United States

United States

US offshore wind project approval time cut by two years

UNITED STATES: For a young industry, it was a big week. On November 23, Cape Wind, the most advanced offshore wind project in the US, received approval from state regulators for a 15-year power purchase agreement (PPA) covering half of its 468MW output.

The following day, the Department of the Interior (DOI) and its offshore energy agency announced three regulatory changes that, according to interior minister Ken Salazar, could cut the current seven-to-nine-year planning time for such projects by two years or more.

Probably the most significant outcome of the announcements, made by the ministry and its agency, the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE), is that developers may no longer need two environmental impact statements: one to gain a lease for wind farm site assessments (with geophysical surveys and meteorological tower installation) and a second for construction and operation. This requirement under the National Environmental Policy Act has been a major problem for developers (Windpower Monthly, November 2010).

The DOI will now conduct an environmental assessment, integrating BOEMRE's existing studies on the impact of wind power with information from other state and federal agencies. It will cut the time needed to gain a commercial lease by one year, says BOEMRE, while the American Wind Energy Association (AWEA) estimates a cut of 18-24 months.

Streamlining the process of requests for information (RFI) will also cut permitting time, BOEMRE says. Under current rules, BOEMRE issues one RFI when it proposes an area for offshore development. A second RFI, which is required if only one qualified developer responds, has now been eliminated, saving six to 12 months.

Short timeline

BOEMRE also announced that it would unveil the best wind energy areas in six or seven states by January 22. The bureau has been working with task forces in eight Atlantic states over the past year, collecting information on wind resources in order to decide on the zones offering the best opportunities for wind development. Virginia, Maryland, Delaware, New Jersey, Rhode Island, Massachusetts and possibly New York will be announced in the first round.

By the end of January, the federal government says it will issue RFIs and calls for information from those interested in leases off Massachusetts, Rhode Island, New Jersey and Virginia. BOEMRE issued the RFI for Maryland in November.

Peter Mandelstam, president of offshore developer NRG Bluewater and chair of AWEA's offshore group, says the new streamlining measure should lead to a shorter project timeline. "This is a strong, concrete signal to the global supply chain that the US is open for business," he says.

Clarification

The company's two offshore projects - a 348MW New Jersey site off Atlantic Beach with an exploratory lease and a 300-450MW Delaware site off Rehobeth Beach with a 200MW PPA - could now gain federal permits in two to three years, says Mandelstam, adding that he would like the DOI to clarify how existing projects will fit into the new wind-energy-areas system.

For the country's longest-running offshore project, Cape Wind, some obstacles still remain. Spokesman Mark Rodgers says the PPA with utility National Grid for half the project's 468MW was the largest remaining hurdle. The Massachusetts Department of Public Utilities (DPU) approved a price of 18.7 cents per kWh in 2013, rising by 3.5% annually for 15 years, and granted National Grid a right to a one-time ten-year extension of the contract.

Opposition

However, as Windpower Monthly went to press, the Alliance to Protect Nantucket Sound, an opponent to the project, said it would meet the December 23 deadline to appeal the DPU decision in Massachusetts Supreme Judicial Court. The project's DOI permit is also being contested, but Cape Wind is confident that both protests will fail. "Our opponents have a dismal losing legal track record thus far," Rodgers says.

Federal permits are still being sought from the Army Corps of Engineers and the Environmental Protection Agency, and the Federal Aviation Administration's no-hazard ruling for the project is being challenged by the alliance and Barnstable Airport.

The DPU's ruling includes a knock-back for Cape Wind's second PPA, which unusually does not name a power purchaser. Instead, National Grid proposes to sell the power purchase rights to a third party, an arrangement the DPU says it could not sanction. Since National Grid has not shown interest in the second half of output, Cape Wind's best hope is to find another Massachusetts utility to purchase the power, says Dan Shreve, director of renewables consultancy MAKE. "The reason why no one has come forward yet may be due to the fact that people were waiting to see what happened with National Grid's effort," Shreve says.

But for all its obstacles, Cape Wind's recent DPU win - like the DOI's permitting changes - sends a good signal to investors. Attorney Mary Beth Gentleman of Foley Hoag, who represented the state's Department of Energy Resources in arguing for the PPA, says the DPU's decision could even influence other states.

"It could be very useful to public utility commissioners and elected officials in other jurisdictions, because it was a very systematic accounting of costs and benefits that took into account the real benefits of renewable energy," says Gentleman.

There will likely be more chances to see if that happens and if other projects can come to fruition faster than Cape Wind.

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