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Monday, February 7, 2011

Another Big News Day: Salazar, Chu Announce Major Initiatives; News out of RI and NJ

DOE, DOI Announce Inter-Agency Offshore Wind Initiative: Funding for R&D Projects Solicited and New Wind Energy Areas Identified

Although recent events have suggested that the Obama administration's goal to generate 80% of the Nation's energy from carbon-neutral generation is at loggerheads with regulatory progress, DOI Secretary Salazar and and DOE Secretary Chu today unveiled the first-ever inter-agency Strategic Work Plan in support of offshore wind. The Strategic Work Plan, part of the National Offshore Wind Strategy, incorporates and expands upon the "Smart from the Start" program announced by Secretary Salazar in November 2010. The Strategic Work Plan will begin with two major initiatives: (1) $50.5 Million in funding for research and development; and (2) the continued identification of "Wind Energy Areas."

First, DOI and DOE have announced up to $50.5 Million to fund research and development projects that will contribute to the efficient development of domestic offshore wind projects. Today, the first round of funding was announced in the following three areas:



  • Technology Development (up to $25 million over 5 years): DOE will support the development of innovative wind turbine design tools and hardware to provide the foundation for a cost-competitive and world-class offshore wind industry in the United States. Specific activities will include the development of open-source computational tools, system-optimized offshore wind plant concept studies, and coupled turbine rotor and control systems to optimize next-generation offshore wind systems.
  • Removing Market Barriers (up to $18 million over 3 years): DOE will support baseline studies and targeted environmental research to characterize key industry sectors and factors limiting the deployment of offshore wind. Specific activities will include offshore wind market and economic analysis; environmental risk reduction; manufacturing and supply chain development; transmission planning and interconnection strategies; optimized infrastructure and operations; and wind resource characterization.
  • Next-Generation Drivetrain (up to $7.5 million over 3 years): DOE will fund the development and refinement of next-generation designs for wind turbine drivetrains, a core technology required for cost-effective offshore wind power.
See DOI Press Release.

Second, Secretary Salazar also announced several new "wind energy areas" (WEAs) located on the Outer Continental Shelf off the coasts of Delaware (122 square nautical miles), Maryland (207), New Jersey (417), and Virginia (165). See here for a map of the new WEAs. Additional new WEAs off of Massachusetts, Rhode Island, and the Southern Atlantic Region will be identified by DOI by Spring 2011. The WEAs, part of the Smart for the Start program initiative to reduce permitting and leasing process time, will allow developers to take advantage of pre-existing and/or approved coordinated environmental studies, large-scale planning (such as ocean zoning and mapping studies), as well as expedited approval processes.

The Offshore Wind Strategy will be employed in furtherance of the Obama administration's goal of generating 80% of the Nation's electricity from carbon-neutral generation projects by 2035. See State of the Union Address, January 25, 2011. Under the Offshore Wind Strategy, 10 gigawatts of offshore wind generating capacity will be deployed in state and federal waters by 2020 (enough to power 2.8 million homes) and another 54 gigawatts will be deployed by 2030 (enough to power 15.2 million homes).

State Developments:

Much Bigger NJ Offshore Wind Farm?

New Jersey is going to be a hot spot for the foreseeable future. First, later this week, we expect that the New Jersey Board of Public Utilities will issue regulations implementing the requirements of last August's Offshore Wind Economic Development Act. More information to come on that later this week.

However, there also appears to be some changes in the development plans for the wind farms currently proposed off of the New Jersey coastline. At last week's GreenPower Conference, "Offshore Wind Power USA: Creating a Roadmap for Commercially Successful Offshore Wind Projects" in Boston, Robert Gibbs, Vice President of the Deepwater Wind/ PSEG Global collaborative offshore wind development group Garden State Offshore Energy, provided a rather startling update regarding its New Jersey project. Up until last week, GSOE had been saying that its plan was to develop a utility scale project of approximately 350 megawatts of name plate capacity approximately 20 miles off of Cape May, New Jersey. During last week's conference, Mr. Gibbs' presentation included a slide which suggests that GSOE may be intending to expand its development plan to provide for a utility scale project of up to 1,000 megawatts of name capacity. Notably, GSOE's development arm, Deepwater Wind, recently made a similar announcement with regard to its Rhode Island Sound project.

GSOE's plan to radically increase the size of its project is in part motivated by seeking economy of scale benefits now available via larger, more productive turbines. However, it also creates a potentially dicey competitive environment for the other New Jersey developer, Fishermen's Energy. Under New Jersey's offshore wind energy legislation, the OWEDA, direct funding and financial incentives are directed for up to 1,100 megawatts of offshore energy generation. Thus, if the GSOE project encompasses 1,000 megawatts, it essentially eliminates incentives for projects other than the GSOE project.

Rhode Island: One Less Opponent for Block Island

There is one less opponent to Deepwater Wind's proposed 6-turbine offshore wind installation near Block Island. Rhode Island Attorney General Peter Kilmartin dropped his office’s appeal of the power purchase agreement between Deepwater Wind and National Grid. The appeal, which is set to be heard in the first quarter of 2011, was filed after the state’s Public Utilities Commission approved a price agreement for the sale of electricity from the planned Block Island wind farm.

The appeal will nevertheless proceed because three other petitioners, the Conservation Law Foundation and two manufacturers, are still actively involved in the proceeding.

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