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Trump administration turns bullish about offshore wind as pipeline exceeds 25 GW

Fri 02 Nov 2018 by David Foxwell

Trump administration turns bullish about offshore wind as pipeline exceeds 25 GW
Governors such as New York state’s Andrew Cuomo have been vocal in support of offshore wind energy

Wind energy projects are under way in 30 states in the US, with a growing number in coastal states on the east and west coast and a groundswell of political support for the technology

As briefly highlighted in the Q3 2018 issue of OWJ, the unexpectedly low wholesale price the state of Massachusetts will pay for electricity generated from the 800-MW Vineyard Wind offshore wind project – America’s first large, commercial-scale project – gave a huge boost to the US offshore wind energy sector in August.

Documents from the Executive Office of Energy and Environmental Affairs, Department of Energy Resources released by the state show that Vineyard Wind will provide the Commonwealth with energy and renewable energy certificates at a total levelised price of US$0.065/kWhr over the term of the contracts. The department said that, on average, the contracts are expected to reduce customer’s monthly electricity bills (rather than add to them) by 0.1% to 1.5%.

The months since the Massachusetts announcement have been busy ones with President Donald Trump’s Secretary of the Interior Ryan Zinke swinging firmly behind offshore wind, which he described as “a source of abundant and affordable energy for the US.”

Speaking at the American Wind Energy Association’s (AWEA’s) Offshore Wind Conference, Secretary Zinke announced details of a much-anticipated wind auction in federal waters off the coast of Massachusetts; environmental review of a proposed project offshore Rhode Island; and the next steps to a first-ever wind auction in federal waters off California.

“I’m very bullish on offshore wind, and harnessing this renewable resource is a big part of the Trump Administration's made in America energy strategy,” said Secretary Zinke. “We are always looking at new ways to increase American innovation and productivity to provide abundant and affordable energy for our homes and manufacturers. I think this is a win for America. Working together with states, fishermen and the energy industry, we are making offshore wind a reality, and these three historic announcements are proof.”

The Bureau of Ocean Energy Management (BOEM) will hold the next offshore wind auction – to include nearly 390,000 acres offshore Massachusetts – on 13 December 2018. Nineteen companies have qualified to participate in the auction for the Massachusetts Wind Energy Area, demonstrating continued strong commercial interest in the US offshore wind market.

“The Massachusetts sale has a lot of potential for both energy and economic activity,” Secretary Zinke said. “If fully developed, the wind auction could support approximately 4.1 GW of power.”

BOEM will publish a notice of intent to prepare an environmental impact statement for the construction and operations plan for the South Fork Wind Project offshore Rhode Island. If approved, the plan would allow construction and operation of up to 15 turbines that connect via a transmission cable to a grid in East Hampton, New York, the east end of Long Island. The project is approximately 19 miles southeast of Block Island. The notice was published in the Federal Register on 19 October and will have a 30-day public comment period closing on 19 November.

In what could result in the first west coast offshore wind auction, BOEM will also publish a call for information and nominations to identify companies interested in commercial wind energy leases within three proposed areas off central and northern California. This is the first step towards offering a location for wind leasing. 

The three call areas include 85 whole Outer Continental Shelf blocks and 573 partial blocks and together comprise approximately 2,779 km. The call was published in the Federal Register on 19 October and will have a 100-day public comment period closing on 27 January 2018.

As was evident at the AWEA event, the race for offshore wind leadership in the US is heating up and around the country a flurry of recent announcements from states and offshore developers are shaping the future of the industry. So many are the potential projects that according to the Department of Energy, as of June 2018, the US offshore wind project development pipeline exceeded 25 GW of planned capacity. Offshore wind projects are being proposed right around the country, on the east coast, in California and even Oregon, which have some of the strongest offshore wind resources in the country. Then there’s Hawaii, while back on the east coast, BOEM is already looking at additional sites in the New York Bight. Politics has played a role in which US states are committing to offshore wind, but of late realisation of the manufacturing, infrastructure and employment potential of offshore wind has convinced former sceptics.

Massachusetts’ commitment to offshore wind seems safe whatever political developments take place there, with incumbent governor Charlie Baker and challenger Jay Gonzalez having pledged to continue with offshore wind energy. 

In June 2018, Connecticut governor Dannel Malloy and the Department of Energy and Environmental Protection announced that Connecticut selected 200 MW of offshore wind as part of a recent Clean Energy request for proposals issued in January. The offshore wind project will also be a part of Deepwater Wind’s Revolution Wind project, selected by Rhode Island in May. Construction on Revolution Wind could begin as soon as 2020, with the project in operation in 2023. 

In New York state, Governor Andrew Cuomo has set a goal of generating 50% of the state’s electricity from renewable sources by 2030, including 2.4 GW of offshore wind capacity. A solicitation for the first 800 MW is expected before the end of 2018 and Long Island Power Authority has approved a power purchase agreement to buy 90 MW of electricity from the South Fork Wind Farm, a 15-turbine installation set to begin construction by 2020. 

Since taking office, New Jersey governor Phil Murphy has made offshore wind one of his highest priorities. He aims to have 3.5 GW of wind capacity by 2030 and the New Jersey Board of Public Utilities recently approved the country’s largest offshore wind solicitation to date, 1.1 GW. Two more solicitations are anticipated in the next four years. 

Virginia is also making plans for offshore wind. Earlier this year an omnibus energy bill was passed that set a target for the state to develop 5.5 GW of renewable energy by 2024, including at least 2 GW of offshore wind capacity. The Virginia plan calls for 3 GW of solar and onshore wind to be deployed by 2022, and 2 GW of offshore wind to be deployed by 2028.

Approval is being sought to build two 6-MW offshore wind turbines and the necessary grid infrastructure off the coast of Virginia. Dominion Energy and Ørsted plan to install two 6-MW wind turbines 27 miles off the coast as a pilot project. The facility will serve as a demonstrator for stakeholders like the military, commercial and recreational groups and government agencies. 

Published in September 2018, a report said another east coast state, South Carolina, could capitalise on opportunities in the offshore wind industry to drive economic growth and support an annual average of around 850 new jobs every year through 2035.

The South Carolina Jobs Project: A Guide to Creating Jobs in Offshore Wind report was produced by the American Jobs Project (AJP) in partnership with the Burroughs and Chapin Center for Marine and Wetland Studies (BCCMWS) at Coastal Carolina University and BVG Associates.

“Jumpstarting South Carolina’s offshore wind conversation would position us to benefit from this quickly growing sector,” said BCCMWS executive director Paul Gayes. “Right now, there is US$56Bn committed to Atlantic Coast offshore wind projects. AJP’s report shows that we can leverage South Carolina’s industry strengths to provide support for these projects and nurture local projects that would grow the economy while meeting our energy needs.”

The market is also developing on the west coast of the US, where the California legislature passed Senate Bill 100, which calls for the state to reach 100% clean energy by 2045. The National Renewable Energy Laboratory estimates the state’s net offshore wind capacity at 112 GW with a net annual energy potential of 392 terawatt hours (TWhr), even after excluding areas for military, environmental and other uses. To put this in context, California’s entire 2017 electricity generation from both in-state and imported power sources was 292 TWhr – 100 TWhr less than the state’s offshore wind energy potential.

In September 2018 a consortium of companies and a coastal energy authority submitted a lease application to the Bureau of Ocean Energy Management to advance development of a floating offshore wind energy project 20 miles off the coast of Eureka in northern California. Redwood Coast Energy Authority, Principle Power, EDPR Offshore North America and Aker Solutions have been working since 2017 to develop offshore wind potential off Humboldt County. The 100-150-MW project would consist of 10-15 floating turbines 20 miles off the coast of Eureka and could come online as soon as 2024.

In Q3 2018, wind energy developer Ørsted secured a particularly strong, long-term growth platform in the US offshore market with the acquisition of Deepwater Wind. The merger created a leading offshore wind platform in the US with the most comprehensive geographic coverage and the largest pipeline of development capacity.

Deepwater Wind has a geographically diverse portfolio of projects along the US east coast and has a portfolio with a potential capacity of approximately 3.3 GW comprising:

  • Block Island (30 MW), the only operational offshore windfarm in the US.
  • Three offshore wind development projects in Rhode Island, Connecticut, Maryland and New York totalling 810 MW of capacity with long-term revenue contracts in place or pending finalisation.
  • Approximately 2.5 GW of offshore wind development potential across three lease areas in Massachusetts and Delaware. Of these 2.5 GW, 1.2 GW is developed through an equal joint venture with PSEG, a leading New Jersey utility.

Ørsted’s current US offshore wind portfolio has a total capacity of approximately 5.5 GW including:

  • Development rights for up to 2 GW at the Bay State Wind site off the coast of Massachusetts owned in a joint venture with Eversource.
  • Development rights for up to 3.5 GW at the Ocean Wind site off the coast of New Jersey.
  • In Virginia, Ørsted will construct two 6-MW wind turbine positions for phase one of Dominion Energy’s Coastal Virginia Offshore Wind Project.

Ørsted has exclusive rights with Dominion Energy to discuss the potential development of up to 2 GW of offshore wind capacity.

With the combined organisation and asset portfolio, Ørsted will deliver clean energy to the seven states on the US east coast that have already committed to build in total more than 10 GW of offshore wind capacity by 2030.

Development projects with revenue contracts awarded to the new entity or under negotiation include:

  • Revolution Wind (600 MW) in Deepwater Wind’s northern Massachusetts-Rhode Island BOEM lease area. Subject to permitting, securing power purchase agreements and final investment decision, Revolution Wind is expected to be commissioned in 2023.
  • Skipjack (120 MW), 19 miles from Ocean City, Maryland, which is expected to be commissioned by the end of 2022, subject to permitting, further development and final investment decision.
  • Southfork (90 MW): 35 miles east of Long Island, which is due to be commissioned by the end of 2022, subject to the same conditions being fulfilled.

Future development by the newly-formed entity include:

  • Garden State Offshore Energy, a 50-50 joint venture with PSEG, a New Jersey utility and power generation company, that holds the rights to a lease off the coast of Delaware and New Jersey with the potential for 1.2 GW of offshore wind.
  • New England lease areas, with Deepwater Wind holding the rights to two areas off the coast of New England with potential for a further 1.3 GW.
  • Development rights for the up to 2 GW Bay State Wind site off the coast of Massachusetts, and for the up to 3.5-GW Ocean Wind site off the coast of New Jersey.
  • Two 6-MW turbines mentioned above that form part of Dominion Energy’s Coastal Virginia offshore wind project.

The two companies have also signed a memorandum of understanding giving Ørsted exclusive rights to discuss potential development of up to 2 GW of offshore wind capacity.

Lakes Erie opportunity boosted by environmental assessment

A federal agency has released a finding of no significant environmental impact for a windfarm developers hope to build in Lake Erie. Lake Erie Development Corporation said an exhaustive federal review of the proposed Icebreaker Lake Erie wind energy project found no significant environmental impact from building the windfarm and that the project would not significantly affect migratory birds.      

The US Department of Energy conducted the review in co-operation with the US Army Corps of Engineers, US Coast Guard and other federal entities.

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