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Wednesday, October 6, 2010

Secretary Salazar and Cape Wind Sign First Commercial Lease

Following his keynote speech this morning at the third annual American Wind Energy Association ("AWEA") Offshore Wind Conference in Atlantic City, New Jersey, DOI Secretary Salazar was joined onstage by Cape Wind President Jim Gordon and AWEA President Denise Bode to sign a commercial lease for submerged federal lands.

The lease, which grants Cape Wind the right to develop submerged lands in the Outer Continental Shelf off the coast of Nantucket, MA, is the first of its kind, and has been over 8 years in the making. Cape Wind expects to install 140 turbines in Nantucket Sound. The maximum capacity of the Cape Wind installation is 462 mW, with a expected output of 180mW. Cape Wind will generate enough electricity to power about 200,000 homes.

As a large crowd of AWEA conference attendees looked on, Salazar and Gordon prepared to sign the lease. Gordon, who has been the President and primary financial stakeholder in Cape Wind since its inception in 2002, was clearly eager to sign the lease. Salazar asked Gordon to offer a few remarks before signing the document, joking that Gordon's eagerness was comparable to "waiting 8 years to marry someone." Gordon then thanked the Secretary and the administration for personally engaging with him and Cape Wind to see the project towards fruition. Gordon noted that Salazar was a particular champion of offshore wind projects and that due to his personal commitment and determination, necessary deadlines and clear regulatory processes were finally being issued and implemented at state and federal levels. Gordon highlighted that the effect of this lease and of the leases to come for other offshore wind projects will have the effect of ensuring a boundless supply of clean, efficient, and cost effective energy for our future.

Salazar and Gordon recieved a standing ovation from the conference attendees after the lease was signed.

Secretary Salazar's keynote speech was a paean to the Obama administration's efforts to invest time, money, and sweat equity in the success of the United States' renewable energy industry-- with an especial focus on offshore wind development. The Secretary noted that he had just issued an approval for two large scale solar installations (also the first of their kind) on federal lands located in California.

With regard to the nascent offshore wind industry, Secretary Salazar stated that it is important for developers and industry stakeholders to be "smart from the start." Secretary Salazar identified five areas where smart development is essential:

(1) Governmental coordination: Secretary Salazar commended the support of DOE's Secretary Chu as well as the success of interstate cooperative initiatives such as the Atlantic Governor's Consortium as well as state specific initiatives.

(2) Site Identification: The Secretary stated that BOEMRE will have completed its analysis and identification of high priority sites for offshore wind development by the end of 2010.

(3) Streamlining the Permitting Process: The Secretary acknowledged that the present BOEMRE permitting and leasing scheme is not a final polished process and that developers and stakeholders should view the regulations issued in May 2009 as a baseline framework. The Secretary encouraged the audience members to recommend concrete suggestions to streamline the regulatory process in order to speed project development and encourage financial investment in offshore wind. Specifically, Secretary Salazar noted that he expects the regulatory process to become significantly less cumbersome as more and more information about topics such as metocean planning, bathymetry, and ornithological and ichthyological studies are completed. The Secretary recognized that many of the studies and submissions require applicants to perform tasks duplicatively-- even just at the federal level. Accordingly, the next iteration of the regulatory process needs to be more efficient.

(4) Transmission: The Secretary indicated that DOI is seriously reviewing the construction of a transmission "backbone" that would connect offshore projects up and down the eastern seaboard to one another and to the existing grid. Notably, the "backbone" transmission proposal is one of the most promising solutions for intermittency issues inherent in offshore wind power generation.

(5) Investment: The Secretary acknowledged that without investor support, there will be no industry-- and that without a clear, predictable, and coordinated permitting process, investors are unable to ensure a return on their investment within any reasonable period of time. Accordingly, the Secretary recognized that the current estimated timeline to proceed through the regulatory process -- 7-9 years-- is simply unacceptable.

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