Offshore Wind: Driving Factors and Recent Impediments
This article contains a brief review of the latest developments in offshore wind, including state laws and policies, federal laws and permitting practices, and the impact of COVID-19. The main issue we are now watching is the Department of the Interior’s supplemental environmental review of the proposed Vineyard Wind project, discussed below. Until a final environmental review is completed, we are unable to predict with certainty how many offshore wind construction plans will be approved this year by the Bureau of Ocean and Energy Management (“BOEM”) in the Department of the Interior.
States Are Driving the Offshore Wind Process along the Atlantic Coast
We have reviewed state laws and policies before (see our article in the April 2019 edition of Mainbrace). Although developments offshore California and Hawaii are still being considered, they have been hampered by objections from the Department of Defense to siting wind farms near adjacent military bases. Meanwhile, development along the mid-Atlantic and New England coasts remains strong.
We conclude, as we have before, that the governors are taking the lead in promoting offshore wind by adopting new laws and/or executive orders and promoting renewable energy, including offshore wind. Their goal is to bring in some of the more than 40,000 new offshore wind jobs predicted by 2030.
In New York, Governor Andrew Cuomo has made clear his commitment to clean energy, with a goal of 70 percent of electricity from renewable energy by 2030 to support the implementation of the Climate Leadership and Community Protection Act. He recently announced that the New York State Energy Research and Development Authority (“NYSERDA”) would issue its second offshore wind solicitation, which is expected to yield another 1 GW of clean power for New Yorkers.
NYSERDA will also award $200 million in public-private investments in port infrastructure and launch the Offshore Wind Training Institute to train 2,500 New Yorkers for the jobs expected in the new industry.
On April 12, 2020, Governor Ralph Northam of the Commonwealth of Virginia signed the Virginia Clean Economy Act into law. The act sets ambitious goals towards promoting energy efficiency and, eventually, requires all electricity to come from renewable sources. Among the act’s most notable aspects:
- Dominion Energy Virginia must be carbon-free by 2045, and Appalachian Power by 2050.
- Almost all coal-fired plants must close by the end of 2024.
- An energy efficiency pilot program will be created to address energy-related burdens on low-income customers.
- Establishes a goal of 5,200 megawatts of offshore wind generation.
Dominion Energy holds part of the research lease for a two-turbine project on the Outer Continental Shelf (“OCS”), which will become operational this year—the first such project in federal waters. The project, Coastal Virginia Offshore Wind, will be expanded by Dominion and its partners in the coming years into the 220-turbine, 2600 MW commercial offshore wind project also on the OCS. Recently, Dominion announced that it had created a consortium to build a new Jones Act installation vessel. If built, it will be the first such vessel in the United States and should be capable of installing the larger turbines being built by one of its key suppliers, Siemens Gamesa.
In January 2020, Rhode Island Governor Gina Raimondo signed an Executive Order setting a 100-percent clean electricity goal by 2030, which would make the state the first in the nation to be powered exclusively by renewable energy. Governor Raimondo will build on the example set by the wind project off Block Island to meet these goals.
The Commonwealth of Massachusetts selected two projects last year to provide renewable energy to the state, including Vineyard Wind for 800 MW, discussed further below, and Mayflower Wind for 804 MW. Both projects have been delayed due to extensive environmental reviews and permitting delays.
On February 28, 2020, New Jersey Governor Phil Murphy announced a schedule to meet the state’s goal of 7,500 MW of offshore wind by 2035. The next solicitation of 1200 MW is scheduled to be issued in the third quarter of 2020, and four additional solicitations approximately every two years thereafter.
Also, Governor Murphy announced plans this month to develop New Jersey Wind Port in Salem County, which will involve significant infrastructure investments to create a location for staging, assembly, and other work related to offshore wind projects. Construction is expected to begin in 2021 and the port will eventually create about 1,500 offshore wind support jobs.
In March 2020, Governor Janet Mills of Maine announced that her state will review opportunities for supporting offshore wind. The governor is looking to develop necessary port infrastructure within the state to support Maine’s planned floating wind farm, called Aqua Ventus, which would be the first offshore floating wind farm in the United States.
Last year, Maryland Governor Larry Hogan reluctantly allowed the state’s Clean Energy Jobs Act to become law. The legislation will increase the state’s renewable portfolio standard to 50 percent by 2030 and includes a 10 percent carve-out for offshore wind (or 1.2GW). The main projects off the coast of Maryland are U.S. Wind and Skipjack Wind. However, both projects are now delayed for one or more years due to COVID-19 and permitting delays.
North Carolina recently issued a Request for Proposal (“RFP”) to study the supply chain and infrastructure requirements for offshore wind in the state. The RFP closed on June 15, 2020. In the meantime, Avangrid Renewables owns the lease offshore North Carolina, but the power from this project, known as Kitty Hawk, is expected to come onshore near Virginia Beach, Virginia, and feed into the mid-Atlantic and not supply North Carolina directly.
Federal Permitting Delays and Related Federal Actions
BOEM Permitting Delays Hamper Vineyard Wind and Other Projects
BOEM has the lead for designating wind energy areas (“WEAs”) in federal waters and is responsible for approving all developer plans such as construction and operation plans (“COPs”). To date, BOEM has auctioned off 16 leases—most under a competitive auction process—and is planning further lease areas possibly off the eastern end of Long Island and perhaps off the coast of California. However, its processing of COPs has been delayed due to the need for supplemental environmental impact statements and reviews that BOEM states is due to the number of wind farms planned for the same area off the coast of New England as well as potential for conflicts with commercial and recreational fishing. .
Siting and fishing conflicts off New England have forced BOEM to delay approving plans for the major Vineyard Wind project 14 miles off Martha’s Vineyard and Nantucket, MA. In fact, siting and fishing conflicts forced BOEM to issue a Supplemental Environmental Impact Statement (“SEIS”) for Vineyard Wind in light of other nearby wind farms. BOEM announced availability of the SEIS on June 12, 2020. Comments may be submitted until July 27. The notice of a final SEIS is anticipated on November 13, 2020, with a Record of Decision expected on December 18, 2020.
Interested parties can submit comments and participate in the upcoming round of five virtual webinars between June 26 and July 9, 2020. So far, Vineyard Wind, AWEA, and other interested groups are praising BOEM for finishing the draft on time. But it remains to be seen what BOEM will decide must be done to mitigate what the draft SEIS calls “major adverse impacts” on the commercial fishing industry. Already Vineyard Wind and other developers have announced delays in their projects until at least 2021.
In an abundance of caution and perhaps due to staffing shortages, BOEM is only processing one COP at a time. Therefore, other COPs from major developers are waiting behind the Vineyard Wind project, which is certainly slowing down the permitting and construction process. This, in addition to COVID-19, is leading to delays for many other offshore wind projects.
Coast Guard and Port Access Route Studies
Now that BOEM has approved multiple WEAs and multiple projects are planned along the Atlantic Coast, the Coast Guard has initiated a series of Port Access Route Studies to review the planned wind farms and determine whether and how they affect shipping lanes. The first such study under review is the one for the WEA offshore Massachusetts and Rhode Island. The Coast Guard’s May 27, 2020 Final Report recommends turbine layouts be in standard and uniform grid patterns to accommodate vessel transits, fishing operations, and search and rescue operations. It concludes that such uniform grid pattern will avoid the need for formal routing measures. The study was completed on May 27, 2020, and largely adhered to the wishes of the developers to allow their spacing plan. Once again, it remains to be seen how BOEM will reconcile its findings on transit lanes and protections for commercial fishing with the Coast Guard’s earlier findings.
Tax Credits for Renewable Energy May Be Extended
In response to an inquiry from Senator Chuck Grassley (R-IA) and Chair of the Senate Finance Committee, the Treasury Department extended the deadlines for both the investment tax credit and production tax credit by one year for certain developments. In the meantime, offshore wind associations are advocating for more permanent extensions in upcoming stimulus bills and possibly a grant in lieu of a tax credit, an option that was authorized in the 2009 American Recovery and Reinvestment Act and enacted after the last financial crisis.
Impact of COVID-19
There are understandable delays in supply chains for offshore wind farms due to COVID-19. As noted above, some major developers have announced delays to U.S. offshore wind projects due in part to COVID-19. The major impact of COVID-19 appears to be the lack of present political attention to state renewable energy goals in light of the paramount importance of addressing the pandemic. However, the state laws and executive orders are still on the books and we anticipate further action when the crisis is abated.
Congress has already enacted several stimulus bills in response to the crisis and we expect future bills to include energy and infrastructure development. At that time, there is a possibility, especially from the House and Senate Democrats, that any infrastructure bill will include clean energy goals and possibly tax credit extensions.
While COVID-19 is having an impact on the supply chain and permitting delays at BOEM are also impeding progress, state goals keep moving forward to achieve expansive renewable energy goals, of which offshore wind is playing a major part. Future stimulus packages may also address the need for continued tax incentives and specific renewable energy goals for new and needed transportation infrastructure.
This article is one in a series of articles written for Blank Rome's MAINBRACE: Special Offshore Wind Edition (June 2020).