NY offshore wind lease auction set

The U.S. Bureau of Ocean Energy Management has issued a Final Sale Notice, setting December 15 as the date for auctioning the right to lease sites in federal waters off New York for commercial offshore wind development.

The U.S. federal government is pursuing a national strategy to facilitate the domestic development of offshore wind energy.  Under federal law, the Bureau of Ocean Energy Management is responsible for administering renewable energy project development on the offshore Outer Continental Shelf.  The strategy calls for BOEM to identify areas suitable for wind energy leasing, and to then offer leases through auctions or other sales.

BOEM is now moving forward with plans to auction leasing rights for an area offshore New York.  In June 2016, BOEM first issued a Proposed Sale Notice for leasing rights off New York.  BOEM solicited public comment on its proposal over the summer.

On October 27, 2016, BOEM announced the designation of a final New York Wind Energy Area, starting approximately 11.5 nautical miles from Jones Beach, NY, and running approximately 24 nm southeast.  The final New York Wind Energy Area differs from BOEM's earlier leasing proposal primarily in its removal of about 1,780 acres due to environmental concerns over sensitive habitat on a feature called Cholera Bank.

BOEM's announcement also identified 14 companies that it has deemed legally, technically and financially qualified to participate in the New York lease sale:

• Avangrid Renewables, LLC
• CI-II NY Inc.
• DONG Energy Wind Power (U.S.) Inc.
• Innogy US Renewable Projects LLC
• wpd offshore Alpha LLC
• Deepwater Wind Hudson Canyon, LLC
• Energy Management, Inc.
• Convalt Energy LLC
• Clean Power Northeast Development Inc.
• New York State Energy Research and Development Authority
• Statoil Wind US LLC
• EDF Renewable Development, Inc.
• Fishermen’s Energy, LLC
• Sea Breeze Energy LLC 

BOEM will offer the lease as Lease OCS-A 0512, using a multiple-factor auction format.  Changes to the auction rules originally proposed include a 10% bidding credit for entities that establish that they are a “government authority” as defined in the Final Sale Notice, along with an adaptation to the auction format allowing bidders a “limited opportunity to revoke” a provisionally winning bid without penalty if the next-highest bid was submitted by a governmental entity.

Meanwhile, state energy agency NYSERDA is pursuing the New York State Offshore Wind Master Plan to advance offshore wind development in the state.  NYSERDA has expressed interest in bidding in a BOEM auction for project leasing rights, and was included in BOEM's list of entities qualified for the December 15 auction. Moreover, NYSERDA could be a beneficiary of the "government authority" provision in BOEM's Final Sale Notice; if so, it could receive a 10% credit on top of its cash bid.

BOEM will conduct the auction electronically, through a contractor, starting at 8:30 EST on December 15, 2016.

Maine enacts energy bill to promote natural gas, energy efficiency

The Maine Legislature has enacted an omnibus energy bill designed to save consumers over $200 million per year.   For reasons ranging from a reliance on oil for home heating to inadequate natural gas pipeline capacity into New England, Maine’s energy costs are well above the national average. In response, a bipartisan group of legislators pulled together a package of measures to cut energy costs.

The Maine State House, Augusta, Maine.

The resulting bill, LD 1559, "An Act To Reduce Energy Costs, Increase Energy Efficiency, Promote Electric System Reliability and Protect the Environment", brings together elements of over ten other bills that came before the Joint Standing Committee on Energy, Utility, and Technology this year.  Last week, the Legislature enacted the bill by wide margins in both chambers: it received a vote of 131-7 in the House, and 29-6 in the Senate.

Highlights of the bill as enacted include:

Requires the Public Utilities Commission to help cut electricity costs:

• For the first time ever, requires the Public Utilities Commission to work to minimize the cost of energy to Maine’s consumers and to set rates to achieve economic efficiency

Expands heating options:

• Extends utility pilot programs to offer efficient electric heat pumps

Improves energy efficiency:

• Gives the Public Utilities Commission and Efficiency Maine Trust a revised policy directive to reduce energy costs and improve security of the state and local economies by pursuing all cost-effective energy efficiency for homes and businesses, including conservation in both electricity and heating fuel consumption
• Directs Regional Greenhouse Gas Initiative proceeds to lower commercial and industrial energy costs, reduce residential heating energy demand in a fuel-neutral way, and provide rate relief
• Caps electric efficiency spending at no more than 4% of total retail electricity and transmission and distribution sales in Maine
• Gives the Public Utilities Commission improved tools for overseeing efficiency programs
• Uses Maine Yankee litigation settlement funds for energy efficiency investment and rate relief
• Approves the Trust’s contract with Maine utilities for energy efficiency

Lowers electricity and natural gas costs:

• Authorizes the Public Utilities Commission to execute or direct utilities to execute energy cost-reduction contracts if necessary and appropriate to reduce the “basis differential” cost of natural gas in New England and thus to reduce the cost of electricity in Maine
• Protects ratepayers from cost increases resulting from the energy cost-reduction contracts
• Creates the Energy Cost Reduction Trust Fund to hold energy cost-reduction contract revenues, to be held in trust for the purposes of reducing the energy costs of Maine consumers

Improves controls over the cost of electricity transmission:

• Establishes a least cost electric transmission policy that gives the Public Utilities Commission improved tools to evaluate whether non-transmission alternatives can   address identified needs at lower cost

Improves the Regional Greenhouse Gas Initiative:

• Aligns Maine’s carbon emissions budget with other RGGI states’ budgets
• Adopts the new RGGI reforestation offset to benefit both large and small Maine forest owners.
• Directs the Department of Environmental Protection and Public Utilities Commission to develop incentives for consumers to reduce greenhouse gas emissions by switching from oil and coal to alternative fuels such as natural gas, biomass, or other renewables

Brings competition into municipal streetlighting:

• Requires transmission and distribution utilities to give municipalities options to participate in the ownership and management of their own streetlighting systems

Expands ocean energy options:

• Gives consideration to the University of Maine’s deepwater floating offshore wind pilot project and potential ocean energy projects, in addition to Statoil’s proposal

With the bill enacted as an emergency measure, absent a procedural roadblock it will become law later this month.

Maine ocean energy roadmaps

A coalition of Maine trade groups has released a pair of comprehensive permitting and regulatory road maps for developers of offshore wind, wave and tidal projects in Maine. The Maine Composites Alliance, Maine Wind Industry Initiative, and Environmental and Energy Technology Council of Maine (E2Tech) prepared these road maps to help steer potential developers and interested parties through federal, state and local laws and regulations applicable for ocean energy projects.

The documents can be obtained here:

• Permitting and Leasing for Maine Marine Hydrokinetic (MHK) Power Projects (14-megabyte PDF)
• Permitting and Leasing for Maine Offshore Wind Energy Projects (11-megabyte PDF)

Maine Composites Alliance is an alliance of composite businesses that work together to promote Maine's leadership in the international composites industry.  Maine Wind Industry Initiative is a collaborative created to organize Maine wind industry interests, link opportunities to Maine companies, relate industry needs to the state and federal government and act as a communication hub for Maine-based industrial partners in the wind energy industry. E2Tech seeks to build and expand the State's environmental, energy and clean technology sectors through networking and educational events, business development and sustainable job growth projects, and research, development and commercialization initiatives.

Waters off Maine are considered to be home to significant renewable energy resource potential.  Ocean Renewable Power Company has developed a marine hydrokinetic project off Eastport, and Statoil has proposed an offshore wind project off the Maine coast.  The roadmaps released today are designed to illustrate the path forward for offshore wind or MHK projects.  Developing renewable ocean energy projects requires developers to compile permits and approvals under over a dozen federal and state statutes.  Will the current regulatory structures lead to the development of more ocean energy projects off Maine and other U.S. coasts?

Maine offshore wind projects win federal grants

The U.S. Department of Energy has announced an award of funding to seven offshore wind Advanced Technology Demonstration projects totaling $168 million over six years.  These projects are designed to achieve large cost reductions over existing offshore wind technologies and develop viable and reliable options for the United States.  Waters off Maine will be home to two of the projects:

• Statoil North America of Stamford, Connecticut plans to deploy four 3-megawatt wind turbines on floating spar buoy structures in the Gulf of Maine off Boothbay Harbor at a water depth of approximately 460 feet. These spar buoys will be assembled in harbor to reduce installation costs and then towed to the installation site to access the Gulf of Maine's extensive deep water offshore wind resources.
  
  
• The University of Maine, based in Orono, plans to install a pilot floating offshore wind farm off Monhegan Island.  This project will feature two 6-megawatt direct-drive turbines on concrete semi-submersible foundations. These concrete foundations could result in improvements in commercial-scale production and provide offshore wind projects with a cost-effective alternative to traditional steel foundations.
  

Each project will receive up to $4 million to complete the engineering, site evaluation, and planning phase of their project.  Five other projects were also selected for this first phase:

• Baryonyx Corporation, based in Austin, Texas, plans to install three 6-megawatt direct-drive wind turbines in state waters near Port Isabel, Texas. The project will demonstrate an advanced jacket foundation design and integrate lessons learned from the oil and gas sector on hurricane-resistant facility design, installation procedures, and personnel safety.
  
  
• Fishermen's Atlantic City Windfarm plans to install up to six direct-drive turbines in state waters three miles off the coast of Atlantic City, New Jersey. The project will result in an advanced bottom-mounted foundation design and innovative installation procedures to mitigate potential environmental impacts. The company expects this project to achieve commercial operation by 2015.
  
  
• Lake Erie Development Corporation, a regional public-private partnership based in Cleveland, Ohio, plans to install nine 3-megawatt direct-drive wind turbines on "ice breaker" monopile foundations designed to reduce ice loading. The project will be installed on Lake Erie, seven miles off the coast of Cleveland.
  
  
• Seattle, Washington-based Principle Power plans to install five semi-submersible floating foundations outfitted with 6-megawatt direct-drive offshore wind turbines. The project will be sited in deep water 10 to 15 miles from Coos Bay, Oregon. Principle Power's semi-submersible foundations will be assembled near the project site in Oregon, helping to reduce installation costs. 


• Dominion Virginia Power of Richmond plans to design, develop, and install two 6-megawatt direct-drive turbines off the coast of Virginia Beach on innovative "twisted jacket" foundations that offer the strength of traditional jacket or space-frame structures but use substantially less steel.
  

After the first phase, the DOE Wind Program will select up to three of these projects to advance the follow-on design, fabrication, and deployment phases to achieve commercial operation by 2017. These projects will be eligible for up to $47 million over four years, subject to congressional appropriations.

Maine PUC declines to OK Statoil offshore wind term sheet

Today the Maine Public Utilities Commission declined to approve a term sheet offered by Statoil North America, Inc. for a long-term power purchase agreement from its proposed Hywind Maine floating offshore wind project.

Sutton Island, Maine, about 80 miles downeast of the proposed Hywind Maine project.

In 2010, Maine enacted a law designed to support the development of offshore wind and other marine renewable energy projects.  Among other features, that law required the state Public Utilities Commission to conduct a competitive solicitation for proposals for deep-water offshore wind energy pilot projects, meaning grid-tied floating wind projects at least 10 nautical miles offshore.  The statute gave the commission authority to direct mainland utilities to enter into power purchase agreements with one or more responding developers if certain minimum criteria were met.  This authority was discretionary, meaning the commission could choose not to order the utilities to sign a deal even if it met those criteria.

In September 2010, the commission issued its request for proposals under the program. Over the ensuing years, Statoil emerged as the apparent leading respondent, proposing the "Hywind Maine" project, a four-turbine, twelve megawatt project south of Boothbay Harbor.  Commission staff and Statoil negotiated the terms of a proposed power purchase agreement, which became public this summer.  Among those terms was a proposed energy price of between $290 and $320 per megawatt-hour, escalating annually, for the first 41 gigawatt-hours of energy produced each year.

That term sheet was the subject of deliberations by the Maine commission this morning.  After two hours of discussion, two of the three commissioners had stated that they would vote against approving the term sheet.  They expressed concerns about the cost of the contract, as well as uncertainty over the deal's benefit to Maine and Maine ratepayers.

The Maine commission's action bears some resemblance to that of the Rhode Island Public Utilities Commission in 2010 when it rejected a proposed contract between utility National Grid and offshore wind developer Deepwater Wind on the grounds that $244 per megawatt-hour was not a "commercially reasonable" price.  The Rhode Island commission ultimately approved a renegotiated deal with Deepwater Wind at a comparable price.  Similarly, the Maine commission invited Statoil to revise its proposal to offer more benefits to Maine, and to present a renegotiated deal for further deliberation.  Will Statoil be able to sweeten its offer and convince the commission that its contract is a good deal for Maine?

Floating offshore wind in US waters?

US coastal waters may soon see the development of floating offshore wind electric generating projects. Being able to install offshore wind turbines on floating platforms, as opposed to towers fixed to the seabed, may enable projects to tap into the vast deepwater ocean energy resource. This would represent a major step in history and technology, and could provide real data on the actual feasibility and costs of offshore wind in the United States.

The Cuckolds Light off Boothbay Harbor, Maine, with Seguin Island Light in the distance.

2012 may bring the deployment of North America's first floating offshore wind project. The DeepCWind Consortium and the University of Maine plan to test a floating wind turbine several miles off the Maine island of Monhegan next summer. The Monhegan project is designed as a pilot project, not a commercial effort. Nevertheless, the lessons learned off Monhegan could be used to shape a larger commercial project in 2013.

Historically, this project could be the first operating US offshore wind development. As 2011 closes, US waters still host neither operating commercial offshore wind projects, nor installed pilot projects of significant size. This is not for lack of interest. Universities and businesses are investing in offshore wind research and development, while developers eagerly pursue commercial projects in nearly all US jurisdictions. Commercial proposals range from projects fully permitted projects but unbuilt, to concepts still in the formation phase.

Technologically, a floating offshore wind project would demonstrate potential solutions to the engineering challenges posed by deep water sites. At least two floating turbines have recently been deployed around the world. The first, Statoil’s 2.3 megawatt Hywind unit, was installed off Norway in 2010. In November 2011, Portuguese utility Energias de Portugal (EDP) teamed up with Principle Power, Inc. to deploy a 2 megawatt turbine on a WindFloat platform off Portugal. The semisubmersible WindFloat design allows the unit to be towed in a horizontal position to the site, then erected without the use of a lift vessel. These test projects demonstrate some of the technologies required for deepwater offshore wind projects. A US project would represent a similar demonstration of new technology.

Floating offshore wind projects appear to have some momentum in Europe, and are poised to make a splash in US waters in the next year. Whether these efforts take hold depends on broader questions of economics and policy as much as on technology. What will 2012 bring?

Maine ocean energy advances

Maine's offshore wind industry may be moving forward, as the federal agency responsible for offshore wind site leasing is now considering a request by Norwegian energy company Statoil to lease a site for a Maine deepwater floating wind project.

Uninhabited Damariscove Island, off Boothbay Harbor, Maine.

The Maine site for which Statoil has applied lies over 12 miles offshore, south of Boothbay Harbor.  It lies in United States waters south of Damariscove Island.  This places the site near the pre-selected Damariscove Island wind site in Maine state-jurisdictional waters.  Statoil's proposed site is also southwest of the Monhegan offshore wind site.

Statoil's request to the federal Bureau of Ocean Energy Management was submitted on an unsolicited basis.  No BOEM Call for Information and Nominations (the agency's primary competitive solicitation tool) was in effect for these waters.  Under current regulations, unsolicited leases face a slightly different process for review, including a determination of whether there is any competitive interest in the site.

(You can read four public pages from Statoil's application here.)

Statoil is a large and diverse energy company headquartered in Stavanger, Norway, and owned primarily by the government of Norway.  Statoil's portfolio includes petroleum, gas, pipeline, and electric utility businesses.  Statoil is now exploring ocean energy opportunities, and developed the world's first full-scale floating wind turbine, the 2.3 megawatt Hywind unit.  Statoil has applied for a site lease off Maine, which could be its first US offshore wind site.

BOEM has deemed Statoil NA's lease application to be complete, and the applicant to be legally qualified.  Now BOEM is engaged in a review of Statoil's technical and financial qualifications.

Tomorrow morning, a joint state-federal task force will meet to review Statoil's request.  The Maine Task Force of the Bureau of Ocean Energy Management consists of a broad array of agency representatives.  Tomorrow's meeting will feature presentations by representatives from the governor's energy office, Maine Public Utilities Commission, United States Coast Guard, Department of Defense, NOAA, as well as BOEM and the Department of Interior itself.  This meeting will be held on December 8 at the Marriot Hotel in South Portland, Maine, at 9:30 a.m.

Separately, Statoil is negotiating with staff from the Maine Public Utilities Commission for a long-term contract to sell the project's output to utilities.  Statoil responded to the Maine commission's 2010 request for proposals for pilot floating offshore wind projects.  This offshore wind long-term contracting program was established by a Maine law designed to facilitate the development of a deep-water offshore wind energy pilot project.

If the Commission approves a long-term contract for the project's output, it could give the wind farm sufficient revenue certainty.  At the same time, the Commission is required to weigh the costs and benefits of any such contract, and must find that ordering a utility to buy the energy, capacity and renewable energy credits at the price and other terms proposed would not have an unreasonable impact on the utility's rate.