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DOI Announces Competitive Lease Sale for Offshore Wind Development off the Coasts of New York and New Jersey

The US Department of the Interior (DOI) announced plans to expand offshore wind development off the coasts of New York and New Jersey by proposing a lease sale it strives to complete by the end of this year. More specifically, the Biden Administration proposed a competitive sale of eight lease sites for over 627,000 acres of federal waters on the Outer Continental Shelf in the New York Bight. This proposed lease sale will support the administration’s goal of installing 30 gigawatts of offshore wind energy by 2030.

The proposed leases contain notable stipulations, including the encouragement of project-labor agreements during construction and the requirement of increased engagement with the fishing industry and other affected ocean users during the leasing process. “The development of renewable energy is an important piece of addressing climate change,” US Secretary of the Interior Deb Haaland said in the DOI’s statement, adding, the “new proposed lease stipulations puts a priority on creating and sustaining good-paying union jobs as we build a clean energy economy.”

The lease sites have the potential to generate an additional seven gigawatts of offshore wind energy, powering more than 2.6 million homes and creating thousands of new jobs. “A lease sale not only opens a door to investment in New York and New Jersey, but will support jobs and businesses throughout the U.S.,” National Ocean Industries Association President Erik Milito said. “Providing new offshore wind opportunities will boost critical investments into the supply chain, ports, and workers, and will provide a foundation for exceptional offshore wind growth.”

Despite the stipulations within the proposed leases, the DOI’s Bureau of Ocean Energy Management (BOEM) claimed that 11 offshore wind developers have already expressed interest in the leases. Should the lease sale occur, it would be the first competitive offshore wind lease sale for the administration. A Proposed Sale Notice has been issued in the Federal Register, which opens a 60-day public comment period and provides further information about the potential lease areas, proposed lease provisions and conditions, as well as auction details.

The lease sale announcement builds upon the Biden Administration’s commitment to advance offshore wind development, which includes approval of the Vineyard Wind project—the first large-scale project in federal waters—and the recent announcement to assess potential renewable energy opportunities in the Gulf of Mexico.




DOE Announces Funding for Hydrokinetic Power Projects

by Bethany Hatef

The Department of Energy (DOE) announced last week that it will commit $16 million toward 17 projects to capture energy from waves, tides and currents.  In a press release, DOE stated that the commitment is “part of the Obama Administration’s all-of-the-above strategy to deploy every available source of American energy.”  Although DOE’s committed funds are relatively modest, they may spur the growth of a largely untapped but potentially significant clean source of domestic power.

Wave and tidal, or hydrokinetic, energy, a renewable fuel source, may be captured where large volumes of water are moved (e.g., changing tides and currents).  According to DOE, development of this resource may supply clean and reliable power to millions of homes, including in many coastal U.S. cities with high power demands.  DOE’s latest assessments found that wave and tidal energy could potentially generate up to 1,400 terawatt hours (or 1.4 billion megawatt hours) annually.  (One terawatt hour would be sufficient to power 85,000 homes.)

A hint of government support for hydrokinetic energy production first arose in 2009, when the Federal Energy Regulatory Commission (FERC) and the Bureau of Ocean Energy Management (BOEM) entered into a memorandum of understanding addressing their respective jurisdiction over hydrokinetic projects on the Outer Continental Shelf.  In January 2012, FERC issued its first pilot project license for a hydrokinetic project, which will generate power from the tidal flow of the East River in New York.  In August of this year, BOEM issued a Finding of No Significant Impact with respect to a proposed hydrokinetic power project off the Florida coast, giving the go-ahead for the first such BOEM-leased project.

DOE’s commitment consists of $13.5 million for eight projects to assist American companies with building wave and tidal devices to reduce production costs and maximize the harnessed energy.  These projects “will develop new drivetrain, generator and structural components as well as develop software that predicts ocean conditions and adjusts device settings accordingly to optimize power production,” according to DOE’s press release.  Additionally, DOE will provide $2.4 million to nine projects “that will gather and analyze environmental data from wave and tidal projects as well as potential development zones” to proactively handle environmental impacts and promote efficient development.




United States’ First Offshore Wind Farm Obtains Critical Federal Approval

by Bethany K. Hatef

For the fourth time the Federal Aviation Administration (FAA) on August 15, 2012 issued a Determination of No Hazard to the proposed Cape Wind project, which, if constructed after a decade of planning, will be the United States’ first offshore wind farm.  Energy Management Inc., the project’s developer, proposes to construct and operate 130 wind turbines in a 25-square-mile shallow area of Nantucket Sound known as Horseshoe Shoal at an estimated cost of $2.5 billion.  The project has now received all required permits, including Construction and Operations Plan approval from the Bureau of Ocean Energy Management, Regulation and Enforcement and various other federal and state approvals, and a 25-year commercial lease from the Department of the Interior.

The FAA began its review of the Cape Wind project in 2002 and originally approved the project in May 2010, but the Cape Cod town of Barnstable and the Alliance to Protect Nantucket Sound, an environmental group created in 2001 to oppose the project, appealed the agency’s decision.  In October 2011, the United States Court of Appeals for the District of Columbia reversed the FAA’s decision and remanded the matter to the agency for further review of whether the project posed safety hazards to air traffic.  The D.C. Circuit found that the FAA had ignored its own regulations and failed to demonstrate that it had analyzed whether the project would negatively impact air traffic in approving the Cape Wind project.

The FAA’s most recent determination found that the Cape Wind project poses no hazard to air navigation, as the project falls within the agency’s obstruction standards and would not have any electromagnetic radiation effect on air traffic.  FAA regulations provide that a structure negatively affects visual flight rules (VFR) air navigation if its height is more than 500 feet above the surface and if it is located within two miles of a commonly traveled VFR route.  The Cape Wind project does fall within two miles of a commonly traveled VFR route, but the project’s proposed turbines will only reach 440 feet above the surface.  The FAA found that, provided the Cape Wind project adheres to the agency’s height restriction, files construction forms with the agency as required, and properly lights structures that may obstruct planes, the project will pose no hazard to air traffic.

Appeals of the FAA’s decision are certainly possible; the Alliance for the Protection of Nantucket Sound has already indicated it will appeal.  In addition, Republican Congressmen Darrell Issa (R-CA) and John Mica (R-FL) have suggested that the FAA may have been politically influenced to approve the Cape Wind project in 2010; a formal congressional investigation could add further delay to the Cape Wind project.

Energy Management Inc. plans to begin construction on the project in 2013.  Three-quarters of the Cape Wind project’s anticipated electricity output has already been sold through power purchase agreements with electrical utilities in Massachusetts, and Energy Management Inc. is now seeking to raise capital.  Each of the 130 proposed turbines [...]

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DOE Previews Significant Funding Opportunities for Offshore Wind

by Kimberly Glasspool

The Department of Energy (DOE) has announced new funding opportunities for offshore wind energy projects.  The DOE has not yet confirmed the amount of new funding that will be made available, but early indications from officials suggest grants could total between $100 million to $175 million.  The DOE awards are expected to cover roughly half of a selected offshore project’s total costs. 

According to a draft funding announcement  available on the DOE’s website, the focus of this assistance is to support advanced technology demonstration projects that test new technology and verify performance and cost under actual operating and market conditions.  The announcement indicates that one of the primary goals of providing financial assistance to advanced technology demonstration projects is to expedite development of offshore wind farms with the potential for bringing the cost of energy down to a point where these sources can compete with other generation technologies on an unsubsidized basis.

The announcement includes a potential roadmap to cost competiveness for offshore wind projects.  The roadmap highlights development of innovative turbine architectures and advanced infrastructure to cut costs and increase efficiency.  The DOE’s roadmap assumes that validation of construction, generation and operating expenses will be key drivers to reducing financing costs.

The DOE funding announcement is part of a broader effort by the federal government to facilitate offshore wind projects in the U.S.  Recently, the U.S. Department of the Interior, Bureau of Ocean Energy Management announced completion of an environmental assessment  for wind energy development off the coasts of New Jersey, Delaware, Maryland and Virginia. The assessment — required by the National Environmental Policy Act — identifies areas where offshore wind development would not have a significant impact on wildlife and the environment.  Lease solicitation and application processes are underway for areas offshore of these Mid-Atlantic states.

Applications for offshore wind project funding are tentatively due on May 31, 2012.  The DOE anticipates that it will select award recipients in August 2012 and make awards available in September 2012.




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