(a). Once National grid had identified the project, National Grid was to enter into negotiations with the selected project developer with the goal of “achieving a commercially reasonable contract.” R.I. Gen. Laws §39-26.1-7(b).

During the course of the R.I. PUC’s review of the December 2009 PPA, a variety of intervenors, including CLF, TP and PTC, entered submissions arguing that the December 2009 PPA was not “commercially reasonable.” See R.I. PUC Docket No. 4111. On that basis, the R.I. PUC concluded that the 2009 PPA did not comply with the requirements of R.I. Gen. Laws §39-26.1-7(b), and refused to approve it. See R.I. PUC Opinion.

On April 28, 2010, the Rhode Island legislature adopted revised legislation that significantly altered the Rhode Island Gen. Laws § 39-26.1-1 to 8. See revised legislation here. Most notably, the new legislation (a) specifically authorized National Grid to enter into a PPA for an 8-turbine offshore wind project; (b) changed the criteria under which the R.I. PUC was to review that PPA; (c) and provided explicitly for the same intervenors whom had challenged the original PPA to challenge the amended PPA again within the scope of a streamlined process.

Subsequently, National Grid and Deepwater Wind resubmitted their PPA to the Rhode Island PUC. The intervenors, not surprisingly, again the challenged the PPA. However, instead of challenging the PPA exclusively, the intervenors now also argue that the new legislation is itself illegal.

For a summary of the parties’ arguments, see the Providence Journal.

Japan and the Resilience of Wind Power

2011-03-18T11:26:00.000-07:00

Although this blog focuses on the United States Offshore Wind industry, things occasionally happen outside of the United States that warrant coverage here. For those of us watching from the safety of the Western Hemisphere, the horrific destruction caused by the earthquakes and tsunami in Japan is simply incomprehensible. And, as if the physical impact of the earthquakes and tsunami weren`t enough, the crisis at the Fukushima Nuclear Plant appears to be getting worse by the hour, and news sources are now reporting that radiation leaks may be severe enough to impact human health and welfare.

According to the World Nuclear Association, Japan's nuclear power plants provide approximately 30% of consumed electricity in Japan. At least 25% of Japan's 55 nuclear reactors have been shut down since the earthquake and tsunami on March 11, 2011.

As Japan begins the long road of "rebuilding the country from scratch", it is important to highlight the infrastructure that survived the catastrophes.

Amazingly, Yoshinori Ueda, leader of the International Committee of the Japan Wind Power Association & Japan Wind Energy Association has reported that there has been no damage reported at any of Japan's member wind generation plants-- including the Kamisu semi-offshore wind farm. The Kamisu wind farm, which is located approximately 300km from the epicenter of the quake, was designed to withstand earthquakes-- and the merit of that design should plainly be lauded.

According to the Huffington Post's Kelly Rigg, Mr. Ueda has confirmed that the majority of Japanese wind turbines are fully operational and have been asked to increase output to make up for shortages due to the disaster:

Eurus Energy Japan says that 174.9MW with eight wind farms (64% of their total capacity with 11 wind farms in eastern part of Japan) are in operation now. The residual three wind farms (Kamaishi 42.9MW, Takinekoshirai 46MW, Satomi 10.02MW) are stopped due to the grid failure caused by the earthquake and Tsunami. Satomi is to re-start operations in a few days. Kamaishi is notorious for tsunami disaster, but this wind farm is safe because it is locate in the mountains about 900m high from sea level.

The resilience of wind power in the face of incredible natural forces should not be overlooked.

Should you wish to contribute to organizations that are providing much-needed services and assistance to those who have been impacted by the earthquakes and tsunami in Japan, please consider donating to the following organizations:

The Red Cross

Doctors Without Borders

Ontario's Moratorium on Offshore Wind in the Great Lakes: Impacts on U.S. Great Lakes Offshore Wind Development

2011-02-25T10:30:00.000-08:00

What Canada Did

On February 11, 2011, the Ontario Ministry of the Environment ("MOE") announced that it has suspended all activities pertaining to offshore wind development in the Great Lakes. See HERE for official statement. Accordingly, the MOE has suspended review of all applications for Renewable Energy Approvals and is not accepting any further applications for offshore wind projects in the Feed-In-Tariff ("FIT") program. Further, the Ontario Ministry of Natural Resources ("MNR") will not accept any new Crown land applications for offshore wind development and will cancel all existing Crown land applications for offshore wind development that do not have a FIT contract, including those with Applicant of Record status.

The Canadian Wind Energy Association ("CanWEA") and many developers, including Trillium Wind Power Corp., have broadly criticized the MOE's decision to halt the review of permit applications and approvals. The developers have noted that MOE and MNR’s cancellation of submitted applications will cost their investors the value of years of work and have a severe adverse impact on investors’ view of the reliability of offshore wind as an investment option in the future.

MOE has promised that projects will receive refunds for the site release permitting process, developers like Trillium say that a refund for an application fee cannot compensate for the last 15 years of time, money, and resources that they have dedicated towards developing their proposed project.

Why Canada Did It

The MOE stated that this moratorium has been instituted to allow time to review further scientific research on the effects of offshore wind projects on freshwater ecosystems. Others speculate that MOE's alleged need for additional environmental and engineering studies is simply an excuse to provide the Canadian government with more time to re-evaluate and align their offshore regulatory processes and policies.

Although a variety of federal and provincial authorities have issued legislation impacting offshore wind development on the Canadian side of the Great Lakes, neither the provincial government of Ontario nor the federal Canadian government have established a clear directive with regard to what studies, permits, applications, or other submissions must be prepared and submitted and in what order. For example, developers seeking to build offshore wind projects need to obtain submerged land leases from the Ministry of Natural Resources. The MNR has not yet established a competitive application process to govern the issuance of submerged land leases, which give developers site control to conduct environment and meteorological testing on their proposed site. This lack of a competitive process has resulted in a number of applicants -- qualified and unqualified -- being granted “placeholder” rights to a designated area just by virtue of filling out the application with no qualifications standards and thereby are precluding any other applicants whom may be better prepared financially and/or technically. Moreover, there is no official coordination between the leasing/siting process and MOE’s authority to issue Renewable Energy Approvals under the Feed in Tariff program.

What This Means for the U.S. Offshore Wind Industry

Although stakeholders in the U.S. Offshore Wind industry have not reacted strongly thus far, Canada’s offshore wind moratorium could provide fodder for a variety of opposition groups in the U.S. Traditionally, parties that oppose offshore wind development focus on one of three areas: (1) complaints about the visual impacts; (2) alleged adverse environmental impacts; and (3) increased rates associated with fixed prices set forth in power purchase agreements. Since the MOE has indicated that this moratorium stems from possible concerns regarding environmental and/or engineering issues, parties opposing U.S. Great Lakes developments may cite the Canadian moratorium as justification for implementing identical delays for U.S. projects in the Great Lakes.

More concerning is the impact that this decision may have on investor confidence. Although the U.S. Department of the Interior has instituted a more rigorous process (via the Final Rule and the Smart from the Start initiative) by which developers may pursue approvals for offshore wind developments, there is still significant uncertainty in the process. Possible investors for U.S. projects will certainly consider the losses which will inevitably be sustained by investors in the Canadian projects whose applications have been cancelled and/or whose submission is now indefinitely suspended. The potential for financial losses resulting from an unpredictable and untried regulatory process—even if these losses are a result of a completely independent foreign regulatory system— may appear that much more real to investors who are considering investing in U.S. offshore projects.

On the plus side, the Ontario market collapse may also increase investment in the U.S. offshore wind industry and result in more opportunities for job creation on our side of the border. As a result of its FIT program, many manufacturers and investors have viewed Ontario as having taken the lead in offshore wind development. Ontario's indefinite moratorium on offshore wind permitting means that Ontario has effectively lost that competitive advantage. Incentive-based legislation (e.g., the New Jersey Offshore Wind Economic Development Act and recently proposed legislation in Maryland) and slow but steady project progress in the U.S. may now compel these manufacturers to set up shop in the U.S. instead-- thus garnering the associated revenue and job creation for the U.S. economy.

Special thanks to Leslie Garrison of Bluewater Wind/NRG for her contributions to this post.

Ocean & Offshore Energy Projects and Policy Blog Nominated by LexisNexis!

2011-02-18T10:29:00.000-08:00

Dear Offshore Energy Blog Readers, Colleagues and Friends:

For the first time, the LexisNexis Environmental Law & Climate Change Community is honoring a select group of blogs that set the online standard for environmental and energy law and policy online publications. I am pleased to announce that Ocean & Offshore Energy Projects and Policy Blog is one of the nominated candidates for the LexisNexis Top 50 Environmental Law & Climate Change Blogs for 2011.

I hope that you will click on this link and submit a comment in support of the Ocean & Offshore Energy Projects and Policy Blog.

The deadline for comments is 28 February 2011. Thanks for your support!!

Best,

Jennifer Simon Lento, Esq.

New Jersey OREC Regulations Issued! Fishermen's Energy Submits First Application to NJ BPU!

2011-02-11T12:08:00.000-08:00

New Rules Issued Implementing New Jersey's OWEDA

On Thursday February 10, 2011, the New Jersey Board of Public Utilities ("BPU") approved new rules implementing the New Jersey Offshore Wind Economic Development Act (OWEDA). See NJBPU Press Release, dated 2/10/11. The rules became effective upon last Thursday's filing with the New Jersey Office of Administrative Law. The rules, codified at N.J.A.C. 14:8-6, were promulgated through a Special Adoption, and will remain in effect until 18 months from the effective date-- i.e., until August 10, 2012.

The Rules, which largely mirror the OWEDA, establish the Offshore Wind Renewable Energy Certificate (OREC) program. The OREC program requires developers of "qualified offshore wind projects" to submit an application requesting that the BPU issue ORECs for the designated project. Once applications have been deemed administratively complete, the BPU will have 180 days to review the substance of an application and issue a finding. The BPU will designate dates by which applications must be received so that they are able to review all developer applications simultaneously and comparatively.

This application must include, among other things, a detailed description of the project, construction plans, financing methods and analysis demonstrating the financial integrity of the developer and access to sufficient capital, proposed OREC pricing methods, and operations, maintenance and safety plans. In addition, the application must include a comprehensive cost-benefit analysis which must demonstrate "positive economic and environmental net benefits to the State."

Once the application has been received, the BPU may issue Offshore Wind Renewable Energy Certificates. These ORECs can be purchased by electricity distributors in New Jersey. The OWEDA provides that electricity sold to retail customers in New Jersey must include, at the least, the minimum percentage of energy derived from Offshore Wind generation projects as required for that energy year, as determined by the BPU.

The new Rules include some provisions which many developers are likely to find objectionable or difficult to implement. For example, the Rules require an applicant to identify by name the key project personnel and then commit to maintaining those exact people throughout the project development process. The Rules do not appear to include exceptions for personnel identified in the application who later leave the applicant's employ, get promoted, or otherwise shift their career function over the course of what could reasonably be years. Another provision requires applicants to describe the type of job creation anticipated through the project and then formally commit to those jobs actually coming to fruition. If the described jobs do not come about, the applicant must provide a direct adverse consequence that it will impose upon itself.

Rob Gibbs, Vice President of Garden State Offshore Energy, one of the three anticipated prospective applicant project developers (i.e., GSOE, Bluewater Wind and Fishermen's Energy), said the following with regard to the new Rules:

We’re pleased the OREC regulations are out and are currently reviewing them to ensure what’s been adopted is financeable from a project perspective. While the regulations contain a good deal of detail with respect to application requirements, we were disappointed the Board did not go further in establishing common assumptions that all interested developers would use in their applications. For instance, establishing common assumptions on capacity factor, forward energy prices, etc. would enable the Board to compare applications on a similar basis rather than letting interested developers use divergent data points that are subjective and could make it more difficult for meaningful comparison. We also would have liked to have seen more definitive time periods for submitting applications but we understand a stakeholder process will be held in the next few weeks so we’re encouraged that this will be fleshed out quickly.

Fishermen's Energy Submits First OREC Application

Fishermen’s Energy of New Jersey, LLC (Fishermen’s) announced that it filed the first application for approval for the issuance of ORECs with the New Jersey Board of Public Utilities on February 9, 2011. The application was filed for a "Demonstration Project" consisting of six turbines with an output not to exceed 25MW. The project will be located in New Jersey state waters about 2.8 miles from Atlantic City.

If approved by the NJ BPU, the Fishermen’s Atlantic City Windfarm, located in New Jersey State waters, is on schedule to be the first grid connected offshore wind project in the United States.

Daniel Cohen, President of Fishermen’s Energy, stated:

The decision to allow us to receive OREC funding will be up to the NJ BPU. The price for the electricity is within the range we testified to during the legislative
process to enact the Offshore Wind Development Act, with about a one tenth of one percent rate increase in the first operating year, which will decrease each year thereafter, as the cost of fossil fired energy increases. This is a bargain for New Jersey and its ratepayers as a societal and energy cost hedge and to start a new
industry.

Mike Madia, Chief Operating Officer of Fishermen's Energy and the team leader in charge of the BPU application, further asserted that the project's benefits will far outweigh its upfront costs:

This project will be a magnet for industrial development of wind energy manufacturing in New Jersey. The State’s and the NJ BPU’s willingness to support this first offshore wind project for New Jersey and the US will be a key selling point to convince wind turbine manufacturing and related supply chain participants to locate new facilities in New Jersey, bringing their associated jobs and investment. Aside from industrial jobs, based on polling data among tourists, Fishermen’s projects that the presence of an operating wind farm visually associated with Atlantic City and that is accessible to tourists by boat from shore, will result in increased tourism to Atlantic City, drawing people to the birthplace of offshore wind in the Americas. This coupled with the economic incentives for manufacturing included in the Offshore Wind Economic Development Act provides compelling reasons for new industry to locate in New Jersey.

Another Big News Day: Salazar, Chu Announce Major Initiatives; News out of RI and NJ

2011-02-07T10:44:00.000-08:00

DOE, DOI Announce Inter-Agency Offshore Wind Initiative: Funding for R&D Projects Solicited and New Wind Energy Areas Identified

Although recent events have suggested that the Obama administration's goal to generate 80% of the Nation's energy from carbon-neutral generation is at loggerheads with regulatory progress, DOI Secretary Salazar and and DOE Secretary Chu today unveiled the first-ever inter-agency Strategic Work Plan in support of offshore wind. The Strategic Work Plan, part of the National Offshore Wind Strategy, incorporates and expands upon the "Smart from the Start" program announced by Secretary Salazar in November 2010. The Strategic Work Plan will begin with two major initiatives: (1) $50.5 Million in funding for research and development; and (2) the continued identification of "Wind Energy Areas."

First, DOI and DOE have announced up to $50.5 Million to fund research and development projects that will contribute to the efficient development of domestic offshore wind projects. Today, the first round of funding was announced in the following three areas:

Technology Development (up to $25 million over 5 years): DOE will support the development of innovative wind turbine design tools and hardware to provide the foundation for a cost-competitive and world-class offshore wind industry in the United States. Specific activities will include the development of open-source computational tools, system-optimized offshore wind plant concept studies, and coupled turbine rotor and control systems to optimize next-generation offshore wind systems.
Removing Market Barriers (up to $18 million over 3 years): DOE will support baseline studies and targeted environmental research to characterize key industry sectors and factors limiting the deployment of offshore wind. Specific activities will include offshore wind market and economic analysis; environmental risk reduction; manufacturing and supply chain development; transmission planning and interconnection strategies; optimized infrastructure and operations; and wind resource characterization.
Next-Generation Drivetrain (up to $7.5 million over 3 years): DOE will fund the development and refinement of next-generation designs for wind turbine drivetrains, a core technology required for cost-effective offshore wind power.

See DOI Press Release.

Second, Secretary Salazar also announced several new "wind energy areas" (WEAs) located on the Outer Continental Shelf off the coasts of Delaware (122 square nautical miles), Maryland (207), New Jersey (417), and Virginia (165). See here for a map of the new WEAs. Additional new WEAs off of Massachusetts, Rhode Island, and the Southern Atlantic Region will be identified by DOI by Spring 2011. The WEAs, part of the Smart for the Start program initiative to reduce permitting and leasing process time, will allow developers to take advantage of pre-existing and/or approved coordinated environmental studies, large-scale planning (such as ocean zoning and mapping studies), as well as expedited approval processes.

The Offshore Wind Strategy will be employed in furtherance of the Obama administration's goal of generating 80% of the Nation's electricity from carbon-neutral generation projects by 2035. See State of the Union Address, January 25, 2011. Under the Offshore Wind Strategy, 10 gigawatts of offshore wind generating capacity will be deployed in state and federal waters by 2020 (enough to power 2.8 million homes) and another 54 gigawatts will be deployed by 2030 (enough to power 15.2 million homes).

State Developments:

Much Bigger NJ Offshore Wind Farm?

New Jersey is going to be a hot spot for the foreseeable future. First, later this week, we expect that the New Jersey Board of Public Utilities will issue regulations implementing the requirements of last August's Offshore Wind Economic Development Act. More information to come on that later this week.

However, there also appears to be some changes in the development plans for the wind farms currently proposed off of the New Jersey coastline. At last week's GreenPower Conference, "Offshore Wind Power USA: Creating a Roadmap for Commercially Successful Offshore Wind Projects" in Boston, Robert Gibbs, Vice President of the Deepwater Wind/ PSEG Global collaborative offshore wind development group Garden State Offshore Energy, provided a rather startling update regarding its New Jersey project. Up until last week, GSOE had been saying that its plan was to develop a utility scale project of approximately 350 megawatts of name plate capacity approximately 20 miles off of Cape May, New Jersey. During last week's conference, Mr. Gibbs' presentation included a slide which suggests that GSOE may be intending to expand its development plan to provide for a utility scale project of up to 1,000 megawatts of name capacity. Notably, GSOE's development arm, Deepwater Wind, recently made a similar announcement with regard to its Rhode Island Sound project.

GSOE's plan to radically increase the size of its project is in part motivated by seeking economy of scale benefits now available via larger, more productive turbines. However, it also creates a potentially dicey competitive environment for the other New Jersey developer, Fishermen's Energy. Under New Jersey's offshore wind energy legislation, the OWEDA, direct funding and financial incentives are directed for up to 1,100 megawatts of offshore energy generation. Thus, if the GSOE project encompasses 1,000 megawatts, it essentially eliminates incentives for projects other than the GSOE project.

Rhode Island: One Less Opponent for Block Island

There is one less opponent to Deepwater Wind's proposed 6-turbine offshore wind installation near Block Island. Rhode Island Attorney General Peter Kilmartin dropped his office’s appeal of the power purchase agreement between Deepwater Wind and National Grid. The appeal, which is set to be heard in the first quarter of 2011, was filed after the state’s Public Utilities Commission approved a price agreement for the sale of electricity from the planned Block Island wind farm.

The appeal will nevertheless proceed because three other petitioners, the Conservation Law Foundation and two manufacturers, are still actively involved in the proceeding.

BOEMRE Slows Down; Maryland Picks Up the Pace

2011-01-25T10:17:00.000-08:00

Although there is still one last installment of my "What's Next: 2011 Edition" series yet to be published, I had no choice but to interrupt myself with two new developments related to two of my earlier predictions:

First, BOEMRE's announcement regarding its revised offshore renewable project permitting rules will directly impact my predictions regarding BOEMRE's anticipated Requests for Interest. In short, the revised shortened timeline for these Requests for Interest is, for the moment, extended.
Second, as I predicted here, Maryland Governor Martin O'Malley has issued a more concrete summary of the legislation he plans to pursue in support of offshore wind projects off of Maryland's coast.

A Speedier Permitting Process? Not So Fast, Thanks to Rulemaking Mandates.

Ah, the absurdity that can result from bureaucratic efforts to facilitate efficiency: BOEMRE's announcement that it must now proceed through the rulemaking process twice in order to promulgate a rule designed to eliminate regulatory redundancy in the federal permitting process for offshore wind projects may just take the prize.

BOEMRE originally unveiled the Rule, part of the "Smart from the Start program" on November 26, 2010. On Monday, January 21, 2011, BOEMRE announced that it now plans to republish the November 26, 2010 Rule within the next 30 days as a Proposed Rule. This accouncement indicates that (1) BOEMRE will be shepherding the revised rule through standard informal notice and comment rulemaking procedures; and (2) BOEMRE received at least one adverse comment or notice during the 30 day comment period following the November 26, 2010 direct final rule publication. BOEMRE has not released any information regarding the basis of the adverse comments or notices. The need to proceed through a second round of rulemaking procedures means that the November 26, 2010 Rule will not go into effect until - at the earliest - May 2011.

The November 26, 2011 Rule, which amends the 2009 MMS Final Rule governing offshore renewable energy project permitting, was designed to eliminate a redundant step in the noncompetitive leasing process for commercial renewable energy development on the Outer Continental Shelf. Under the 2009 MMS Final Rule, BOEMRE must issue a second Request for Interest with regard to leasing specific areas of interest on the Outer Continental Shelf even if only one entity responds to BOEMRE's first request. The November 26, 2011 Rule eliminates BOEMRE's obligation to issue a second request for interest in the event that there is only one interested entity -- resulting in a time savings of up to six to twelve months in the leasing process. If time is money in the project development arena- and it is- the elimination of pointless bureaucratic delay seems like a no-brainer.

In an attempt to codify the 2009 Rule as quickly as possible, BOEMRE decided to employ the little-used "direct final rulemaking" process. The direct final rulemaking process is an accelerated version of the standard notice-and-comment method of informal rulemaking set forth under the Administrative Procedure Act that negates the requirement that an agency proceed through rounds of deliberation at both the proposal and final promulgation stages. See 5 U.S.C. 553. Typically, an agency will use the direct final rulemaking process when it believes that a rule is so uncontroversial that the standard notice-and-comment method would be superfluous and impose needless delay.

Under the direct final rulemaking process, BOEMRE published the Rule in the Federal Register accompanied by the following statement:

This rule becomes effective on January 25, 2011 unless BOEMRE publishes a notice withdrawing this rule before that date.

See November 26 Rule. If no adverse comments had been received before January 25, 2011, the Rule would have been effective as of January 25, 2011. However, under the APA, BOEMRE was compelled to withdraw the Rule upon receipt of even one adverse comments or notices during the comment period compelled.

Nothing in the APA, however, prevents BOEMRE from republishing the November 26, 2010 Rule and initiating the standard informal notice and comment rulemaking process. Under the standard rulemaking process, BOEMRE must first publish a "proposed rule" in the Federal Register. BOEMRE has stated that it intends to issue a proposed rule within the next 30 days. The proposed rule will include a notice setting forth a period of time during which the public and interested parties may submit comments in support of or adverse to the Rule-- typically, between 30 and 180 days. After reviewing all comments and notices, BOEMRE will then be required to publish a "final rule" in the Federal Register. The "final rule" must include BOEMRE's written responses to the substance of each and every comment or notice recieved during the comment period. Subject to any further challenges or comments, the Rule may then be codified into the Code of Federal Regulations ("CFR"). See 5 U.S.C. 553.

So what are the immediate impacts? You may recall that BOEMRE issued an RFI for specially identified submerged lands off of the Maryland coast on April 26, 2010. By way of a letter dated November 8, 2010, BOEMRE notified Bluewater Wind, LLC that it has submitted the only eligible submission. Under the November 26, 2010 Rule, BOEMRE would not be required to issue a second RFI and Bluewater Wind, LLC would be permitted to proceed to the next step in the permitting process immediately. However, because the Rule has not gone into effect, BOEMRE has now issued a second RFI in accordance with the 2009 MMS Final Rule.

Maryland: Proposed Offshore Wind Legislation

Governor Martin O'Malley revealed further details about the legislation he intends to sponsor this year in support of a Maryland-based offshore wind industry. According to the summary, O'Malley's proposed legislation will:

direct the Public Service Commission to require Maryland’s five distribution utilities to award long-term contracts to procure between 400 to 600 megawatts of offshore wind energy. The Commission will oversee the procurement process and approve the final contracts which must be for a period of not less than 20 years. Any additional costs of electricity from offshore wind, and ultimately the additional savings, will be shared by all ratepayers and customer classes in the State.

O'Malley's proposed legislation appears to track similar legislation adopted last year in New Jersey.

What's Next: 2011 Edition, Part 2.

2011-01-18T10:19:00.000-08:00

Part 2 of my Top 10 Predictions for Offshore Wind in 2011 examines new technology developmens and new legislative incentives for Offshore Wind.

(4) State Legislation In Support of Offshore Wind Projects

In the wake of New Jersey’s 2010 OWEDA legislation and following the failure of the 111th Congress to pass a national renewable energy standard, many coastal states with offshore wind potential are considering adopting state legislation to provide incentives for developing offshore wind projects in state and state-adjacent federal waters. This type of legislation provides critical support for offshore wind projects by ensuring lenders and financiers that the energy produced by these projects will be purchased and distributed to end-users.

Other coastal states where Power Purchase Agreements ("PPA"s) for offshore wind projects have not yet been signed (fn1) are likely to follow suit and attempt to enact legislation to encourage offshore wind development. In fact, last week, Maryland Governor O’Malley announced that he plans to propose legislation which will require utilities to purchase a certain amount of wattage from offshore renewable energy projects. Other states that are likely to enact laws which include financial or other incentives for offshore wind development are New York (for both Atlantic and Great Lakes-based development opportunities), Texas (for developments in state waters in the Gulf of Mexico), Michigan (for Great Lakes development) and the Carolinas.

(5) Development of "Floating" Turbines

I admit that I follow the development progress of the various engineering teams working to produce a scaleable floating wind turbine the way that some people follow “American Idol.” In my opinion, a fully tested and engineered scaleable model of a floating wind turbine will transform the offshore wind industry globally and create worldwide opportunity for the production of energy without sacrificing environmental integrity or land in the periphery of already over-burdened demand centers.

BOEMRE provides the following description of the turbine technology that is currently in use at foreign installed offshore wind projects and which will be used for the projects currently proposed in the United States:

Offshore wind facilities today are generally developed and operated as follows. Once a suitable place for the wind facility is located, piles are driven into the seabed. For each turbine, a support structure and a tower to support the turbine assembly, to house the remaining plant components, and to provide sheltered access for personnel are attached to the piles. After the turbine (generally a three-bladed rotor connected through the drive train to the generator) is assembled, wind direction sensors turn the nacelle (a shell that encloses the gearbox, generator, and blade hub) to face into the wind and maximize the amount of energy collected. Wind moving over the blades makes them rotate around a horizontal hub connected to a shaft inside the nacelle. This shaft, via a gearbox, powers a generator to convert the energy into electricity.

See: BOEMRE website.

Because the current generation of turbines must be secured via piles driven into the seabed floor, locations for offshore wind farms have been limited to areas where the water depth does not exceed 30 meters. As a result, most coastal areas in the United States have been deemed unsuitable for offshore energy development including nearly all of the western seaboard-- regardless of the bounty of the wind resources located there. Instead, offshore wind development proposals have been limited to areas with appropriate oceanic bathymetry (i.e. ocean depth) such as the shallower areas of the Outer Continental Shelf extending from Maine down to the southern reaches of the mid-Atlantic region, the Gulf of Mexico, and the Great Lakes.

However, if engineers can overcome the technology issues that preclude the development of offshore energy projects in waters deeper than 30 meters, large swathes of ocean territory located near demand centers could open up for offshore wind development.

Over the last eighteen months, a development team at the AEWC Advanced Structures and Composites Center at the University of Maine, in collaboration with the DeepCwind Consortium has been working to develop a “floating” wind turbine that could be installed in waters significantly deeper than 30 meters. The program, if it is able to stay on track with its funding requirements (nearly $20 million per year over the next four years) expects to design, build, deploy, and test 1:3 scale floating turbine prototypes at a designated (and state approved) test site in Maine's coastal waters over the next 3 years. The program expects to have its first full-scale floating turbine designed, built and deployed at a deep water test site by 2015. See: HERE at page 2.

The University of Maine team is not the only engineering team seeking to develop a scaleable floating wind turbine. In August 2009, Statoil, a Norwegian company with extensive offshore oil drilling experience, installed the first full scale test model of a floating wind turbine, known as the Hywind Project. The Hywind project has less than a year left in its two year testing period, and was designed to be installed at depths of 120-700 meters below sea level.

In addition, a collaboration of European companies including, among others, Converteam, EDF Energies Nouvelles, Institut des Sciences de l'Ingenieur Toulon-Var, IFP Energies Nouvelles, Oceanide, and the engineering company that installed the Hywind Project, Technip, have announced plans to install their own prototype floating offshore wind turbine called the Vertiwind project. The Vertiwind project is a vertical-axis offshore floating wind turbine which will be located in French waters in an area identified as the Sea Cluster of the Provence Alpes Côte d’Azur region. The project is backed and sponsored by the French Prime Minister through the French Environment and Energy Management Agency.

Although we should not expect a fully tested scaleable floating turbine to be production ready in 2011, the enormous market potential of this technology makes any significant engineering progress worth watching.

__________________________________________________
Footnotes:

1. Although I would laud the effort, I do not believe that Delaware legislators will prioritize enactment of legislation mandating inclusion of offshore wind generated energy in Delaware’s renewable energy portfolio. The primary purpose of legislation that requires utilities to purchase offshore wind generated electrons is to facilitate investment in offshore wind projects by mandating a back-end market – i.e., requiring utilities to enter into PPAs with offshore wind energy generators. Delmarva Energy has already signed a PPA with Bluewater Wind, an offshore wind project developer, for a project that is slated to be built in waters adjacent to the Delaware coast. Therefore, in my opinion, it is less critical for Delaware to adopt incentive based legislation.

What's Next: 2011 Edition, Part 1.

2011-01-07T08:14:00.000-08:00

We are one week-- a mere seven days -- into 2011, and the U.S. offshore wind sector is already in full swing! I started drafting this post, which was intended to be a "Top 10" list of predictions for 2011, just before New Years. However, at least one of my predictions was so uncanny that it has already come to fruition!

In an effort to make these posts a little less lengthy, I am breaking the Top 10 into three parts. This post includes the first three predictions-- stay tuned for the next seven!

(1) Army Corps of Engineers Issues Final Permit and ROD for Cape Wind

After years of inaction, delay, and litigation challenges, the United States Army Corps of Engineers has issued a final permit for the Cape Wind Offshore Wind Farm. Cape Wind is set to be located in an area known as Horseshoe Shoals off the coast of Nantucket Island in federal waters off the coast of Massachusetts. The Army Corps permit was issued pursuant to the Corps' regulatory authority under Section 404 of the Clean Water Act (33 U.S.C. 1344), and under Section 10 of the Rivers and Harbors Act of 1899 (33 U.S.C. 403). The permit, which was issued concurrently with the Army Corps' Record of Decision, was granted in consideration of the Final Environmental Impact Statement approved by Mineral Management Services (now the Bureau of Ocean Energy Management, Regulation and Enforcement) and subsequent to the issuance of the first-ever submerged land lease granted for an offshore renewable energy project. Under the Permit, Cape Wind must complete construction of the 130 turbine installation by 2020.

(2) BOEMRE Requests for Interest and Calls for Information

In 2009, BOEMRE issued Requests for Interest with regard to potential offshore renewable energy developments in Delaware, Maryland, and Massachusetts (in cooperation with Rhode Island). Under the Department of the Interior's new "Smart from the Start" program, I believe that we should expect to see BOEMRE RFI's issued for the waters off of Maine, New Jersey, New York, and North Carolina.

Joan Bondareff, Vice Chair of Virginia's Offshore Wind Development Authority (and of counsel in Blank Rome's Washington, DC office) offers the following prediction related to offshore wind development in Virginia:

In VA, we expect DoI to issue an RFI in January for leasing areas on the OCS off the coast of Virginia. At the newly-constituted VA Offshore Wind Development Authority, established in legislation last year and promoted by Gov. McDonnell, we are looking forward to working with companies interested in offshore wind development and building public-private partnerships to facilitate bringing these projects on-line in the future at what we hope can be competitive rates. We also welcome the DoI's Smart from the Start Initiative.

(3) Action Under 2010 New Jersey OWEDA Legislation: New BPU Regulations for OREC Program; Bids Expected Shortly Thereafter

Under the recently enacted New Jersey Offshore Wind Economic Development Act ("OWEDA"), the New Jersey Board of Public Utilities (BPU) has been directed to develop and establish an offshore wind renewable energy certificate (OREC) program that calls for a percentage of electricity sold in the state-- a minimum of 1,100 megawatts-- to be from offshore wind energy. The OWEDA also offers financial incentives, including both tax credits and direct funding through the New Jersey Economic Development Authority, to businesses that build manufacturing, assemblage, and water access facilities for qualified offshore wind projects.

Under the legislation, New Jersey BPU is required to issue regulations governing the OREC program within 180 days of the legislation's enactment date-- i.e., by February 15, 2011.

Once the OREC program has been established, we should expect to see applications submitted by a number of developer entities including the Garden State Offshore Energy, Fishermen's Energy, LLC and Bluewater Wind, LLC.

What Happened? 2010 Edition.

2010-12-29T12:41:00.000-08:00

2010 has been a big year for offshore wind energy. We have seen regulatory revolutions and revelations, lingering litigations, project progress, legislative luminaries, and capital commitments-- not to mention these annoying alliterations! Here are my top 10 news items for 2010:

1. Salazar Signs Approves Cape Wind and Signs Submerged Land Lease

In April, Interior Secretary Ken Salazar granted federal approval to Cape Wind’s long-suffering offshore wind project slotted for construction in Nantucket Sound off the coast of Massachusetts. In October, Salazar took the stage at AWEA’s Offshore Wind Conference in Atlantic City and signed the first ever submerged land lease for an offshore renewable energy project. As a conference attendee and witness, I admit that I may have teared up—but just a little!

2. Google Invests in Atlantic Wind Connection Backbone Transmission Cable

In October, internet giant and financial juggernaut Google announced its intentions to invest undisclosed, but potentially enormous sums of money to build an undersea cable to connect and transmit energy from offshore wind projects to distribution centers between New Jersey and Virginia. The project, known as the Atlantic Wind Connection, filed a plan with the FERC on December 21.

3. New Jersey Enacts Offshore Wind Economic Development Act
Speaking of transmission and infrastructure, New Jersey enacted legislation that not only calls for the production of at lease 1,100 megawatts of offshore wind generation, but also offers direct financial incentives to businesses that build manufacturing, assemblage, and water access facilities for qualified offshore wind projects. These incentives include tax credits and funding from the New Jersey Economic Development Authority (NJEDA).

4. MMS becomes BOEMRE in the wake of the Gulf Spill; BOEMRE to Handle Offshore Wind Regulation

Following the tragic and unfathomably destructive BP oil spill in the Gulf of Mexico, the Obama administration restructured and renamed the former Mineral Management Services and created the new Bureau of Ocean Energy Management, Regulation and Enforcement. Although some un-named (and snarky) industry insiders have been known to pronounce the new DOI bureau acronym as “bummer”, there is nothing depressing about the new “Smart from the Start” initiative that BOEMRE will be overseeing in the New Year!

5. Salazar Introduces Streamlined Permitting Process: “Smart from the Start”

In response to resounding complaints from project developers, financiers, and just about everyone else with an interest in offshore renewables, DOI Secretary Salazar announced a revised permitting process designed to eliminate regulatory redundancies and “needless red tape.” The new program, which Secretary Salazar's office has titled "Smart from the Start", and which began with BOEMRE’s immediate identification of several designated Wind Energy Areas in November, hopes to diminish the length of the permitting process by two to five years.

6. Deepwater Wind Announces a 1,000 MW Project for the Rhode Island Sound

In early December, Deepwater Wind announced that it has revised its original plan for a 100 turbine, 350 megawatt wind farm and has instead submitted plans for federal approval for a 1,000 megawatt wind farm in the Rhode Island Sound. The plan also includes a transmission line that would distribute electricity produced by the project to distribution centers between Massachusetts and New York.

7. 1603 Renewable Energy Tax Credit Extended for Another Year

In late December, Congress passed a one-year extension of the 1603 renewable energy investment tax credit as part of a multi-billion dollar tax cut package. The tax credit could provide a financial boost to offshore wind projects if construction begins before December 31, 2012.

8. Various Utility Commissions Reject, Approve, Reconsider and Litigate Various PPA Agreements for Proposed Projects

In March, the Rhode Island Public Utilities Commission rejected a power purchase agreement for Deepwater Wind’s Block Island project (starting at 24.4 cents per kilowatt hour) as “commercially unreasonable.” Rhode Island legislators then directed the commission to reconsider and the contract was approved. The PPA has been challenged yet again though, and the RI Supreme Court is expected to address the issue in 2011.

Likewise, the Massachusetts Department of Public Utilities approved National Grid’s PPA with Cape Wind. This PPA has also been challenged.

9. Maine Takes The Lead In Deep Water Floating Turbine Technology

Following a 2009 DOE Grant, Dr. Habib Dagher and his team at the University of Maine Advanced Structures & Composite Center have taken the lead in the U.S. market with regard to developing floating turbines designed for deep water wind farms. Maine has identified and approved three test areas in state waters where the team plans to test its floating turbines.

10. Steelworkers Union Files Trade Case Against China

In early September, the Steelworkers Union filed a 5,800 page petition with the office of the US Trade Representative to the WTO alleging that China has made unfair use of billions of doallars of subsidies, and has instituted performance requirements preferential practices and other "trade-illegal activities to advance its domination of the [renewable energy] sector." The focus of the USW's latest petition is the export to the US of Chinese-made equipment for alternative energy projects like land based and offshore wind turbines and solar-energy projects. The Union's petition identifies five major areas of "protectionist and predatory practices used by the Chinese to develop their green sector at the expense of production and job creation here in the US." These five areas include:

a. Restrictions of access to critical materials;

b. Prohibited subsidies contingent on export performance or domestic content;

c. Discrimination against imported goods and foreign firms;

d. Technology transfer requirements for foreign investors; and,

e. Trade-distorting domestic subsidies.

On Oct. 15, the U.S. Trade Representative announced its intention to proceed with further investigation of the case. On December 22, the US Trade Representative announced that it will be seeking World Trade Organziation dispute resolution with regard to China’s Subsidies for Wind Power Equipment Manufacturers.

Largest U.S. Offshore Wind Farm Proposed for Rhode Island

2010-12-13T07:46:00.000-08:00

Rhode Island-based offshore wind developer Deepwater Wind submitted an application to the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) to build the largest offshore wind project in the United States: a 200 turbine, 1,000-megawatt offshore wind project in Rhode Island Sound. The project, called the Deepwater Wind Energy Center, also includes a proposal for an undersea transmission network designed to stretch from Massachusetts to New York. The turbines and installation would cost an estimated $4.5 billion to $5 billion, and the transmission system will cost an additional $500 million to $1 billion.

If approved, the Deepwater Wind Energy Center will be installed in four phases, with construction starting in 2014. The first 50-turbine phase will go on line in 2015 with additional construction phases to follow.

The Deepwater Wind Energy Center proposal replaces Deepwater Wind’s 2008 proposal to construct a 350-megawatt, 100-turbine project. Deepwater Wind reports that the aggressive new proposal was motivated by technological innovations that increase energy generation potential while diminishing costs, as well as DOI’s recently announced "Smart from the Start” regulatory initiative.

Diminished timelines for regulatory approvals may help to overcome investor reluctance. Regulators previously predicted time frames of 7 to 9 years before an offshore wind project could be brought online. Investors typically shy away from projects with start-up timelines longer than (at the most) 5-6 years. Deepwater Wind, along with most U.S. offshore wind developers, has lauded the proposed revisions to the regulatory process under the Smart from the Start program which among other things, promises expedite permitting for qualifying offshore renewable energy projects and may enable regulators to issue the first submerged land leases to developers by late 2011 or early 2012. See also here.

In addition, technological improvements to wind turbines have the potential to materially impact economy of scale analysis of offshore wind projects and make larger projects far more cost-effective. Here, Deepwater’s 200-turbine plan will produce more than triple the energy wattage than the 100-turbine plan. This is in part due to innovations in turbine design. While most existing European and Asian offshore wind installations have used 3 to 3.6 megawatt turbines, manufacturers (including Areva Renewables and REpower Systems) have now made 5 and 6-megawatt turbines available.

Using larger turbines improves the economies of scale for developers like Deepwater Wind and can translate into better pricing for rate-payers. Deepwater Wind CEO Bill Moore has predicted that the 200-turbine project will be more cost-effective than Deepwater’s much smaller Block Island wind farm (turbines, wattage) and could reduce prices a third lower than the 24.4 cents/kWh rate set under Deepwater Wind’s Block Island project power purchase agreement with National Grid. “This ‘second generation’ of offshore wind farms will be larger and farther from shore, and will produce lower priced power, using more advanced technology than the offshore projects announced to date. We expect the offshore wind industry in the United States to follow the European experience, where a more mature industry is building larger projects farther from shore,” Moore said in a press release.

Provided the project obtains a myriad of state and federal regulatory approvals, the Deepwater Wind Energy Center will be located in a 270 square-mile area between Rhode Island and Massachusetts in federal waters directly south of Sakonnet Point between Block Island to the west and Martha’s Vineyard to the northeast. This area is subject to a Memorandum of Understanding between the states of Massachusetts and Rhode Island, and is referred to as the “area of mutual interest.” The proposed project area is consistent with Rhode Island’s recently issued and approved Special Area Management Plan (SAMP)—essentially, an ocean-zoning plan designed to identify and protect fishing grounds, shipping lanes and glacial rock formations. Deepwater Wind submitted an application for a submerged land lease on the area of mutual interest in October 2010.

The multi-state transmission network, known as the New England-Long Island Interconnector (NELI) will extend from Massachusetts to New York and would enable Deepwater Wind to sell power to any of the states located along the seaboard where the network will be located including Connecticut, Massachusetts, New York and Rhode Island. The ability to distribute and sell energy to multiple states ensures that Deepwater will be able to sell all of the power produced by its project and also ensures that the investment cost of construction that is factored into power rates will not fall on ratepayers in Rhode Island alone.

As of this writing, it is not clear whether the NELI transmission system will ultimately interconnect with the planned Atlantic Wind Connection subsea transmission system which is planned to extend from New Jersey south to Virginia.

DOI and BOEMRE Announce 'Smart from the Start' Program Revisions to BOEMRE's 2009 Regulations

2010-11-23T11:47:00.001-08:00

At 2pm EST, Secretary of the Department of Interior Ken Salazar announced the launch of a new offshore wind energy initiative for the Atlantic Outer Continental Shelf entitled ‘Smart from the Start’. Sec. Salazar explained that the new program will facilitate siting, leasing and construction of new projects to encourage the efficient (but prudent) development of offshore renewable resources. In summary, the 'Smart from the Start' program comprises two tracks of revised provisions to BOEMRE's May 2009 regulations. The first track concerns the leasing process, and the second track pertains to transmission system development.

The new program, which promises to significantly shorten the time projected to obtain a subsea lease under the current regulations (7-10 years), intends to simplify the leasing process for offshore wind projects where there is only one qualified and interested developer. The revised regulations call for BOEMRE to identify Wind Energy Areas ("WEAs")-- that is, offshore locations that appear most suitable for offshore wind energy projects-- off the coasts of a number of Atlantic states including Maryland, Delaware, New Jersey, Virginia, Rhode Island, and Massachusetts within the next 60 days.

By January 2011, Requests for Interest and Calls for Information ("RFI"s) will be issued for the initial WEAs to support environmental assessments for project based leases. An RFI has already been issued for coastal areas off of Maryland, and RFIs are currently in development for New Jersey, Virginia, Rhode Island, and Massachusetts.

Also in January 2011, BOEMRE will initiate and coordinate Environmental Assessments ("EA") pursuant to the National Environmental Policy Act ("NEPA") at the identified WEAs to evaluate potential impacts associated with site assessment activities. As part of the EA process, the revised regulations also require BOEMRE and DOI to coordinate closely with other federal agencies to compile existing site assessment data. If the EAs reveal a Finding of No Significant Impact ("FONSI"), BOEMRE could extend leases to prospective developers for the WEAs by the end of 2011/early 2012. Developers will still need appropriate and comprehensive site-specific NEPA review of individual projects.

Later in 2011, BOEMRE will work to identify additional WEAs in other Atlantic States, possibly including New York, Maine, North Carolina, South Carolina, and Georgia.

On the transmission side, the 'Smart from the Start' program requires BOEMRE to move aggressively to process applications to build offshore transmission lines. The identification of wind energy areas should assist the siting and feasibility reviews associated with potential offshore transmission lines.

The Department of the Interior posted a press release quoting statements made by the Secretary and the Director of BOEMRE at today's announcement:

“The Cape Wind lease is an historic milestone in America’s renewable energy future, but to fully harness the economic and energy benefits of our nation’s vast Atlantic wind potential we need to implement a smart permitting process that is efficient, thorough, and unburdened by needless red tape,” said Secretary of the Interior Ken Salazar.

“Our ‘Smart from the Start’ Initiative for Atlantic wind will allow us to identify priority Wind Energy Areas for potential development, improve our coordination with local, state, and federal partners, and accelerate the leasing process,” Salazar noted. “If we are wise with our planning, we can help build a robust and environmentally responsible offshore renewable energy program that creates jobs here at home.”

“This coordinated initiative will help to capture the great potential that offshore wind power offers our country and our economy,” said Deputy Secretary David J. Hayes. “Smart planning and early environmental reviews will pay great dividends in spurring responsible renewable wind energy development.”

“This accelerated and focused approach to developing the nation’s Atlantic wind resources will encourage investment while ensuring projects are built in the right way and in the right places,” said Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) Director Michael R. Bromwich.

“We believe the regulatory change we are proposing, along with our efforts to identify priority Wind Energy Areas offshore, will result in a more efficient and coordinated permitting process for offshore wind,” said Bromwich.

DOI posted a factsheet on the Smart from the Start program HERE and a factsheet on the Direct Final Rule HERE.

Big News Day for Offshore Wind: Cape Wind and Major Federal Announcement!

2010-11-23T09:19:00.001-08:00

Stay Tuned for a Major Federal Announcement Regarding Offshore Wind Regulation and Permitting!!

US Department of the Interior ("DOI") Secretary Ken Salazar is slated to announce “a major new initiative to accelerate the responsible siting and development of wind energy projects along the Atlantic coast” at 2pm today at the Ft. McHenry National Monument in Baltimore, Maryland. Although the DOI and the Bureau of Ocean Energy Management ("BOEMRE") have not released official details on the substance of the announcement, there is speculation that the DOI will be authorizing a new, more streamlined permitting process for offshore wind and hydrokinetic energy projects that could eliminate some of the duplicative requirements that are presently mandated.

Deputy Interior Secretary David Hayes, Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) Director Michael Bromwich, Delaware Senator Tom Carper, Maryland Gov. Martin O’Malley and Jim Lanard, president of the Offshore Wind Development Coalition are also expected to be in attendance during the announcement today.

Check back here after the announcement for more specifics!

More Progress for Cape Wind!

On Monday November 22, 2010, the Massachusetts Department of Public Utilities announced that it has issued a final approval for the 15-year Power Purchase Agreement ("PPA") between National Grid and Cape Wind. This approval signifies another hard-won victory for the proposed Cape Wind offshore wind project.

Under the PPA, National Grid, one of the main electricity providers in Massachusetts, will purchase 50 percent of the power generated by the Cape Wind project. The Massachusetts Department of Public Utilities has approved rates starting at 18.7 cents per kilowatt hour beginning in 2013, with a planned gradual increase of 3.5% to be introduced over the next 15 years. This will results in an average increase of one to two percent for most consumers' electric bills.

In its press release, Massachusetts Department of Public Utilities Massachusetts Department of Public Utilities chair Ann Berwick stated: "It is abundantly clear that the Cape Wind facility offers significant benefits that are not currently available from any other renewable resource. These benefits outweigh the costs of the project."

The Cape Wind Offshore Wind project, which will involve the installation of 130 wind turbines in the waters of Nantucket Sound, still must obtain additional federal permits from the U.S. Army Corps of Engineers, as well as from the U.S. Environmental Protection Agency before construction can begin.

DOE, BOEMRE & NOAA Award $5 Million in Grants to 8 Ocean Renewable Energy Research Projects

2010-10-27T10:33:00.000-07:00

On October 26, 2010, The Department of Energy (DOE), Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE), and the Department of Commerce's National Oceanic and Atmospheric Administration (NOAA) announced their joint decision to award nearly $5 million to eight research projects designed to support offshore wind energy facilities and wave, tidal, and currents and thermal gradient energy projects.

The projects were selected following a competitive joint funding process (a "Broad Agency Announcement") and were chosen as part of the Obama administrations' newly created National Ocean Council which was established on July 19, 2010.

The awards were granted to the following projects**:

(1) Parametrix (Auburn, Washington): Bayesian Integration for Marine Spatial Planning and Renewable Energy Siting

This research seeks to apply advanced probabilistic statistical methods to integrate oceanographic, ecological, human use data, stakeholder input, and cumulative impacts for the purpose of evaluating ocean renewable energy siting proposals.
Approximate award amount: $499,000 (over two years); Funding agencies: BOEMRE, DOE, NOAA

(2) Cornell Lab of Ornithology (Ithaca, NY): Characterization & Potential Impacts of Noise Producing Construction & Operation Activities on the Outer Continental Shelf

This 3 year project, expedited through the Cornell Ornithology Lab's Bioacoustics Research Program, will measure, characterize and evaluate the influences of construction and operation noises from construction and operation and maintenance of offshore renewable energy projects on resident and migratory marine vertebrates. Approximate award amount: $499,000 (over three years); Funding agencies: BOEMRE, NOAA

(3) University of Rhode Island (Kingston, RI): Development of Environmental Protocols and Modeling Tools to Support Ocean Renewable Energy and Stewardship

This project intends to develop and test standardized protocols for baseline studies and monitoring of environmental impacts associated with offshore renewable energy projects. Specifically, the URI researchers hope to craft a consistent and reliable (yet flexible) process for conducting environmental impact evaluations for offshore renewable energy projects. The project will be conducted as part of Rhode Island's ongoing effort to develop a comprehensive Special Area Management Plan ("SAMP"). Approximate award amount: $745,000 (over two years); Funding agencies: BOEMRE, DOE, NOAA

(4) University of Washington School of Aquatic and Fishery Sciences (Seattle, WA): Evaluating Acoustic Technologies to Monitor Aquatic Organisms at Renewable Sites

This two year research project will evaluate the ability of three classes of active acoustic technologies (echo sounders, multibeam sonar, and acoustic camera) to characterize and monitor animal densities and distributions at a proposed hydrokinetic site, the Snohomish Public Utility District's tidal energy demonstration project. Approximate award amount: $746,000 (over two years); Funding agencies: DOE, BOEMRE, NOAA

(5) Pacific Energy Ventures (Portland, OR): Protocols for Baseline Studies and Monitoring for Ocean Renewable Energy

This two year project will attempt to develop a consistent evaluational and monitoring protocol for considering the environmental impact of offshore renewable projects. The protocol will be consistent with related European programs. Although PEV plans to develop their protocol specifically around west coast marine resources, they hope to create a tool that can be used in other regions and marine ecosystems. Approximate award amount: $499,000 (over two years); Funding agencies: BOEMRE, DOE, NOAA

(6) University of Arkansas Center for Advanced Spatial Technologies (Fayetteville, AR): Renewable Energy Visual Evaluations

This research project is designed to develop a "Visual Impact Evaluation System" for Offshore Renewable Energy. The proposed system will allow a user to design the spatial layout and content of an offshore facility, import and prepare geospatial data that will affect visibility, run a series of sophisticated visual analyses, define atmospheric, lighting and wave conditions and, finally generate one or a series of realistic visualizations from multiple viewpoints. The system will also accept three-dimensional computer models of facilities submitted by project applicants or available from third parties, and will include pre-built models of many facilities. Output during the two year project will be in the form of maps, tabular reports and high-quality rendered images. Approximate award amount: $497,000 (over three years); Funding agency: BOEMRE

(7) University of Texas Bureau of Economic Geology (Austin, TX): Sub-Seabed Geologic Carbon Dioxide Sequestration Best Management Practices

This research project will employ existing knowledge and experience with onshore carbon sequestration monitoring and risk assessment, existing and proposed policy (both domestic and international), and international collaboration with groups already conducting offshore carbon dioxide transport and sequestration to compile information needed to establish best management practices for U.S. offshore geologic sequestration. Approximate award amount: $497,000 (over three years); Funding agency: BOEMRE

(8) University of Massachusetts Marine Renewable Energy Center (Dartmouth, MA): Technology Roadmap for Cost Effective, Spatial Resource Assessments for Offshore Renewable Energy

This research project will develop a technology roadmap, using primarily existing data, for the application of advanced spatial survey technologies, such as buoy-based LIDAR, to the assessment and post-development monitoring of offshore wind and hydrokinetic renewable energy resources and facilities. Once the roadmap has been completed, researchers will perform field tests to assess its viability. Approximate award amount: $748,000 (over two years); Funding agencies: BOEMRE, DOE

** These research project descriptions are paraphrased from a DOE press release issued on October 26, 2010.

Google Invests in Offshore Wind Transmission Cable: Boon or Bane?

2010-10-12T09:31:00.000-07:00

This morning, Google and Good Energies (a New York based financial firm) announced that they inked a deal to provide 37.5% of the equity investment costs for a proposed $5 billion backbone transmission line, which is being called the "Atlantic Wind Connection" ("AWC"), and which will be used to link future offshore wind farms along the Atlantic Seaboard. Google and Good Energies join Marubeni, a Japanese trading company which has committed to a 10% stake in the project.

The project developer, Trans-Elect, describes the project as a 350-mile underwater spine that will run bi-directionally up and down the Atlantic coastline from Virginia to Maine. As has been discussed in a prior post, the AWC has been touted to resolve certain inherent problems with offshore wind generation, including the proverbial elephant in the room: intermittency. Trans-Elect says it hopes to begin construction in 2013.

Several media sources have reported that U.S. Government officials have indicated cautious optimism about the AWC project: “Conceptually it looks to me to be one of the most interesting transmission projects that I’ve ever seen walk through the door...It provides a gathering point for offshore wind for multiple projects up and down the coast.” (See here). Notably, Secretary of the Department of the Interior specifically referenced the AWC during his keynote speech at the AWEA Offshore Wind Conference last week.

There are some questions regarding the economic impact that will result from a transmission system that essentially negates the individual utility of each individual offshore wind installation. In the present regulatory environment, the end-user prices for electricity are set by state regulators and therefore, vary from state to state. Therefore, electrons generated from a facility in State A will garner a different price if they are deployed to State A or to State B. The Regional Transmission Operator ("RTO") makes the decision where a facility's electrons will be deployed based on grid conditions (i.e., where electricity is needed based on demand), not on pricing. This means that offshore wind generators must account both for the uncertainty resulting from intermittency, as well as uncertainties arising from where the RTO will direct their electrons.

This much uncertainty doesn`t bode well with investors. Unless there is some unifying policy or legislation to standardize end-user prices (or the utilities' sales price) for electrons generated by state based offshore wind installations, there is insufficient revenue predictability to assure debt investment in offshore wind. Insufficient debt financing can lead to a disproportionate cost burden being levied on state residents who may or may not reap the benefit of these costs. Without some tangible and guaranteed financial benefits, why would any state utility board or other authority support state financing (via mechanisms such as New Jersey's Offshore Wind Economic Development Act) of offshore wind projects? And without state support, most projects just can`t make the numbers work.

One way to resolve pricing variances between the states would be to implement some sort of unifying federal policy, regulation or legislation. Alternatively (and perhaps in light of agreements such as the Atlantic Offshore Wind Energy Consortium, more practically), states could enter into regional cooperative agreements to conform end-user and/or utility pricing as an incentive for renewable energy projects facing intermittency and high upfront development costs. However, adding new regulatory challenges to an already hyper-regulated industry seems like an inefficient way to get offshore wind farms built in our lifetimes.

Moreover, none of the above seems to jibe well with the law of Occam's razor-- there are just too many decision makers and moving parts. So what would be the alternative to a bi-directional backbone transmission project and what are some of the potential benefits thereto?

Local transmission lines only would omit the need for state and regional regulation/policy considerations to some extent. In addition, shorter transmission lines are less expensive transmission lines. But that leaves that intermittency elephant standing smack in the middle of the room.

This brings us to the holy grail of renewable energy: energy storage. If the benefit of offshore wind energy (for the Atlantic Seaboard) is demand center proximity, there is no economic benefit to extending transmission lines beyond the nearest shore-based substation. Notwithstanding that a viable accumulator technology has not yet been developed, I would be willing to bet that energy reservoirs would be at least as effective (if not more effective) at managing intermittency than a backbone subsea cable.

In sum, the backbone cable offers some solutions, but may create some difficult economic hurdles without significant policy and regulatory attention. Alternatively, local transmission options avoid some of the economic issues, but will not be able to truly resolve intermittency issues (which are themselves economic issues) until energy storage technology radically improves. In my humble view, neither option presents an ideal approach. What do you think?

Secretary Salazar and Cape Wind Sign First Commercial Lease

2010-10-06T12:55:00.000-07:00

Following his keynote speech this morning at the third annual American Wind Energy Association ("AWEA") Offshore Wind Conference in Atlantic City, New Jersey, DOI Secretary Salazar was joined onstage by Cape Wind President Jim Gordon and AWEA President Denise Bode to sign a commercial lease for submerged federal lands.

The lease, which grants Cape Wind the right to develop submerged lands in the Outer Continental Shelf off the coast of Nantucket, MA, is the first of its kind, and has been over 8 years in the making. Cape Wind expects to install 140 turbines in Nantucket Sound. The maximum capacity of the Cape Wind installation is 462 mW, with a expected output of 180mW. Cape Wind will generate enough electricity to power about 200,000 homes.

As a large crowd of AWEA conference attendees looked on, Salazar and Gordon prepared to sign the lease. Gordon, who has been the President and primary financial stakeholder in Cape Wind since its inception in 2002, was clearly eager to sign the lease. Salazar asked Gordon to offer a few remarks before signing the document, joking that Gordon's eagerness was comparable to "waiting 8 years to marry someone." Gordon then thanked the Secretary and the administration for personally engaging with him and Cape Wind to see the project towards fruition. Gordon noted that Salazar was a particular champion of offshore wind projects and that due to his personal commitment and determination, necessary deadlines and clear regulatory processes were finally being issued and implemented at state and federal levels. Gordon highlighted that the effect of this lease and of the leases to come for other offshore wind projects will have the effect of ensuring a boundless supply of clean, efficient, and cost effective energy for our future.

Salazar and Gordon recieved a standing ovation from the conference attendees after the lease was signed.

Secretary Salazar's keynote speech was a paean to the Obama administration's efforts to invest time, money, and sweat equity in the success of the United States' renewable energy industry-- with an especial focus on offshore wind development. The Secretary noted that he had just issued an approval for two large scale solar installations (also the first of their kind) on federal lands located in California.

With regard to the nascent offshore wind industry, Secretary Salazar stated that it is important for developers and industry stakeholders to be "smart from the start." Secretary Salazar identified five areas where smart development is essential:

(1) Governmental coordination: Secretary Salazar commended the support of DOE's Secretary Chu as well as the success of interstate cooperative initiatives such as the Atlantic Governor's Consortium as well as state specific initiatives.

(2) Site Identification: The Secretary stated that BOEMRE will have completed its analysis and identification of high priority sites for offshore wind development by the end of 2010.

(3) Streamlining the Permitting Process: The Secretary acknowledged that the present BOEMRE permitting and leasing scheme is not a final polished process and that developers and stakeholders should view the regulations issued in May 2009 as a baseline framework. The Secretary encouraged the audience members to recommend concrete suggestions to streamline the regulatory process in order to speed project development and encourage financial investment in offshore wind. Specifically, Secretary Salazar noted that he expects the regulatory process to become significantly less cumbersome as more and more information about topics such as metocean planning, bathymetry, and ornithological and ichthyological studies are completed. The Secretary recognized that many of the studies and submissions require applicants to perform tasks duplicatively-- even just at the federal level. Accordingly, the next iteration of the regulatory process needs to be more efficient.

(4) Transmission: The Secretary indicated that DOI is seriously reviewing the construction of a transmission "backbone" that would connect offshore projects up and down the eastern seaboard to one another and to the existing grid. Notably, the "backbone" transmission proposal is one of the most promising solutions for intermittency issues inherent in offshore wind power generation.

(5) Investment: The Secretary acknowledged that without investor support, there will be no industry-- and that without a clear, predictable, and coordinated permitting process, investors are unable to ensure a return on their investment within any reasonable period of time. Accordingly, the Secretary recognized that the current estimated timeline to proceed through the regulatory process -- 7-9 years-- is simply unacceptable.

Hydropower: FERC enters MOU with Colorado to Facilitate Small Hydropower Projects

2010-08-26T06:45:00.000-07:00

On August 24, Chairman Jon Wellinghoff of the Federal Energy Regulatory Commission (FERC) signed a Memorandum of Understanding (MOU) with the State of Colorado to establish a pilot program to facilitate the development of small-scale hydropower projects in Colorado.

This MOU was crafted in the wake of growing interest in the development of small, low-impact hydropower projects in Colorado. Earlier, the federal government conducted surveys to identify hundreds of potential hydropower projects (less than 5MW per project) in Colorado with a combined capacity of more than 1400 MW.

Under the MOU, Colorado and FERC have agreed to take the following steps:

(1) Colorado will develop a pilot program to test options for simplifying and streamlining procedures for authorizing conduit exemptions and small 5MW or less exemption projects while ensuring environmental safeguards;

(2) Colorado and FERC will identify a single point of contact for implementation of the pilot program;

(3) Both parties will hold quarterly teleconferences to discuss the development and implementation of the pilot program;

(4) Both parties will share and make publicly available all relevant economic, environmental, and technical data.

(5) FERC will waive certain consultation requirements when all relevant resources agencies agree to do so.

FERC's MOU with Colorado is the most recent of a number of FERC MOUs with other states to encourage and facilitate the development of hydrokinetic projects. The other MOUs are as follows:

FERC and California (wave and tidal projects): May 18, 2010

FERC and Maine (tidal energy projects): August 18, 2009

FERC and Washington (experimental hydrokinetic projects): June 4, 2009

FERC and Oregon (wave energy projects): March 26, 2008

Offshore Wind: State Update (NJ, NC, NY and the Great Lakes)

2010-08-20T11:09:00.000-07:00

The agency formerly known as MMS (and now known as the Bureau of Ocean Energy Management, Regulation and Enforcement) has certainly had its hands full this summer -- what with the renaming and internal reorganization in the wake of the BP Gulf Oil spill. Consequently, while the feds juggle other balls, a number of states have been moving to adopt (or reject) a variety of business and legislative initiatives that impact offshore wind project development.

New Jersey:

On Thursday August 19, 2010, New Jersey Governor Chris Christie signed into law the Offshore Wind Economic Development Act ("OWEDA"). The OWEDA directs the New Jersey Board of Public Utilities (BPU) to develop and establish an offshore wind renewable energy certificate program (OREC) that calls for a percentage of electricity sold in the state to be from offshore wind energy. This percentage would be developed to support at least 1,100 megawatts of generation from qualified offshore wind projects. The OWEDA also offers financial incentives to business that build manufacturing, assemblage, and water access facilities for qualified offshore wind projects. These incentives include tax credits and funding from the New Jersey Economic Development Authority (NJEDA).

The OWEDA is the most comprehensive-- and the most conducive -- state legislation that has been passed by a state to support the development of offshore wind energy. New Jersey project developers including the Deepwater Wind/PG&E Global joint project, and Fisherman's Energy will surely laud Governor Christie's commitment to offshore wind.

North Carolina:

On Friday August 20, 2010, Charlotte, North Carolina's Duke Energy announced that it has cancelled its plans to develop a three-turbine offshore wind demonstration project in a lagoon in North Carolina's Pamlico Sound. Duke noted that its analysis of the proposals signified that permitting, design and construction are “no longer economically viable”. Duke estimated that costs to get the first turbine operating at the Pamlico Sound location would cost $88 million, although costs for the second turbine would drop to $14 million. Duke further reported that its decision was made in part due to the greater than expected environmental impacts that would result from the construction of the project at the Pamlico Sound location.

Although the Pamlico Sound project will not move forward, Duke continues to work with the University of North Carolina at Chapel Hill, to develop a much larger, utility scale offshore wind farm in the ocean off of North Carolina’s coastline. In support of this effort, Duke will continue to fund a bird study conducted through UNC as well as studies of North Carolina's coastal wind resources.

Finally, Duke Energy is now calling on state lawmakers to consider legislation that could help the development of large-scale offshore wind capacity off the North Carolina coast. Now that New Jersey has passed qualified legislation in support of offshore wind development, we should expect that North Carolina lawmakers will be considering whether New Jersey's legislation can provide a model for North Carolina.

New York and the Great Lakes

The New York Power Authority is currently reviewing five proposals from private-sector wind developers to build offshore wind turbines somewhere in lakes Ontario or Erie. The Great Lakes Offshore Wind Project(hilariously shortened to "GLOW"-- which I suppose is better than "GLOP") originally issued a Request For Proposals in December 2009. The agency has urged public officials and citizens to be patient until a developer is chosen and a location revealed, likely in late 2010 or early 2011.

Lawmakers in Wayne, Oswego, Jefferson and Chautauqua counties have voted by wide margins to oppose the plan by the New York Power Authority to locate one or more wind farms in the near-shore waters of lakes Ontario or Erie. The Niagara County Legislature endorsed the authority proposal last year, but recently named a panel to revisit that decision. On August 19, 2010, 29 Monroe County lawmakers considered a resolution opposing the development of wind farms in Lake Ontario. Only 12 of the 29signed the resolution, thus falling short of a majority.

DOI and Thirteen East Coast States Create Offshore Wind Energy Consortium

2010-06-08T13:35:00.000-07:00

The Department of the Interior has entered into a Memorandum of Understanding ("MOU") with Thirteen Atlantic Coast States to promote the development of offshore wind resources. The full title of the MOU is:

Memorandum of Understanding Between the United States Department of the Interior and The States of Maine, New Hampshire, Massachusetts, Rhode Island, New York, New Jersey, Delaware, Maryland, Virginia, North Carolina, South Carolina, Georgia, Florida To Create An Atlantic Offshore Wind Energy Consortium to Coordinate Issues of Regional Applicability for the Purpose of Promoting the Efficient, Expeditious, Orderly and Responsible Development of the Wind Resources of the Atlantic Outer Continental Shelf

Notably, the MOU highlights findings by the Department of Energy ("DOE") that state that in order to achieve a goal of obtaining 20% of national energy from wind resources, US developers will need to build offshore wind farms generating at least 54 gigawatts of offshore wind energy. The MOU also recognizes the enormous impact that an offshore wind industry could have on the economies of the participating Atlantic States through the creation of hundreds of thousands of jobs.

The participating States and the DOI therefore agree pursuant to the MOU to cooperate with one another to clarify and simplify the regulatory process including smoothing the path to compliance for developers who must comply with multiple state regulatory processes as well as the federal regulations. The parties also agreed to share scientific data and cooperate in the design, method, and performance of scientific studies and data acquisition.

Importantly, the MOU also provides that the parties will address the difficult issue of financing offshore wind farms. This is the first time that any collaboration of state and federal government bodies have joined together to consider and address the question of how to finance offshore wind farms-- which are among the most capital intensive energy projects many of the state participants have ever encountered.

Notably, this MOU is strictly between government entities. No private developers, utilities, or investment entities are parties to the agreement.

Cape Wind Receives Approval from DOI!

2010-04-28T11:11:00.000-07:00

Folks, this is a momentous day for offshore renewable energy. After nine long years, countless regulatory hurdles, and more silly squabbles than the stars, Jim Gordon will finally be able to make his Cape Wind Offshore Wind Energy Farm a reality!

Over the next weeks, I will be posting more about the impact this decision may have on other offshore wind projects. For now, take a look at the press release from the DOI website:

Secretary Salazar Announces Approval of Cape Wind Energy Project on Outer Continental Shelf off Massachusetts

04/28/2010

Contact: Kendra Barkoff, DOI (202) 208-6416
Leann Bullin, MMS (703) 787-1755

BOSTON, Mass – Secretary of the Interior Ken Salazar today approved the Cape Wind renewable energy project on federal submerged lands in Nantucket Sound, but will require the developer of the $1 billion wind farm to agree to additional binding measures to minimize the potential adverse impacts of construction and operation of the facility.

“After careful consideration of all the concerns expressed during the lengthy review and consultation process and thorough analyses of the many factors involved, I find that the public benefits weigh in favor of approving the Cape Wind project at the Horseshoe Shoal location,” Salazar said in an announcement at the State House in Boston. “With this decision we are beginning a new direction in our Nation’s energy future, ushering in America’s first offshore wind energy facility and opening a new chapter in the history of this region.”

The Cape Wind project would be the first wind farm on the U.S. Outer Continental Shelf, generating enough power to meet 75 percent of the electricity demand for Cape Cod, Martha's Vineyard and Nantucket Island combined. The project would create several hundred construction jobs and be one of the largest greenhouse gas reduction initiatives in the nation, cutting carbon dioxide emissions from conventional power plants by 700,000 tons annually. That is equivalent to removing 175,000 cars from the road for a year.

A number of similar projects have been proposed for other northeast coastal states, positioning the region to tap 1 million megawatts of offshore Atlantic wind energy potential, which could create thousands of manufacturing, construction and operations jobs and displace older, inefficient fossil-fueled generating plants, helping significantly to combat climate change.

Salazar emphasized that the Department has taken extraordinary steps to fully evaluate Cape Wind’s potential impacts on traditional cultural resources and historic properties, including government-to-government consultations with the Wampanoag Tribe of Gay Head (Aquinnah) and the Mashpee Wampanoag Tribe and that he was “mindful of our unique relationship with the Tribes and carefully considered their views and concerns.”

Because of concerns expressed during the consultations, Interior has required the developer to change the design and configuration of the wind turbine farm to diminish the visual effects of the project and to conduct additional seabed surveys to ensure that any submerged archaeological resources are protected prior to bottom disturbing activities.

Under these revisions, the number of turbines has been reduced from 170 to 130, eliminating turbines to reduce the visual impacts from the Kennedy Compound National Historic Landmark; reconfiguring the array to move it farther away from Nantucket Island; and reducing its breadth to mitigate visibility from the Nantucket Historic District. Regarding possible seabed cultural and historic resources, a Chance Finds Clause in the lease requires the developer to halt operations and notify Interior of any unanticipated archaeological find.

Salazar said he understood and respected the views of the Tribes and the Advisory Council on Historic Preservation, but noted that as Secretary of the Interior, he must balance broad, national public interest priorities in his decisions. “The need to preserve the environmental resources and rich cultural heritage of Nantucket Sound must be weighed in the balance with the importance of developing new renewable energy sources and strengthening our Nation’s energy security while battling climate change and creating jobs,” Salazar said.

“After almost a decade of exhaustive study and analyses, I believe that this undertaking can be developed responsibly and with consideration to the historic and cultural resources in the project area,” Salazar said. “Impacts to the historic properties can and will be minimized and mitigated and we will ensure that cultural resources will not be harmed or destroyed during the construction, maintenance, and decommissioning of the project.”

He pointed out that Nantucket Sound and its environs are a working landscape with many historical and modern uses and changing technologies. These include significant commercial, recreational and other resource-intensive activities, such as fishing, aviation, marine transport and boating, which have daily visual and physical impacts, and have long coexisted with the cultural and historic attributes of the area and its people.

A number of tall structures, including broadcast towers, cellular base station towers, local public safety communications towers and towers for industrial and business uses are located around the area. Three submarine transmission cable systems already traverse the seabed to connect mainland energy sources to Martha’s Vineyard and Nantucket Island. Visual and physical impacts associated with Nantucket Sound and its associated shorelines abound; it is not an untouched landscape.

Salazar disagreed with the Advisory Council’s conclusion that visual impacts from the proposed wind farm, which will be situated between and at substantial distance from Cape Cod, Nantucket Island and Martha’s Vineyard, provide a rationale for rejecting the siting of the project. The viewshed effects are not direct or destructive to onshore traditional cultural properties. In no case does the turbine array dominate the viewshed. The project site is about 5.2 miles from the mainland shoreline, 13.8 miles from Nantucket Island and 9 miles from Martha’s Vineyard.

Nevertheless, Interior has required the developer to reduce the number of turbines and reconfigure the array to diminish its visual effects. Moreover, the developer will be required to paint the turbines off-white to reduce contrast with the sea and sky yet remain visible to birds.

No daytime Federal Aviation Administration lighting will be on the turbines, unless the U.S. Coast Guard requires some “day beacons” to ensure navigation safety. FAA nighttime lighting requirements have been reduced, lessening potential nighttime visual impacts. The upland cable transmission route was located entirely below ground within paved roads and existing utility rights of way to avoid visual impacts and potential impacts to unidentified archeological or historic resources.

These mitigation measures, coupled with the overall distance from which the turbine array will be viewed at any location, will reduce the visual impacts of the project. Lease terms also require the developer to decommission the facility when the project has completed its useful service life, deconstructing the turbines and towers and removing them from the site.

The Secretary also disagreed that it is not possible to mitigate the impacts associated with installation of piers for wind turbines in the seabed, noting that piers for bridges, transmission lines and other purposes are routinely built in relatively shallow waters consistent with those found in Horseshoe Shoals. A number of marine archaeological studies have indicated that there is low probability that the project area contains submerged archaeological resources. Most of the area has been extensively reworked and disturbed by marine activities and geological processes.

Nonetheless, Interior will require additional and detailed marine archaeological surveys and other protective measures in the project area. A full suite of remote sensing tools will be used to ensure seafloor coverage out to 1000 feet beyond the Area of Potential Effect. More predictive modeling and settlement pattern analyses also will be conducted as well as geotechnical coring and analyses to aid in the identification of intact landforms that could contain archaeological materials. Moreover, the Chance Finds Clause in the lease will not only halt operations if cultural resources or indicators suggesting the possibility of cultural habitation are found but also allow the Tribes to participate in reviewing and analyzing such potential finds.

The Advisory Council’s regulations provide that the Interior Department must take into account the Council’s comments on particular projects. The Department, as the decision-making authority, is required to consider the Council’s comments but is not legally bound to follow its recommendations or conclusions.

The Cape Wind Associates, LLC facility would occupy a 25-square-mile section of Nantucket Sound and generate a maximum electric output of 468 megawatts with an average anticipated output of 182 megawatts. At average expected production, Cape Wind could produce enough energy to power more than 200,000 homes in Massachusetts. Horseshoe Shoals lies outside shipping channels, ferry routes and flight paths but is adjacent to power-consuming coastal communities. One-fifth of the offshore wind energy potential of the East Coast is located off the New England coast and Nantucket Sound receives strong, steady Atlantic winds year round. The project includes a 66.5-mile buried submarine transmission cable system, an electric service platform and two 115-kilovolt lines connecting to the mainland power grid.

The Cape Wind Fact Sheet, Project Site Map and the Secretary’s Response to the Advisory Council on Historic Preservation are available at
http://www.DOI.gov/news/doinews/Secretary-Salazar-Announces-Approval-of-Cape-Wind-Energy-Project-on-Outer-Continental-Shelf-off-Massachusetts.cfm or at http://go.usa.gov/iE2. More information on the project can be found at http://www.mms.gov.

Transmission: Why East Coast Offshore Renewable Energy Will Provide More Renewable Energy Than Onshore Wind Imported from the Midwest

2010-04-08T11:52:00.000-07:00

It`s no secret that the costs of transmission associated with offshore renewable energy generation are greater than the costs associated with onshore renewable energy generation. You don`t need an expert to explain why laying cable along the ocean floor might be more expensive than traditional above-ground power lines. Thus, it is not surprising that proponents of midwest onshore wind farms have latched onto this simple economic argument to support a plan wherein east coast electricity would be imported across thousands of miles from midwest wind farms in places like the Dakotas.

However, the hidden costs of importing midwestern wind are more than just financial. Importing wind energy from the midwest would require construction of thousands of miles of cross-country transmission lines and associated relay stations. The new transmission lines would potentially pass through a number of states such as Kentucky, Illinois, West Virginia, Indiana and Pennsylvania that host some of the most productive coal mines and some of the dirtiest coal fired power plants in the nation; and, there is no legal basis by which anyone could prevent those coal fired power plants from tapping into the new electricity superhighway. In short, a cross country transmission line would provide greater opportunity for the distribution of dirty electricity, thus defeating the entire purpose of importing clean, wind energy all that way.

So what`s the alternative? The alternative is to build offshore renewable energy off of the Atlantic Seaboard.

Those who support importing midwestern wind energy may argue that while traditional power plants ability to tap into transcontinental transmission lines may tarnish some of the environmental benefit, there are also advantages to be had-- most especially with regard to the intermittency issue.

As I have mentioned here before, one of the big concerns with all true renewable energy resources is intermittency-- i.e., the wind doesn`t blow all the time and the sun only shines for abut half of any given 24 hour period. However, if traditional power plants could take over at night and when the wind is calm, wouldn`t that split the baby and solve the problem? Well, yeah, but that means we still have to keep those stinky old power plants online, right?

There may be a better solution.

A recent study, published on April 5 in the Proceedings of the National Academy of Sciences and spearheaded by marine-policy expert Willett Kempton of the University of Delaware in Newark, proposes a 1,550-mile-long network of offshore wind stations that could provide power from Massachusetts to North Carolina with minimal threat of outages.

Kempton's study directly addresses the intermittency problem by addressing the issue from a meteorological standpoint. Basically, the study shows that at any given time, the wind is gusting strongly enough to provide a significant amount of energy somewhere, but probably not everywhere, along the eastern seaboard of the United States. To combat intermittency, we therefore need to build a series of wind farms strategically along the coastline from Maine to North Carolina, and connect them through a single network.

Kempton's study used data from 11 meteorological stations located off of the eastern seaboard-- from Maine to Florida-- with data tracked over five years. The study also employed a simulated underwater transmission cable to predict the effect of interconnecting power theoretically derived from the 11 stations. Although each site's data showed a predictably erratic capacity for electricity production, the energy production of all of the sites in aggregate did not dramatically fluctuate.

Moreover, there are no fossil fuel burning power plants between eastern coastal waters and land. So, there you have it-- a solution to intermittency that does not require default reliance on traditional power plants.

Is the President's New Oil and Gas Drilling Plan a Death Knell for Offshore Renewable Energy? Think Again.

2010-04-01T06:16:00.000-07:00

Yesterday, President Obama announced a plan to expand oil and gas drilling on the continental shelf. The plan was designed with close assistance from the Department of the Interior-- the same Department that oversees offshore renewable energy development and leasing. President Obama's plan authorizes drilling in areas of the Atlantic Seaboard, the Gulf of Mexico, and Alaska. No drilling is authorized for the west coast or for areas on the Atlantic seaboard north of Delaware. Certain carve-outs have also been implemented to preclude drilling off of Florida's Gulf Coast and part of its eastern shorelines.

Here are two maps from the DOI website showing where the new plan authorizes drilling:

It is not surprising that environmentalists have already roundly condemned Obama's new plan. See, e.g. Oceana, Southern Env't, and Greenpeace. Moreover, although President Obama said that what he wanted to emphasize is that "this announcement is part of a broader strategy that will move us from an economy that runs on fossil fuels and foreign oil to one that relies more on homegrown fuels and clean energy", it is not at all clear that the plan will truly benefit the oil and gas industry or decrease reliance on foreign oil. See, e.g, NY Times 4/1/10.

So what gives? Two thoughts come to mind.

First, the timing of this announcement-- so soon after the health care bill passed-- is suspicious. Drafting legislation authorizing offshore drilling for oil and gas has long been a key piece of the Republican energy agenda. This new plan may be a bone to appease republican frustrations.

Second, and perhaps more intriguing, is how this new plan might affect the development of proposed offshore renewable projects. One of the most commonly made arguments against developing offshore windfarms has been that these developments will compromise the environment and/or stain an otherwise pristine seascape. Moreover, these arguments-- which one might assume would be coming from the liberal environmentalists--have often been propounded by otherwise conservative organizations whose real motivation has been to prevent allocations of state and federal funding to non-traditional energy projects.

However, those who have been arguing against offshore renewables on the basis of aesthetics or environmental concern will have a pretty hard time towing that line if they are in favor of the offshore drilling projects. Additionally, since at least some of the proposed offshore renewables projects (including proposed offshore windfarms in the coastal waters adjacent to Delaware, Maryland, Virginia and North Carolina) are in areas that have been opened up for oil and gas drilling, opposition parties will find that they will have no choice but to oppose both oil and gas AND the offshore wind facilities if they have any hope of appearing sincere.

Personally, I am not a fan of offshore drilling. I tend to agree with the NGO Oceana. I believe that the potential for damage arising from spills and other catastrophes far outweighs the benefit of obtaining access to what are relatively minor oil and gas resources. Nevertheless, I think Obama's new plan may actually help the offshore renewable industry move forward.

What do you think?

Upcoming ABA Quick Teleconference!

2010-03-19T05:10:00.000-07:00

American Bar Association | Section of Environment, Energy, and Resources

Offshore Renewable Energy Generation: State and Federal Regulation and the Development Process Quick Teleconference

Moderator:
Jennifer Simon Lento, Obermayer Rebmann Maxwell & Hippell, LLP, Philadelphia, PA

Panelists:
Maureen Bornholdt, Mineral Management Services, Herndon, VA
Fara Courtney, Good Harbor Consulting/US Offshore Wind Collaborative, Gloucester, MA
Megan Higgins, Ecology & Environment, Providence, RI
Markian Melnyk, Dewey & LeBoeuf LLP, Washington, DC

Click Here to Register: ABA QT Registration

If you are in the Philadelphia area, you can participate in the QT free of charge by attending this event at my office. Please email me at jennifer.simon@obermayer.com for more information!!

Organized by Jennifer E. Simon, Programs Vice-Chair for the Environmental Litigation and Toxic Torts Committee

Tuesday, March 30, 2010
3:00 p.m. – 4:30 p.m. Eastern
2:00 p.m. – 3:30 p.m. Central
1:00 p.m. – 2:30 p.m. Mountain
12:00 p.m. – 1:30 p.m. Pacific
(Special Start Time)

For coastal areas of the United States, offshore renewable energy projects including wind, wave and hydro may provide the best opportunity for renewable energy generation. In May 2009, Mineral Management Services issued a new rule governing site leasing for offshore renewable energy projects proposed in federal waters. Because offshore projects typically impact both federal and state waters, states are slowly coming to the table with their own regulatory programs. However, it remains to be seen whether the state and federal regulatory programs will come together cohesively.

This QT invites interested attorneys to peek into the future of offshore renewable energy in the United States. The panel members will discuss the US Offshore Renewable Industry generally, as well as address specific projects, and will identify obstacles to development including regulatory uncertainly and state and federal inconsistencies, as well as transmission and grid issues.

Cosponsored by Energy Infrastructure and Siting and
Renewable and Distributed Energy Resources Committees

This program will not offer CLE credit.

Obama and Climate Change Legislation: Call and Response

2010-02-23T11:50:00.000-08:00

Yesterday, my colleague Shari Shapiro, posted a blog piece entitled "Getting to Yes". She argued that the current energy/climate change legislation being backed by the Obama administration should be scrapped because it is both weak and toothless. I agree that the proposed bill does not offer anything resembling a comprehensive approach to climate change mitigation. Nevertheless, I believe that congressional dithering has gone on long enough and we must get something-- even a paper tiger-- on the books ASAP.

Check out Shari's position here.

And then see my response.

What do you think?

Nuclear Power and Wind Energy: Why Choose?

2010-02-15T13:10:00.000-08:00

Lately, there have been a lot of white papers, scientific papers, and industry documents that argue (exclusively) in favor of either nuclear power or some renewable energy source (wind, solar, biomass). Typically, these articles paint the preferred energy resource as a panacea to all the world’s energy problems while decrying the imminent devastation that will result if another resource is selected.

The pro-nuclear power articles assert that nuclear is the only possible solution because nuclear is the only option for reliable, non-carbon emitting base load power generation. The pro-nuclear folks then denounce renewable generation from wind and solar as too “intermittent” to provide a viable alternative. Likewise, renewable resource advocates disparage nuclear power plants for environmental, political, economic and social reasons including allegations that nuclear power still causes substantial environmental harm as a result of uranium mining, transport and storage. The renewable advocates then gloss over intermittency issues with vague references to (as yet un-built) smart grids and (as of yet undeveloped) energy storage solutions.

See, e.g. Travis Madsen and Tony Dutzik, et al., Generating Failure: How Building Nuclear Power Plants Would Set America Back in the Race Against Global Warming (Env’t New Jersey Research and Policy Center, Nov. 2009) (available here: http://bit.ly/cirRIR); see also, The Future of Nuclear Energy to 2030 and It’s Implications for Safety, Security and Nonproliferation (Centre for International Governance Innovation, 2010) (available here: http://bit.ly/aPAmcb).

The truth is that both the nuclear folks and the renewable energy people are correct. Nuclear power does not emit carbon or other greenhouse gases or dangerous particulates into the atmosphere at the plant. But there is no question that uranium mining presents problems—including (but not limited to) the standard environmental consequences of most mining operations as well as the fact that most uranium reserves are not located on domestic lands. And, it is also true that wind and solar generation is intermittent—the sun does not always shine, and the wind does not always blow (although offshore wind farms suffer less intermittency issues than onshore wind farms)—and we don`t yet have a smart grid or the technological ability to store vast quantities of electricity for use during non-sunny, non-windy times.

Nuclear power is ideal for providing base load energy needs. Remember, base load represents the floor of our energy requirements—basically, what the demand centers require in the middle of the night when the weather does not require lots of people to run air conditioners or heating units at full tilt. Nuclear power plants provide constant, uniform wattage. They cannot easily be powered down or powered up, which means nuclear power plants need to be run more or less constantly—perfect for base load. Alternatively, renewable energy generation is often at its best during the types of weather events that place higher-than-base-load demands on electricity producers. People use more energy during daylight hours (solar!) and during stormy weather (wind!).

So what about having a mixture of both types of energy generation? Both nuclear power and renewable energy generation projects are capital intensive, so the project advocates must compete for funding. Could it be that the advocates, in decrying their alternatives, have simply created a Mexican showdown preventing either type of project from going forward? As I have complained in this blog before, no offshore wind farms have yet been built. Moreover, the ambitious 2002 U.S. Nuclear Power 2010 program has resulted in the start of not a single construction project.

So maybe the renewable energy people and the nuclear people should stop fighting and start talking about how these resources can compliment each other. Or am I totally off the grid here?

Renewable Energy and International Competition

2010-02-08T11:47:00.000-08:00

Among the panoply of reasons why the United States must invest in and develop an alternative renewable energy industry is the oft-touted call for energy independence. As we all know, reliance on fossil fuel and oil is environmentally costly. But even for those remaining holdouts who insist that the causes of global climate change are not anthropogenic, there is no denying that the middle eastern oil states have more leverage and power over us than we are comfortable with as a result of our insatiable thirst for oil. In short, whether our reasons are environmental or political, we must find a way to end our foreign energy dependence.

A number of recent studies published by the National Renewable Energy Laboratory and the American Wind Energy Association demonstrate that the United States hosts a wide array of accessible renewable energy resources including solar, biomass, and on and offshore wind. One of the more obvious benefits of using these renewable resources is that the fuel sources are cost free. However, the turbines, photovoltaic films, and other renewable energy infrastructures are not free and the companies that make these things are still profit-seeking businesses who must seek out welcoming regulatory environments in which to develop and flourish.

Right now, we are at a crossroads. The United States can either decide that it wants to encourage a renewable energy industry or it can decide to dither around in the regulatory morass in which we have been stagnating for the last decade and more. But the longer we wait, the more likely it is that once we do decide to get in the game, the industry will have taken root elsewhere, and we will once again find ourselves dependent on foreign nations whose markets and political policies are not in tune with our own. One of the biggest threats to the United States renewable energy industry is China:

"China vaulted past competitors in Denmark, Germany, Spain and the United States last year to become the world's largest maker of wind turbines, and is poised to expand even further this year."

"China has also leapfrogged the West in the last two years to emerge as the world's largest manufacturer of solar panels. And the country is pushing equally hard to build nuclear reactors and the most efficient types of coal power plants."

"These efforts to dominate renewable energy technologies raise the prospect that the West may someday trade its dependence on oil from the Mideast for a reliance on solar panels, wind turbines and other gear manufactured in China."
See, http://blog.algore.com/2010/02/china_in_the_lead.html

The European Wind Energy Association 2009 annual report states:

• 199 offshore wind turbines were installed and grid connected totalling
577 MW during 2009, up 54% from the previous year-- a total of 828 offshore
turbines have now been installed (and interconnected) offshore in nine European
countries;
• Turnover in 2009 was approximately €1.5 billion, and is expected
to double in 2010 to
approximately €3 billion;
• 1,000 MW expected to be
installed during 2010, a 75% market growth compared to 2009;
• 17 offshore
wind farms under construction, totaling over 3,500 MW and a further 52 offshore
wind farms have been fully consented, totaling more than 16,000 MW;
• More
than 100 GW of offshore wind farms currently being planned by project
developers
and utilities.

According to Offshore Wind China (www.offshorewindchina.com/english/index.aspx), in addition to a 56% average growth rate per year over the last five years for the wind energy industry generally, China is also making concrete progress with offshore wind projects:

China is regarded as one of the richest countries in offshore wind resources,
whose mainland coastline is about 18,000 kilometers – the fourth longest
coastline in the world. At 10 meters’ height, the offshore wind resource is
estimated to be 750 million KW, among which 100 million KW is in the 10 meter
depth waters. With the nation’s 40％ population, the coastal area is the most
developed area in China and also the largest consuming market for
electricity. The first Chinese offshore wind farm in Shanghai went online
in 2009 as a demonstration project, followed by further ambitious plans to build
more offshore wind farms in the costal provinces of Jiangsu, Zhejian, Fujian,
Guangdong and Shandong. It is estimated that Jiangsu province will
establish the offshore wind farm with the total capacity of 7GW and Zhejiang
province of 2.7 GW by the year of 2020. The development of offshore wind power
has a huge potential in China.

As of this post, the United States has not fully permitted-- nevermind installed-- a single offshore wind turbine.

For the domestic Offshore Wind Industry, many are looking to Secretary Salazar's imminent decision on the future of the proposed Cape Wind project as a canary in the coalmine. DOI Secretary Salazar has indicated that he will issue a decision as to whether the Cape Wind project may be sited in Nantucket Sound by the first week of April. Although the project has proven that its benefits will significantly outweigh any environmental detriments (as demonstrated by the final Environmental Impact Statement issued in 2009), several Native American tribal groups, including the Wampanoag, have challenged the project and requested that the National Parks Service identify Nantucket Sound as a protected historic site. Nearly all offshore industrial interests have rejected the NPS's determination that Nantucket Sound is eligible for this status because it would likely impart a "chilling effect" on nearly all offshore development projects. This decision is the final federal regulatory hurdle that Cape Wind must overcome before the project is able to obtain a site lease.

Secretary Salazar has requested comments from the general public to inform his decision. Hopefully, Secretary Salazar will recognize that his decision and the impact that decision will have on the renewable energy industry in the United States generally will resonate far beyond the clean energy and climate change communities. This is a decision with enormous import for the United States position in world politics and in the international economy.

When Will the US Have A Fully Functional Offshore Wind Farm Installation?

2010-01-20T15:12:00.000-08:00

Recently, a member of an offshore renewables interest group in linkedin.com posted a poll entitled: How long before the USA has a fully functional offshore wind farm installation?

This is an entropic question; in fact, it sums up every other question we face in the United States' burgeoning offshore wind industry. I have heard some project developers such as the New York Power Authority say, "We will be up and running in 3 years." Other project developers scoff at the NYPA prediction thinking it aspirational at best. The NYPA, say the cynics, has no lease for the submerged lands in the Great Lakes where it plans to build. Moreover, NY State has no regulatory policy or provisions in place to guide the project through the approvals that will surely be required. Moreover, say the cynics, NYPA does not even have a power purchase agreement (PPA) in place. And furthermore, say the cynics, have these NYPA people been watching the shenanigans that have thwarted progress on the Cape Wind Project since 2002?

The cynics make a good point. Nevertheless, the problems that have plagued Cape Wind may not plague every project. Still, there are significant obstacles. The primary obstacle is the time and expense involved in obtaining MMS licensure and leasing for siting new offshore projects. Having lenders lend, investors invest, or bond financiers structure financing plans involves the provision of significant amounts of capital to develop offshore facilities-- and those financiers expect repayment or a return on investment within what financial folks consider a reasonable time frame, ie, 5 years or so. But confidence in a five year return on offshore projects is extremely difficult due to the uncertain regulatory framework, not to mention the costs that accrue while siting these projects in relation to capital investment return. We need to create a more stable regulatory environment with reasonable deadlines that comport with investment time frames. Simply put, the investors, lenders and/or debt financiers must have some level of confidence that the project will actually get built if they are going to be willing to put billions of dollars on the line.

Cape Wind is probably not a good example for what future offshore wind projects will have to overcome. Cape Wind started seeking approvals back in 2002, and the regulations governing leases of submerged federal lands (as issued by the Mineral Management Services bureau-- a subsection of the DOI) were not issued until May 2009. Consequently, Cape Wind is not subject to the MMS process. Rather, it is grandfathered in and is following a piece meal approach to obtaining the proper clearances.

Cape Wind (like all offshore wind projects) has also had to wait while the Massachusetts state regulators put together some sort of regulatory process and policy (they have now done so-- the Massachusetts Ocean Management Plan is available here: http://www.mass.gov/Eoeea/docs/czm/v1-complete.pdf.

In contrast, future projects in Massachusetts will not need to wait for the state regulators to figure out how to regulate offshore renewable energy projects. Likewise, other states such as Rhode Island and New Jersey either have already or are in the midst of issuing state ocean management plans that will provide guidance for future projects.

The ongoing offshore wind projects that will be subject to the MMS process are in Rhode Island, New Jersey and Maryland/Delaware/Virginia (the "DelMarVa" project. These are slated for installation 15-20 miles offshore.

The DeepCWind project in Maine is a bit different. The Maine test beds are designed to test out a new technology in offshore wind turbines-- turbines that float. Present technologies require the turbines to be secured to the ocean floor, which means that they can only be installed in relatively shallow waters and increases the installation costs and construction impacts significantly. The test beds will be located within 3 miles of the Maine shoreline and therefore will not be subject to MMS' federal regulatory requirements. These test beds will never be scaled up to full utility sized farms. If the Maine project works, a utility scale wind farm would be built much farther offshore-- in the 15-25 nautical mile range. Floating turbine technology would vastly increase the potential for offshore installations -- especially on the west coast where the sea shelf drops off dramatically.

As for the folks who have retreated from wind because of T. Boone Pickens' reversion to natural gas as a result of the NG price drop, my response is this: any resource that is not renewable is by definition price volatile and comes with externality costs that outweigh short term cost benefits. Natural gas prices dropped this year, but no one really believes that natural gas will not become expensive again-- and sooner rather than later. Moreover, Pickens and his ilk have failed to include the financial hit associated with the climate impact of non-renewable energy resources-- the externalities. Natural gas, nuclear, etc...are all an improvement on coal fired power plants, but they all still emit toxins into the environment. Moreover, fuel costs money. I`m not an economist, but I believe that the increased costs associated with purchasing, transporting, refining, disposing, and mining fuels (never mind the environmental remediation and human health issues that run along side) weigh the scales heavily in favor of renewable energy sources. Wind is affirmatively cost-intensive on the front end-- construction, permitting, etc.. But it costs next to nothing to operate and maintain. Non-renewable resources are just too expensive in the long view.

The problem with Pickens' analysis is that he is looking at the rate of return over a very short time frame. To my mind, the future of our planet and our quality of life deserve an analysis that incorporates more than just a five year return on investment.

That being the case, we do need to find ways to streamline the regulatory process by encouraging MOU's or other types of efficiencies between state and federal regulatory processes. Moreover, we must find a way, without totally compromising public stakeholder participation, to limit the NIMBY challenges.

Engineers in Europe and their US counterparts can and have resolved the mechanical concerns. The big obstacle is regulatory. Make a more efficient and reliable process, and the investors will come. Make a more efficient and reliable regulatory process and we will be able to transform these offshore wind projects into what Europe already has: an offshore wind industry.