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Offshore wind power efforts gaining strength following favorable state and federal actions

By Mary Power

June 18 - As a nation noted for its slow pace in developing offshore wind resources, the US appeared to pick up its pace in early June with a series of favorable state and federal actions along the East Coast.

Ten states signed an agreement with the federal government that offers the promise of lopping years off regulatory review.

Meanwhile, Rhode Island resurrected a project pronounced dead a few months ago, and lawmakers in New Jersey introduced legislation to create a carve-out for offshore wind within its renewable portfolio standard.

The broadest action came out of the Department of Interior, which reached a hand out to help eastern states struggling with issues that have kept the US years behind Europe in developing the offshore wind industry.

Specifically, Interior signed a memorandum of understanding with states that establishes the Atlantic Offshore Wind Energy Consortium, which is expected to give eastern governors new clout when it comes to shaping federal policy on permitting, leasing, transmission and federal incentives for offshore wind, according to Ian Bowles, Massachusetts secretary of energy and environmental affairs.

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"This is great news for the governors who want to move forward with concrete next steps," Bowles said.

Current estimates to get offshore wind projects up and running on the Outer Continental Shelf are seven to nine years. The states hope the consortium's work can slice several years off that timeline.

"The MOU is designed to move offshore wind quickly. I hope the people at the Department of the Interior will take this seriously," Virginia Senator Frank Wagner said in an interview.

The states that have signed the MOU are Maine, New Hampshire, Massachusetts, Rhode Island, New York, New Jersey, Delaware, Maryland, Virginia and North Carolina.

The consortium will develop an action plan that sets forth priorities, goals, specific recommendations and steps for achieving objectives outlined in the agreement.

Interior Secretary Ken Salazar also established a new regional renewable energy office to coordinate and speed development of wind, solar and other renewable energy resources on the Atlantic Outer Continental Shelf. The office will be located in Virginia, chosen because of its convenience to all states.

The new consortium is not expected to have any effect on the first wind farm proposed in federal waters, Cape Wind, because that project is already far along in development, Bowles said. Congress exempted the 130-turbine Massachusetts project from new federal leasing rules, given that it was proposed well before the rules were contemplated.

Expected to be the first offshore wind farm in the US, the Nantucket Sound project has signed a power purchase agreement with National Grid, which is under review before the Massachusetts Department of Public Utilities. Public hearings are under way this month on the contract and written comments are due to the DPU on June 22.

Cape Wind has been working for approvals for a decade. Bowles believes the consortium will allow Massachusetts' next offshore wind farm to be built more quickly.

The state is working with Interior on carving out an offshore wind zone in a shallow, federal area off of the islands of Nantucket and Martha's Vineyard for the next project. Massachusetts plans to issue a solicitation in mid-summer to gauge developer interest.

Maryland, Maine, New York, Rhode Island, New Jersey

In Maryland, officials hope the federal government will take the next step and begin the process of identifying blocks of the ocean that can be leased and partitioning off sections that will be assigned to each region of the coast, said Devon Dodson, policy director for the Maryland Energy Administration.

In Maine, Governor John Baldacci praised creation of the new consortium and said it may prove to be a forum for Maine to showcase its new streamlined permitting process, which could significantly reduce the amount of time required to review a project.

New York, meanwhile, is working to develop offshore wind in the Great Lakes and off the coast of Long Island.

The federal agreement comes shortly after a separate agreement was signed by the Long Island Power Authority, Consolidated Edison and the NYPA for up to 700 MW of wind power off of Long Island.

That agreement spells out pre-development activities and studies that will be shared by the parties.

In Rhode Island, Governor Donald Carcieri was quick to praise creation of the consortium, as he scored a significant victory last week in his push for a 28.8 MW demonstration project under development by Deepwater Wind.

In keeping with Carcieri's wishes, the Rhode Island General Assembly took the unusual step last week of passing legislation that will require state regulators to reconsider their rejection of a power purchase agreement for the offshore wind farm.

The bill orders the state Public Utilities Commission to use broader criteria -- not just price -- in its review of the contract between National Grid and Deepwater Wind.

The commission had rejected the contract for the Block Island project in late March, saying it was too expensive at 24.4 cents/kWh beginning in 2013.

The bill requires the PUC to review the PPA again within 45 days, this time taking into account price and non-price factors, such as economic development opportunities or environmental benefits offered by the project.

The legislative action drew strong protests from the state attorney general, public interest groups and the Conservation Law Foundation. Opponents argued that the General Assembly had overstepped its bounds in dictating the contract to regulators.

Meanwhile, New Jersey lawmakers introduced legislation that would create a carve-out for offshore wind within the state's renewable portfolio standard.

The carve-out would require utilities to purchase a certain amount of power generated by offshore wind between 2011 and 2026, under rules established by state regulators.

The program also would set up a market for trading offshore wind renewable energy credits, or ORECs, much like the state's solar REC market, according to Assemblyman Upendra Chivukula, chairman of the General Assembly's Telecommunications and Utilities Committee.

The BPU would establish benchmarks that would be used to set the price of the ORECs, he said.

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