Offshore Wind Advances in New England, USA

At the end of 2012, New England’s first two offshore wind projects, Cape Wind and the Block Island Wind Farm, each moved steps closer to fruition. Maine’s efforts to stimulate an offshore wind industry comprised of floating wind turbines took several key steps forward, while Statoil, developer of the first planned pilot-scale floating project, awaits a Public Utilities Commission consideration of a power contract.

Meanwhile, the Federal Bureau of Ocean Energy Management (BOEM) identified areas for offshore wind leasing off Massachusetts and Rhode Island, soliciting interest from developers and commencing, as well as issuing, an environmental assessment for comment.

Project Development Activity

The Cape Wind project planned for federal waters in Nantucket Sound continued to make slow but steady progress. The 468-megawatt (MW) project, the subject of lengthy legal battles, was re-granted the Federal Aviation Administration’s (FAA’s) No Hazard Determination in August 2012 after the original permit was overturned in federal court. While the Alliance to Protect Nantucket Sound once again appealed the FAA’s determination, pending resolution of that appeal, Cape Wind now has all required permits.

The project awaits Massachusetts Department of Public Utilities approval of a power contract with NSTAR Electric for 27.5% of the project’s output, which if approved would put 77.5% of the project’s power under contract, a key threshold for attracting financing. In anticipation of commencing construction activities, Cape Wind announced its plans to base its operations headquarters in Falmouth Harbor.

In August 2012, DeepWater Wind, the developer of the 30-MW demonstration-scale Block Island Offshore Wind Farm planned for Rhode Island state waters, received a determination by the BOEM of “no competitive interest” for the transmission line connecting an offshore wind farm off the coast of Block Island to mainland Rhode Island. This decision was the final hurdle before the federal agency could begin to review DeepWater Wind’s right-of-way application for the cable. In October, DeepWater Wind filed for final federal and state permit applications for the project, and the U.S. Army Corps of Engineers, the lead federal agency on the application, opened a comment period on the application, which ended on December 31, 2012.

Rhode Island’s Coastal Resources Management Council, the lead state agency, opened a public comment period and will accept comments through January 15, 2013. This project could assist in the development of the DeepWater Wind Energy Center, a proposed 1,000-MW offshore regional project in federal waters.

In Maine, the state’s efforts to promote an offshore wind industry took several steps forward. Statoil, an international energy company based in Norway, has proposed development of a four-turbine, 12-MW floating wind turbine demonstration project called Hywind Maine in the Gulf of Maine. Statoil recently announced its plans to determine whether the Hywind Maine project is financially feasible. Toward that end, Statoil responded to a 2010 request for proposals (RFP) from the Maine Public Utilities Commission (PUC) for a proposed floating offshore commercial wind farm or tidal energy demonstration project.

Under the 2010 Act to Implement the Recommendations of the Governor’s Ocean Energy Task Force, the PUC may authorize long-term contracts for the capacity and associated renewable energy and renewable energy credits (RECs) from deep-water offshore wind energy pilot projects or tidal energy demonstration projects. After the PUC’s consideration of RFP responses and subsequent negotiations, in August Statoil filed a proposed term sheet for the PUC’s review, which governs the terms of the 20-year contract with Maine Utilities for the energy and capacity from the Hywind Maine project. The pricing for the output of the facility and non-pricing terms include options starting at $290/megawatt-hour (MWh) or $320/MWh with different escalation factors for the energy, and the prevailing forward capacity market clearing price for capacity. The RECs and other market products associated with the environmental attributes of the project are not included in the contract.

In October, the PUC determined they would not support the proposed terms sheet but would be open to approving the project if Statoil offered a larger commitment to in-state benefits. The PUC tabled its decision, pending further discussions between commission staff and Statoil.

While Statoil continues to work with the PUC, the project achieved another important milestone. BOEM accepted public comments on expressions of competitive interest for developing the proposed lease area as well as the notice of intent for the development of an environmental impact statement for the project. After BOEM reviews comments, changes may be recommended or required for the proposed lease area. Statoil North America has already been deemed legally, financially, and technically qualified to develop the project, and this step represents a significant milestone.

Offshore Leasing Activities in Federal Waters Pick up Steam, Attracting Thousands of Megawatts of Interest from Developers

In February 2012, BOEM announced the area identification under the Smart from the Start initiative toward responsible siting, leasing, and construction of new projects by defining a Wind Energy Area (WEA) off the coast of Rhode Island and Massachusetts, an area also known as the area of mutual interest. BOEM also announced a call for information and nominations for offshore wind development zones on the outer continental shelf off the coast of Massachusetts.

In May 2012, BOEM announced that it has identified a 1,200-square-mile area in the federal waters off the Massachusetts coastline that it will consider leasing for wind development. Initial considerations for right whale habitat and visual impacts have been taken into account in determining the location and size of the area. Following this announcement, the Massachusetts Executive Office of Energy and Environmental Affairs (EEA) issued a press release on June 4 announcing that 10 companies have expressed interest in pursuing projects in the designated area, being called the Massachusetts Wind Energy Area.

According the EEA’s release, the interested offshore wind developers include Arcadia Offshore Massachusetts, Condor Wind Energy, Deepwater Wind New England, Energy Management Inc., enXco Development Corporation, Fishermen’s Energy, Iberdrola Renewables, Neptune Wind, Offshore MW, and U.S. Mainstream Renewable Power Offshore.

In July, BOEM released an environmental assessment that analyzes potential environmental effects associated with renewable energy leasing and data gathering off the coast of Rhode Island and Massachusetts.

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Press release, January 23, 2013; Image: Alpha Ventus