Federal auction set for Massachusetts offshore wind leases

The federal agency responsible for managing ocean energy development on the Outer Continental Shelf has scheduled an auction for about 390,000 acres offshore Massachusetts, to be held on December 13, 2018.

Under federal law, the U.S. Bureau of Ocean Energy Management is responsible for conducting auctions to lease parcels of federal waters for offshore wind energy development.

On October 17, Secretary of the Interior Ryan Zinke announced that BOEM will hold its next offshore wind auction in December. According to the Final Sale Notice published in the Federal Register on October 19, the agency will hold its Atlantic Wind Lease Sale 4A, covering 388,569 acres offshore Massachusetts. The sale will cover three separate leases, located within an area previously offered but unsold in 2015.

BOEM map of the proposed lease areas available through the December 2018 auction.

Nineteen companies have qualified to participate as bidders in the lease sale:

• Avangrid Renewables, LLC
• Camellia Wind Energy LLC
• CI III Blue Cloud Wind Energy II LLC
• Cobra Industrial Services, Inc.
• Deepwater Wind New England, LLC
• East Wind LLC
• EC&R Development, LLC
• EDF Renewables Development, Inc.
• EDPR Offshore North America LLC
• Enbridge Holdings (Green Energy) L.L.C.
• Innogy US Renewable Projects LLC
• Mayflower Wind Energy LLC 
• Northeast Wind Energy LLC 
• Northland Power America Inc .
• PNE WIND USA, Inc.
• Equinor Wind US LLC
• Vineyard Wind LLC
• Wind Future LLC
• wpd offshore Alpha LLC

According to BOEM, if fully developed, the areas available for leasing could support about 4.1 gigawatts of commercial wind generation.

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.

Japan's floating offshore wind turbines

A recently-installed floating wind turbine off the Japanese coast marks the second operating floating project in Asia.  Located about 12 miles off the coast of the site of the 2011 Fukushima nuclear power disaster, the government-funded project is being developed by a consortium led by Marubeni Corp.  So far, it consists of a single 2-megawatt Hitachi turbine coupled with a floating substation, with near-term plans to add two 7-megawatt Mitsubishi Heavy Industries Ltd. turbines, and a longer-term vision of installing 1,000 megawatts of capacity.

The Fukushima project follows a 2-megawatt floating offshore wind project installed off Nagasaki.  The Nagasaki project is located about 1 kilometer off the island of Kabashima, a 9-sq.-km island with some 110 households, and followed a 100-kilowatt test project deployed in 2012.

Japan's push for offshore wind development is motivated in large part by the Fukushima nuclear disaster.  Before 2011, nuclear power provided about 30% of Japan's electricity, but all 54 of Japan's nuclear reactors were shut down or inoperable after the disaster.

As an island nation with extensive coastal resources and little if any native fossil fuels, offshore wind may be a natural fit for Japan.  Relatively deep waters surrounding Japan make seabed-mounted towers impractical, so floating platforms may enable greater use of renewable wind energy.  The floating pilot projects off Nagasaki and Fukushima are designed in part to test different technologies, and may help reduce the costs of future projects.

Under the Japanese approach, each of these projects is funded by a separate ministry: the Fukushima project is supported by the Ministry of Economy, Trade and Industry, while the Nagasaki project is funded chiefly by the Environment Ministry.

Will Japan continue to develop its deepwater offshore wind resources?  Will floating platforms and turbines play a significant role in powering Japanese society?  Will the pilot projects lead to engineering and manufacturing knowledge that could place Japan at the forefront of the growing deepwater offshore wind industry?

Maine launches first grid-connected floating offshore wind turbine

The U.S. renewable ocean energy industry achieved a milestone last week with the launch of the nation's first grid-connecting floating offshore wind turbine.  A consortium led by the University of Maine developed and deployed a 1:8-scale prototype in the Gulf of Maine.  What does it mean for ocean energy?

A sailboat catches the wind off the Maine coast.

Offshore wind presents a significant energy resource.  The National Renewable Energy Laboratory has estimated that U.S. waters could host a gross wind power resource of 4,223 gigawatts -- about four times as much generating capacity as the current U.S. electric grid.  If even a fraction of this can be developed in a cost-effective and environmentally friendly way, it could power a significant portion of our electricity needs.

While land-based wind projects represent a relatively established technology -- with over 60,000 megawatts installed in the U.S. by the end of 2012 -- and European waters are home to over 5,000 megawatts of offshore wind, no commercial offshore wind projects have been built in the U.S.  The rigors of the ocean environment create engineering challenges for offshore wind, which drives costs up.  Particularly in U.S. waters, the best wind resources are located in deeper waters farther offshore.  This means that floating wind turbines may be the most cost-effective way to harness offshore winds.

While several prototype floating offshore wind systems have been deployed off Europe, no grid-connected projects have been deployed in U.S. waters.  Using $12 million in funding from the U.S. Department of Energy, the University of Maine and its project partners have developed the VolturnUS prototype.  This unit has several features that may lead to a breakthrough in the cost curve of floating offshore wind.  While most models to date have relied on steel, the VolturnUS semi-submersible platform uses a concrete foundation and composite tower.  While the prototype is just 65 feet tall, its design characteristics are hoped to lead to lower construction costs for larger-scale units closer to 500 feet tall.

The University of Maine is also planning a larger offshore wind demonstration called Aqua Ventus I.  Using a separate $4 million Energy Department grant, the University is engineering and designing a pilot floating offshore wind farm with two 6-megawatt direct-drive turbines on concrete semi-submersible foundations near Monhegan Island. If selected for further funding in 2014, the Aqua Ventus I project could be constructed and installed in several years.

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?