Oregon wave energy project surrenders license

Ocean waves contain tremendous amounts of energy that could be harnessed by humans -- but difficulties have led a pilot project proposed off the Oregon coast to surrender a key federal license.

Calm waters along the shore of Penobscot Bay, Maine.

Ocean Power Technologies subsidiary Reedsport OPT Wave Park, LLC had proposed a wave energy project in the Pacific Ocean off the central Oregon coast.  In 2012, the Federal Energy Regulatory Commission issued a license for the project.  That license authorized the developer to install a single "PowerBuoy" wave energy converter for testing, followed by additional grid-connected buoys.  The developer also envisioned a third phase that could bring the project's capacity to 50 megawatts, and secured a preliminary permit from the Commission to study the site.

Despite securing these key regulatory approvals, the Reedsport project quickly ran into technical difficulties.  Reedsport began construction of the project in September 2012, by installing a single floating gravity based anchor and auxiliary subsurface buoy.  However, this first phase of the project was unsuccessful and the auxiliary buoy sank.  Reedsport removed the buoy and associated tendon and outer mooring lines from the project area on October 17, 2013.  On February 28, 2014, Ocean Power Technologies notified the Federal Energy Regulatory Commission that it intended to surrender its preliminary permit for the 50 megawatt third phase, but left the first phase's license in place for the moment.

On May 30, 2014, Reedsport filed an application to surrender its license for project, stating that financial and regulatory challenges in developing the project have forced it to conclude that it cannot proceed with the development of the project.  The Commission accepted that license surrender by order dated August 14, to be effective following confirmation of the project's decommissioning.

With the Reedsport project shelved, no wave energy project currently holds a FERC license.  Several tidal projects have been licensed, one wave-based hydrokinetic project has secured a preliminary permit, and two other wave energy projects have pending applications for preliminary permits.  The ocean remains a demanding environment, and the economics of most wave energy projects are challenging.  Will others succeed where Reedsport OPT has not?

Maryland offshore wind sites auctioned

The U.S. Bureau of Ocean Energy Management has sold the rights to lease sites for offshore wind projects in federal waters off Maryland to US Wind Inc. for $8.7 million.

A lighthouse on an island in the Atlantic Ocean, off Maine.

Part of the Obama administration's "Smart from the Start" offshore wind leasing program, yesterday's auction covered the rights to lease nearly 80,000 acres of the outer continental shelf.  The Maryland Wind Energy Area ranges seaward from about 10 nautical miles offshore Ocean City.  According to Department of Energy’s National Renewable Energy Laboratory, the area could support between 850 and 1450 megawatts of commercial wind generation.

The Maryland auction drew three bidders: US Wind Inc., Green Sail Energy LLC and SCS Maryland Energy LLC.  After 19 rounds, BOEM declared US Wind Inc. the provisional winner.  US Wind Inc. is a subsidiary of Italian firm Toto SpA's Renexia group. 

While winning the auction is an important first step in leasing federal ocean sites for offshore wind projects, the process will likely continue to play out for several years.  Following the auction results, US Wind Inc. will have one year within which to submit a Site Assessment Plan to BOEM for approval.  In the Site Assessment Plan, the lessee must describe what it intends to do to assess of the wind resources and ocean conditions of its commercial lease area -- for example, installing meteorological towers and buoys.  If that plan is approved, the lessee will then have up to 4½ years in which to submit a Construction and Operations Plan providing more detailed information for the construction and operation of a wind energy project on the lease.  The filing of that plan triggers further public comment and environmental review; if approved, BOEM will then issue a lease with an operations term of 25 years.  Notably, these leases generally require the lessee to pay ongoing rents; placing the winning bid in the auction conveys the right to pay that rent, but paying that bid does not count towards the lease payment obligation.

Moreover, this entire leasing process is just one of several aspects of the project that must move forward in parallel.  At the same time, US Wind Inc. is likely considering engineering issues such as turbine selection and interconnection design as well as how to finance the project.

Will federal waters offshore Maryland soon become home to an offshore wind project?

Feds to auction North Carolina offshore wind sites

The U.S. Department of the Interior's Bureau of Ocean Energy Management has announced plans to auction the rights to lease sites off the North Carolina coast for offshore wind projects.

Under the Bureau of Ocean Energy Management's "Smart from the Start" competitive program for leasing sites on the outer continental shelf (OCS) for commercial wind energy development, BOEM conducts a series of stakeholder and environmental review processes.  Through these processes, BOEM identifies areas that are attractive for commercial offshore wind development, while also protecting important viewsheds, sensitive habitats and resources and minimizing space use conflicts with activities such as military operations, shipping and fishing.

For North Carolina, the process began in December 2012 when BOEM published in the Federal Register a Call for Information and Nominations and a Notice of Intent to Prepare an Environmental Assessment.  After considering the public comments and responses, BOEM defined three Wind Energy Areas off North Carolina:

• The Kitty Hawk Wind Energy Area begins about 24 nautical miles (nm) from shore and extends approximately 25.7 nm in a general southeast direction at its widest point. Its seaward extent ranges from 13.5 nm in the north to .6 nm in the south. It contains approximately 21.5 OCS blocks (122,405 acres).
• The Wilmington West Wind Energy Area begins about 10 nm from shore and extends approximately 12.3 nm in an east - west direction at its widest point. It contains just over 9 OCS blocks (approximately 51,595 acres).
• The Wilmington East Wind Energy Area begins about 15 nm from Bald Head Island at its closest point and extends approximately 18 nm in the southeast direction at its widest point. It contains approximately 25 OCS blocks (133,590 acres). 

Map of North Carolina Wind Energy Areas, courtesy of BOEM.

The North Carolina auction will follow a series of similar auctions for East Coast offshore wind sites in federal waters over the past year, including sites off Massachusetts and Rhode Island and Virginia, and will come after the scheduled August 19 auction for sites off Maryland.  To date, BOEM has awarded five commercial wind energy leases off the Atlantic coast: two non-competitive leases (for the proposed Cape Wind project in Nantucket Sound and an area off Delaware) and three competitive leases (two offshore Massachusetts-Rhode Island and another offshore Virginia).  Altogether, the competitive lease sales have generated more than $5 million in high bids for more than 277,500 acres in federal waters.  BOEM expects to hold additional competitive auctions for wind energy areas offshore Massachusetts and New Jersey in the coming year.

When will North Carolina offshore wind sites be auctioned?  Who will bid?  Who will win -- and what will the high bid be?  Perhaps most fundamentally, will the BOEM leasing process lead to anyone developing a offshore wind project off North Carolina?

Boon Island lighthouse auction

The U.S. federal government is auctioning off Maine's tallest lighthouse, located on Boon Island near one of the state's designated offshore wind test sites.

Boon Island Light Station, seen from Cape Neddick.

The Boon Island Light Station auction, conducted online through the General Services Administration's website, covers a 133-foot granite tower sited on a barren outcrop of granite 14 feet above sea level.  Built in 1855 and listed on the National Register of Historic Places, the lighthouse will continue to serve as an unmanned navigational aid maintained by the United States Coast Guard.

In 2009, the Maine Legislature selected waters near Boon Island as one of three designated offshore wind test sites.  While the Monhegan offshore wind test site drew interest from the University of Maine-led Aqua Ventus consortium, to date, no project has publicly pursued plans to develop the Boon Island offshore wind test site.

Meanwhile, the federal government continues to sell or otherwise get rid of "surplus" property.  Two years ago, the federal government announced plans to give away two Maine lighthouses -- Boon Island and Halfway Rock -- to qualified entities willing to conserve the historic structures.  When no such transfer ensued, the General Services Administration placed both lighthouses on the auction block.

As of early Wednesday afternoon, 13 bidders had participated in the auction for the Boon Island light station, with a current high bid of $64,000.  The auction is scheduled to close midday on Thursday, although previous deadlines have been extended.

Feds to auction Maryland offshore wind sites

On August 19, the U.S. Department of the Interior's Bureau of Ocean Energy Management will auction off rights to lease sites off the Maryland coast for offshore wind.  Through the auction, which will represent the third auction for offshore wind sites in federal waters since July 2013, the Bureau hopes it will award leases to two areas covering approximately 80,000 acres about 10 nautical miles east of the Ocean City coastline.

Last year, the Department of the Interior held its first offshore wind site auction for sites off Massachusetts and Rhode Island; Deepwater Wind won that auction with a bid of $3.8 million.  The second auction, held for Virginia on September 4, covered approximately 112,799 acres about 23.5 nautical miles from the Virginia Beach coastline; Dominion Virginia Power won that auction with a bid of $1.6 million.

The Maryland auction later this month will follow procedures similar to those used in the previous two auctions.  Based on previous expressions of interest and qualifications, BOEM has determined that sixteen companies are eligible to bid on the Maryland sites:

• Apex Offshore Maryland, LLC
• Bluewater Wind Maryland LLC
• Convalt Energy LLC
• Dominion Wind Development, LLC
• EDF Renewable Development, Inc.
• Energy Management, Inc.
• Fishermen’s Energy, LLC
• Green Sail Energy LLC
• IBERDROLA RENEWABLES, Inc.
• Maryland Offshore Wind LLC
• Orisol Energy US, Inc.
• RES America Developments Inc.
• SCS Maryland Energy LLC
• Sea Breeze Energy LLC
• Seawind Renewable Energy Corporation LLC
• US Wind Inc.

How many of these entities actually participate in the auction remains to be seen.  8 qualified bidders (or their affiliates) also qualified to participate in the Virginia auction, but only winner Dominion and an Apex affiliate ever placed bids.  For Massachusetts and Rhode Island sites, 9 companies qualified to bid but only winner Deepwater, Sea Breeze, and US Wind participated.

Offshore wind project developers must coordinate regulatory, financial, and engineering efforts.  Securing a site for a project is a major step forward, but is only one of many important steps necessary to build an operating offshore wind project -- something the U.S. still lacks.  How much interest will the Maryland auction draw?  Who will win the right to lease the two parcels in the Maryland wind energy area, and how much will they pay?  Will the auction winners actually build offshore wind projects?  Some of these questions will be answered when the auction closes on August 19.

FERC approves second Southwest blackout penalty

A California irrigation district has agreed to pay a $12 million penalty to settle its role in a 2011 power outage affecting over 5 million people in California, Arizona, and Mexico.

The September 8, 2011 outage started when a 500-kilovolt transmission line owned by Arizona Public Service Company tripped out of service, causing cascading power outages through automatic load shedding as other equipment quickly overloaded.  In the end, the outage deprived customers of 7,835 megawatts of peak demand and over 30,000 megawatt-hours of energy.

Swiftly on the heels of the outage, the Federal Energy Regulatory Commission and electric reliability organization NERC launched an investigation into what had happened -- and whether any laws or regulations had been violated.  That investigation focused on APS and five other entities believed to have been involved: the California Independent System Operator, the Imperial Irrigation District, Southern California Edison, the Western Area Power Administration, and the Western Electricity Coordinating Council Reliability Coordinator.  Last month, the Commission approved a $3.25 million settlement with APS.

Today, the Commission issued an order approving a stipulation and consent agreement resolving  Imperial Irrigation District's role in the blackout.  Imperial Irrigation District is a not-for-profit, publicly owned, vertically integrated utility and political subdivision of the State of California.  The sixth largest utility in California, Imperial Irrigation District Electricity provides electric power to more than 145,000 customers in the Imperial Valley and parts of Riverside and San Diego counties.

Through their investigation, Commission enforcement staff and NERC found Imperial Irrigation District violated 10 requirements of four Reliability Standards on transmission operations and transmission planning, including a failure to coordinate its operations planning with neighboring systems.  The Commission noted that these violations were serious deficiencies that undermined reliable operation of the Bulk Power System.

Through that stipulation, Imperial Irrigation District agreed to pay a civil penalty of $12 million.  Of this amount, at least $1.5 million will go to the U.S. Treasury and another $1.5 million will go to NERC, and at least another $9 million will be invested in reliability enhancement measures that go beyond mitigation of the violations and the requirements of the mandatory Reliability Standards.  These reliability enhancements will include construction of one or more utility-scale battery energy storage facilities within IID’s transmission operations area, with the money spent by December 31, 2016.

Two of the six entities known to be targeted by the Commission's investigation have now settled their alleged violations by agreeing to pay penalties.  Perhaps more significantly, APS and Imperial Irrigation District represent two of the three vertically integrated utilities implicated.  Will the FERC/NERC investigation lead to further settlements soon?  What impact will the Imperial Irrigation District settlement and penalty agreement have?

FERC tests 2-year hydropower licensing process

Licensing some new hydropower projects in the United States -- traditionally a lengthy process -- may soon become easier, as federal regulators have approved an experimental two-year process that may soon be used to license some projects.

Water spills over a small, non-powered dam in Maine.

The Federal Energy Regulatory Commission regulates most hydropower development in the United States.  Under Part I of the Federal Power Act, the Commission considers applications for hydropower project licenses.  While the traditional licensure process has resulted in the issuance of thousands of licenses, winning a license for a project can take many years -- and some licensure proceedings have stretched toward a decade.

In response to concerns that lengthy licensing procedures stifle hydropower development, last year Congress enacted the Hydropower Regulatory Efficiency Act of 2013.  That law directed the Commission to investigate the feasibility of a two-year licensing process for certain projects, develop criteria for identifying projects that may be appropriate for the process, and develop and implement pilot projects to test the process.

In January 2014, the Commission solicited pilot projects to test a two-year process.  Two kinds of projects were eligible: hydropower development at existing non-powered dams and closed-loop pumped storage projects.  In the notice soliciting pilot projects, the Commission articulated additional criteria for eligibility including:

• The project must cause little to no change to existing surface and groundwater flows and uses;


• The project must not adversely affect federally listed threatened and endangered species;


• If the project is proposed to be located at or use a federal dam, the request to use the two-year process must include a letter from the dam owner saying the plan is feasible;


• If the project would use any public park, recreation area, or wildlife refuge, the request to use the two-year process must include a letter from the managing entity giving its approval to use the site; and


• For a closed-loop pumped storage project, the project must not be continuously connected to a naturally flowing water feature. 

Ultimately, the Commission selected a project proposed by Free Flow Power Project 92, LLC: a 5-megawatt project at the Kentucky River Authority's existing Lock & Dam No. 11 on the Kentucky River in Estill and Madison counties, Kentucky.  Lock and Dam 11 were originally built from 1904-1906 and support a twenty mile long pool of water 201 miles above the mouth of the Ohio River, but have not previously supported a FERC-licensed hydropower project.

The Free Flow Power applicant's request to use the 2-year licensing process was filed on May 5, 2014, so the two years runs through May 5, 2016.  The Commission staff has issued a process plan and schedule with interim milestones through February 2016.  Compared to a traditional licensure process, the proposed schedule is accelerated -- but will this pilot case remain on schedule?  Will the accelerated process satisfy the various stakeholders, including the developer, regulator, neighbors, and public?