tag:blogger.com,1999:blog-36525190020561411942024-03-12T22:00:58.839-07:00Ocean & Offshore Energy Projects and Policy BlogAnalyzing United States Offshore Energy Law, Policy, and DevelopmentJennifer Simon, Esq.http://www.blogger.com/profile/08405807621514416009noreply@blogger.comBlogger50125tag:blogger.com,1999:blog-3652519002056141194.post-71753589805703559532013-08-21T11:14:00.001-07:002013-08-21T11:14:43.091-07:00DOI Completes First Offshore Energy Area Auction, Prepares for Virginia Auction in September<!--[if !mso]>
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<span style="font-size: x-small;">This post was originally published for the American Bar Association Section of Environment, Energy and Resources <a href="http://www.americanbar.org/content/dam/aba/publications/nr_newsletters/mr/201308_mr.authcheckdam.pdf" target="_blank">Marine Resources Committee Newsletter</a>, Vol. 16, No. 2 (August 2013). </span> <br />
<br />
On July 31, 2013, the Bureau of Ocean Energy Management, an office within
the U.S. Department of the Interior, held the first ever subsea land auction for
the purpose of developing an offshore wind farm on the outer continental shelf.<span style="mso-spacerun: yes;"> </span>The land area, which was previously
designated as a Wind Energy Area (“WEA”) as part of BOEM’s Smart from the Start
program, consists of two lease areas located approximately 9.2 nautical miles off
the coast of Rhode Island and Massachusetts.<span style="mso-spacerun: yes;"> </span>Deepwater Wind, the developer of a demonstration scale 30 MW offshore
wind project near Block Island, Rhode Island, is the provisional winner for
both lease areas.<span style="mso-spacerun: yes;"> </span><br />
<br />
The 257-square mile Wind Energy Areas consist of a North Lease Area (Lease OCS-A0486)
and a South Lease Area (Lease OCS-A0487). <span style="mso-spacerun: yes;"> </span>The North Lease Area consists of about 97,500
acres and the South Lease Area covers about 67,250 acres. <span style="mso-spacerun: yes;"> </span>The combined lease areas have potential to
support 3,395 megawatts of wind generation—more than seven times the rate
expectancy for the Cape Wind Farm in Nantucket Sound-- <span style="mso-spacerun: yes;"> </span>enough to power more than 1 million homes,
according to the Department of Energy’s National Renewable Energy Laboratory.<span style="mso-spacerun: yes;"> </span>Deepwater Wind has stated that it plans to
build an offshore wind farm of up to 1,000 megawatts with more than 100
turbines in the two lease areas.<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhKteWZx9KX0DyacnnirDK5bRAz8XjiGfOVIjeix8aJ7axWLJaY_qrWr2Bu1hR4JCHHM33Wvhds9edplUZXHZsiWjiSbJoSTACC-RGWTIlWNVkg5y2bYsozlMAthSx8DpdupsVhiUXcMKIy/s1600/RI_MapS.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhKteWZx9KX0DyacnnirDK5bRAz8XjiGfOVIjeix8aJ7axWLJaY_qrWr2Bu1hR4JCHHM33Wvhds9edplUZXHZsiWjiSbJoSTACC-RGWTIlWNVkg5y2bYsozlMAthSx8DpdupsVhiUXcMKIy/s1600/RI_MapS.jpg" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Image via U.S. Department of the Interior. Additional maps for these areas are available on BOEM's <a href="http://www.boem.gov/Renewable-Energy-Program/State-Activities/Rhode-Island.aspx">website</a>.</td></tr>
</tbody></table>
Now that the auction is complete, the Attorney General, in consultation with
the Federal Trade Commission, has thirty days to complete an antitrust review
of the winning bids. <span style="mso-spacerun: yes;"> </span>Following that
review, BOEM must send unsigned copies of the lease form to Deepwater Wind, who
has 10 days in which to execute and return the lease, file financial assurance
materials and pay the balance on its winning bid.<br />
<br />
Deepwater Wind’s leases have a preliminary term of 6 months.<span style="mso-spacerun: yes;"> </span>During this preliminary term, Deepwater Wind
must submit a Site Assessment Plan (SAP) to BOEM for approval. The SAP, among
other things, must include a detailed explanation of the activities Deepwater
Wind plans to undertake to assess wind, ocean, and metocean conditions.
Following BOEM’s approval of the SAP, Deepwater Wind will have 4 and 1/2 years
in which to submit a Construction and Operations Plan (COP) for approval. After
the COP is approved, BOEM will grant Deepwater Wind a 25 year operations term lease.<span style="mso-spacerun: yes;"> </span><br />
<br />
Although nine bidders were pre-qualified to participate in the auction, only
three bidders actually participated in the auction:<span style="mso-spacerun: yes;"> </span>Providence, RI-based Deepwater Wind,
Philadelphia-based Sea Breeze Energy, and U.S. Wind, a company with ties to an
Italian energy conglomerate.<span style="mso-spacerun: yes;"> </span>None of the
bidders were aware of which companies were bidding against them during the
course of the auction.<span style="mso-spacerun: yes;"> </span><br />
BOEM set opening-round prices for each lease and then raised the prices in
subsequent rounds of the auction.<span style="mso-spacerun: yes;">
</span>Bidding for the north section started at $2 an acre, or $194,996.<span style="mso-spacerun: yes;"> </span>Bidding for the south section opened at $1 an
acre, or $67,252.<span style="mso-spacerun: yes;"> </span>The sale of the north
lease went on for 11 rounds before ending with Deepwater Wind’s $3,744,135
bid.<span style="mso-spacerun: yes;"> </span>The sale of the south lease went on
for only two rounds before Deepwater Wind won with its bid of $94,000.00. <span style="mso-spacerun: yes;"> </span><br />
<br />
BOEM will hold its next competitive lease sale for Virginia’s 112,800 acre
Wind Energy Area on Sept. 4, 2013.<span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span>BOEM has stated that it expects to announce
additional auctions for Wind Energy Areas offshore Massachusetts, Maryland, and
New Jersey later this year and in 2014. <br />
<br />
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Jennifer Simon, Esq.http://www.blogger.com/profile/08405807621514416009noreply@blogger.com0tag:blogger.com,1999:blog-3652519002056141194.post-54335262430458737622013-06-05T08:08:00.003-07:002013-06-05T08:08:37.213-07:00Massachusetts/ Rhode Island Wind Energy Area Lease Auction Slated for July 29 and 31, 2013!<span style="font-family: Times, Times New Roman, serif;">On Tuesday June 4, 2013, the Department of the Interior's Bureau of Ocean Energy Management (BOEM) <a href="http://www.doi.gov/news/pressreleases/interior-announces-first-offshore-renewable-energy-lease-sale.cfm" style="color: #1155cc;" title="Interior Department press release">announced</a> that the first lease auction for commercial offshore wind energy projects will be held on July 29 and July 31, 2013. The final sale notice was published in the <a href="http://federalregister.gov/a/2013-13197" target="_blank">Federal Register</a> on Tuesday June 5, 2013.</span><br />
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<span style="font-family: Times, Times New Roman, serif;">The sale will auction an area previously designated by BOEM as the Rhode Island/ Massachusetts Wind Energy Area (MA/RI WEA) located 9.2 nautical miles south of the Rhode Island coastline. BOEM will divide the area into two lease areas, referred to as the North Lease Area (Lease OCS-A0486) and the South Lease Area (Lease OCS-A0487). The North Lease Area consists of about 97,500 acres and the South Lease Area covers about 67,250 acres. The National Renewable Energy Laboratory has stated that the North Lease Area has the potential for installed capacity of 1,955 megawatts (MW), and the South Lease Area has the potential to support 1,440 MW of installed capacity-- together, more than 3 gigawatts of electricity, enough to power more than 1 million homes. For a map of the MA/RI WEA, click <a href="http://www.boem.gov/Renewable-Energy-Program/State-Activities/Rhode-Island.aspx" id="http://www.boem.gov/Renewable-Energy-Program/State-Activities/Rhode-Island.aspx|" style="background-color: white; color: #336699; line-height: 16px; text-align: left; text-decoration: none;">here</a><span style="background-color: white; line-height: 16px; text-align: left;">. </span></span><br />
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<span style="font-family: Times, Times New Roman, serif;">The North and South Lease Areas will be auctioned simultaneously. BOEM will consider nonmonetary (i.e., whether a bidder holds a Joint Development Agreement or a Power Purchase Agreement) and monetary (cash bid) factors. The nonmonetary phase of the auction will begin on July 29, 2013, and the monetary phase on July 31, 2013. According to the Notice, the July 29/31 lease auction will be limited to nine bidders who previously responded to a BOEM Request for Interest in the MA/RI WEA and established technical, legal and financial eligibility with BOEM. These bidders include:</span><br />
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<li><a 16px="" font-family:="" href="http://www.dwwind.com/" imes="" left="" line-height:="" new="" roman="" serif="" target="_blank" text-align:="" times="">Deepwater Wind New England, LLC</a> (Block Island demonstration project developer)</li>
<li><a href="http://north-america.edf.com/activities/renewable-energy/united-states-46450.html" style="font-family: Times, 'Times New Roman', serif;" target="_blank">EDF Renewable Development, Inc.</a></li>
<li><a href="http://www.capewind.org/article27.htm" style="font-family: Times, 'Times New Roman', serif;" target="_blank">Energy Management, Inc. (</a><span style="font-family: Times, 'Times New Roman', serif;">Cape Wind's developer)</span></li>
<li><a href="http://www.fishermensenergy.com/" style="font-family: Times, 'Times New Roman', serif;" target="_blank">Fishermen’s Energy, LLC </a><span style="font-family: Times, 'Times New Roman', serif;">(Atlantic City demonstration project developer)</span></li>
<li><a href="http://www.iberdrolarenewables.us/" style="font-family: Times, 'Times New Roman', serif;" target="_blank">Iberdrola Renewables, Inc.</a></li>
<li><span style="font-family: Times, 'Times New Roman', serif;">Neptune Wind, LLC</span></li>
<li><a href="http://seabreezeenergyllc.com/" style="font-family: Times, 'Times New Roman', serif;" target="_blank">Sea Breeze Energy, LLC</a></li>
<li><a href="http://www.mainstreamrp.com/our-markets/onshore/us/" style="font-family: Times, 'Times New Roman', serif;" target="_blank">U.S. Mainstream Renewable Power </a><span style="font-family: Times, 'Times New Roman', serif;">(Offshore) Inc. (U.S. subsidiary of a large U.K. offshore wind developer)</span></li>
<li><span style="font-family: Times, 'Times New Roman', serif;">US Wind Inc.</span></li>
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<span style="font-family: Times, Times New Roman, serif;"><span style="line-height: 16px;">In addition to the list of eligible bidders, the notice contains specific information pertaining to the areas available for leasing, lease provisions and conditions, auction details, criteria for evaluating bids, award procedures, lease execution and other information. </span></span></div>
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<span style="font-family: Times, Times New Roman, serif;"><span style="line-height: 16px;">Department of Interior Secretary Sally Jewell, the recently appointed successor to Ken Salazar, indicated that a successful lease sale for the MA/RI WEA would accelerate offshore wind leasing for other designated WEAs along the eastern seaboard of the United States: “If there is good interest in this one, then I think you will have this happening on a consistent basis,” she said.</span></span></div>
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<span style="font-family: Times, Times New Roman, serif;"><span style="line-height: 16px;">Although the auction of subsea leases is an encouraging step for U.S. offshore wind developers, Secretary Jewell noted that development of the commercial offshore wind industry is in the hands of the private sector. “I can’t promise that they will be in production in four years, but we don’t want to be a roadblock,” Jewell said. “The market will dictate, but we certainly don’t want to get in the way.”</span></span></div>
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<span style="font-family: Times, Times New Roman, serif;"><span style="text-align: left;"><span style="line-height: 16px;">BOEM also issued a revised environmental assessment (EA) for commercial wind lease issuance and related activities within the MA/RI WEA. As a result of the analysis in the revised EA, BOEM issued a Finding of No Significant Impact, which concludes that reasonably foreseeable environmental effects associated with the commercial wind lease issuance and related activities will not impose a significant impact on the environment. The revised EA and Finding of No Significant Impact are available </span><a href="http://www.boem.gov/uploadedFiles/BOEM/Renewable_Energy_Program/State_Activities/BOEM%20RI_MA_Revised%20EA_22May2013.pdf" style="line-height: 16px;" target="_blank">here</a></span><span style="line-height: 16px; text-align: left;">. </span></span><br />
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Jennifer Simon, Esq.http://www.blogger.com/profile/08405807621514416009noreply@blogger.com0tag:blogger.com,1999:blog-3652519002056141194.post-32458207662497131172013-06-05T06:00:00.000-07:002013-06-05T06:00:19.827-07:00Maine installs first offshore turbine in the US!This is big news, folks. The people at the <a href="http://www.deepcwind.org/" target="_hplink">DeepCWind Consortium</a> will officially be the first to place a grid-connected wind turbine in U.S. coastal waters. As if this wasn't newsworthy enough, the Maine turbine is a floating
turbine-- a cutting edge technology that, if proven, could enable
construction of offshore wind energy projects in far deeper waters than
previous technology has permitted thusfar. Like I said: BIG NEWS. <br />
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On Friday May 31, 2013, a team comprised of the members of the <a href="http://www.deepcwind.org/" target="_hplink">DeepCWind Consortium</a>, including team leaders from the <a href="http://composites.umaine.edu/" target="_blank">University of Maine's Advanced Structures and Composites Center</a> supervised the placement of the 65-foot tall turbine into the Penobscot River at Brewer, Maine. The turbine, known as VolturnUS, is a 1:8 prototype of a proposed 6-megawatt turbine and will ultimately be towed out to a location in Castine Harbor, Maine once river-rise levels permit a safe journey for the turbine. If the 1:8 prototype proves successful, DeepCWind will construct and deploy two of the 6-megawatt turbines for its proposed Aqua Ventus I project which will be located in state waters off of Maine's Monhegan Island.<br />
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The VolturnUS will transmit power directly to the grid via subsea cables. DeepCWind has stated that the turbine is designed to withstand waves up to 60 feet high and winds up to 150 miles per hour-- that is, the types of conditions that might occur during an Atlantic hurricane.<br />
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Floating turbines present enormous opportunities for offshore wind development. Standard offshore turbines are typically installed in waters less than 30-meters deep due to practical limitations associated with the foundations located on the sea floor. However, floating turbines would enable offshore wind installations to be located in significantly deeper water. This would allow offshore wind projects to be placed further from shore or in areas such as the U.S. west coast where the ocean floor drops off significantly even close to shore. The VolturnUS project is one of only a handful of floating turbine projects worldwide which include one by Portugal's <a href="http://www.edp.pt/en/Pages/homepage.aspx" target="_blank">Energias de Portugal</a> and Seattle's <a href="http://www.principlepowerinc.com/products/windfloat.html" target="_blank">Principle Power </a><a href="http://www.earthtechling.com/2011/12/floating-wind-turbine-deployed-in-atlantic/" target="_hplink">off Portugal</a> and Norway's <a href="http://www.statoil.com/en/Pages/default.aspx" target="_blank">Statoil </a>North Sea <a href="http://www.statoil.com/en/TechnologyInnovation/NewEnergy/RenewablePowerProduction/Offshore/Hywind/Pages/HywindPuttingWindPowerToTheTest.aspx" target="_hplink"> Hywind</a> turbine which was installed in 2009.<br />
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The VolturnUS project has been funded in part by $12 million provided over the past
five years by the U.S. Department of Energy. “Led by the University of Maine, this project represents the first
concrete-composite floating platform wind turbine to be deployed in the
world – strengthening American leadership in innovative clean energy
technologies that diversify the nation’s energy mix with more clean,
domestic energy sources,” the DOE said in a <a href="http://energy.gov/articles/maine-project-launches-first-grid-connected-offshore-wind-turbine-us" target="_hplink">press release</a> as the VolturnUS demo turbine went into the Penobscot River on Friday.<br />
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The VolturnUS launch event was hosted by <a href="http://www.cianbro.com/News/tabid/220/EntryId/359/Cianbro-and-UMaine-Launch-First-Offshore-Wind-Turbine-in-North-America.aspx" target="_blank">Cianbro</a>. Among the dignitaries on hand for the ceremony were Sen. Susan Collins, Sen. Angus King, Rep. Michael Michaud, Jose Zayas of the U.S. Department of Energy, University of Maine System Chancellor James Page, UMaine Executive Vice President and Provost Susan Hunter, Cianbro CEO Peter Vigue and Dr. Habib Dagher, director of UMaine’s Advanced Structures and Composites Center.<br />
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During his preliminary remarks, Dr. Dagher noted that the VolturnUS received its name from a student at the University. The name breaks down into the descriptive components of "Volt" for electric voltage, "turn" to reflect turbine movement, and "US" to celebrate the first turbine located in U.S. waters. The name VolturnUS also pays homage to Volturnus, the Roman God of the East Wind.<br />
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Proponents of deepwater floating turbine projects in Maine hope to support the development of up to 5 gigawatts of power with arrays of up to 80 turbines floating in a 4 by 8-mile area in federal waters approximately 20 nautical miles from the coast by 2030. DeepCWind has stated that it believes that its turbine design will be able to produce electricity at 10 cents per
kilowatt-hour without subsidies, meeting a 2020 goal of the DOE.<br />
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<img alt="floating wind turbine" src="http://i.huffpost.com/gen/1171991/thumbs/o-FLOATING-WIND-TURBINE-570.jpg?6" /><br />
<span style="font-size: x-small;"><b>A large crane operated by Cianbro transitions VolturnUS into the Penobscot River.</b></span><br />
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Jennifer Simon, Esq.http://www.blogger.com/profile/08405807621514416009noreply@blogger.com0tag:blogger.com,1999:blog-3652519002056141194.post-75721477089371330512013-04-24T07:38:00.000-07:002013-04-24T07:38:09.427-07:00Maryland's Offshore Wind Energy Act of 2013On April 9, 2013, Maryland Governor Martin O'Malley signed the <a href="http://mgaleg.maryland.gov/2013RS/chapters_noln/Ch_3_hb0226E.pdf" target="_blank">Maryland Offshore Wind Energy Act </a>into law. <a href="http://www.nawindpower.com/new_home.php" target="_blank">North American WindPower</a> recently published an article highlighting the key components of the new legislation and featuring commentary by me! Feel free to click through to the original article <a href="http://www.nawindpower.com/e107_plugins/content/content.php?content.11406#.UXfo-sr1RGM" target="_blank">here</a>, or just scroll down for a reprint of the article below.<br />
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Stakeholders Weigh In On Maryland Offshore Wind </h3>
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by <a href="http://www.blogger.com/null" rel="external" target="_blank">Joseph Bebon</a> </div>
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The Maryland Offshore Wind Energy Act of 2013, recently signed
into law by Gov. Martin O'Malley, aims to help boost the local economy
and subsidize wind energy development off the state's coast. But what,
exactly, does the legislation do? And how have wind industry
stakeholders reacted to the new law?<br /><br />O'Malley introduced the
Maryland Offshore Wind Energy Act of 2013 in January, his third attempt
at establishing offshore wind legislation in three years. According to
the governor’s office, offshore wind development would lead to about 850
manufacturing and construction jobs and 160 post-development jobs for
activities such as operations and maintenance.<br /><br />At the core of the
new legislation is a financial mechanism to subsidize an offshore wind
project by altering Maryland’s renewable portfolio standard (RPS) and
establishing a charge on utility ratepayers’ monthly bills.<br /><br />The
law amends the state’s 20% by 2020 RPS, classifying offshore wind energy
as a Tier 1 renewable resource, creating an offshore renewable energy
credit (OREC) system and mandating a carve-out for the state’s
utilities. If an offshore wind project is proposed, permitted and
constructed, utilities will be required to begin procuring up to 2.5% of
their portfolio from offshore wind energy as early as 2017.<br /><br />To
help offset the increased costs to the state’s utilities, the
legislation will allow ratepayers to be charged an additional $1.50 per
month on their electricity bills only if and when an offshore wind farm
is built.<br /><br />Brian Redmond, partner at Paragon Energy Holdings, says
the law's $1.50/month cap sets the marker for what the public would be
willing to accept for a price subsidy for offshore wind.<br /><br />The law
uses a potential 200 MW offshore wind farm to gauge its cost-benefit
analysis and rate cap, but Jim Lanard, executive director of the
Offshore Wind Development Coalition, says interested developers may aim
to build a larger project.<br /><br />“The real cap is what the impact is on
the ratepayers. It’s not likely that you’re going to see developers bid
for less than 200 MW, because the cost of mobilizing and preparing a
wind farm doesn’t change if it’s for 50 MW or 500 MW - the planning is
all the same,” he explains.<br /><br />Lanard also believes the new law provides essential subsidies that could jump-start Maryland’s offshore wind industry.<br /><br />“Without
the legislation, there would be no offshore wind development off
Maryland,” he says. “In today’s economic environment, you can’t finance a
project without showing the banks or investors a revenue stream that
proves they are going to get paid back or see a return on investment.
You could build the power plant, but there wouldn’t be anyone to buy the
power.”<br /><br /><em><strong>Developers’ POV</strong></em><br />Following the legislation’s passage, Doug Copeland, regional development manager of EDF Renewable Energy, welcomed the news.<br /><br />"EDF
Renewable Energy supports Governor O'Malley's offshore wind bill and
commends the state in supporting this new industry,” Copeland said in a
written statement to <em><strong>NAW</strong></em>. “Our parent company,
EDF Energies Nouvelles, develops, builds, owns and operates multiple
offshore wind projects in Europe, and we are excited to begin these
efforts off the East Coast.<br /><br />“The governor and his staff have been
very thoughtful in how they have structured this bill to advance
offshore wind, especially in giving opportunities to Maryland
businesses,” he continued. “EDF RE believes offshore wind is a regional
effort and commends the state of Maryland for taking a lead. We believe
cooperation with other states will also be important to create
additional economic benefits. The efforts involved in putting together a
team and submitting a viable application will be substantial, and we
look forward to the opportunity."<br /><br />Even before this legislation
passed, however, there were a number of offshore wind developers eyeing
Maryland. In 2010, the Bureau of Ocean Energy Management issued a call
for interest from developers that would want to build an offshore wind
farm in the state’s designated wind energy area, located 10 to 30
nautical miles off Maryland’s coast. Six potential developers responded.<br /><br />One
such developer, RES Group, also welcomes Maryland’s new law but notes
that the legislation cannot solely create a strong offshore wind
industry in the U.S.<br /><br />“[This legislation] provides an important
and positive step toward realizing the significant potential that
offshore wind can bring to the United States in terms of energy
generation, investment and new jobs,” says Chris Morgan, CEO of RES
Offshore. “However, support for a project of around 200 MW will not, on
its own, be sufficient to stimulate the level of investment and
commitment that will be required by developers, manufacturers and
contractors to establish a viable and cost-effective sector.”<br /><br />“In
addition to ORECs,” Morgan continues, “the sector will seek the
strategic support that the tax credit legislation has provided to the
renewables industry in the past. The current ITC/PTC legislation will
benefit those projects that are ready to enter construction this year,
but beyond that, the absence of a clear vision for legislation will
place a constraint on further offshore development.”<br /><em><strong><br />Specificity</strong></em>Although
a few other states have offshore wind legislation, such as New Jersey’s
Offshore Wind Economic Development Act of 2010, Maryland’s law includes
several unique provisions.<br /><br />According to Jennifer Simon Lento,
associate at Nixon Peabody LLP, Maryland’s legislation outlines exactly
what is expected of potential developers.<br /><br />“In contrast to the
New Jersey legislation, which requires the New Jersey Board of Public
Utilities to apply a somewhat undefined ‘economic benefits’ test, the
Maryland legislation sets out a very specific list of criteria,
including a clearly defined cost-benefit analysis, that an applicant
must demonstrate before the Maryland Public Service Commission (PSC)
will issue ORECs,” Simon Lento explains.<br /><br />“The specific criteria
required under the legislation means both that the PSC will be able to
issue implementing regulations quickly and that developer applicants can
draft their applications with the confidence of knowing exactly what
needs to be included in the submission,” she continues. “Further, the
Maryland legislation is drafted to encourage competition among
developers to present projects with the most environmental, labor and
cost-savings benefits.”<br /><br />Paragon Energy Holdings' Redmond adds that the Maryland law could serve as a model for future offshore wind legislation.<br /><br />“Other
states that have yet to quantify the level of price support that their
constituents would be willing to bear - be it zero, $1.50 or $2.50 -
would be well served to at least establish that marker,” he says. “That,
in a sense, will give the industry certainty that they are not shooting
at a moving target.<br /><br />"In Maryland, developers know that if they
can get to the 1.50 per residential customer, then they have a deal.
Other states, such as North Carolina, Virgina and New Jersey, which are
embarking in wind development activities, would be well served to
provide certainty to developers so as to know what is politically
palatable to the ratepayers in order to attract offshore wind to their
states.”</td></tr>
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Jennifer Simon, Esq.http://www.blogger.com/profile/08405807621514416009noreply@blogger.com0tag:blogger.com,1999:blog-3652519002056141194.post-33006851343107995122013-04-17T08:38:00.000-07:002013-04-17T08:57:59.645-07:00Guest Post: IRS Notice 2013-29 on “Begun Construction” for certain renewable energy facilities<i>My colleag<span style="font-family: inherit;">ue <a href="http://www.nixonpeabody.com/forrest_david_milder" target="_blank">Forrest Milder</a>, an attorney in the <a href="http://www.nixonpeabody.com/renewable_energy_tax_credits" target="_blank">Renewable Energy Tax Credits and Finance practice</a> here at <a href="http://www.nixonpeabody.com/" target="_blank">Nixon Peabody</a>, authored the following client alert describing the <a href="http://www.irs.gov/pub/irs-drop/n-13-29.pdf" target="_blank">IRS' April 15, 2013 Notice</a> on what it means to have "Begun Construction" for the purpose of establishing eligibility for tax credits. </span></i><br />
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<i><span style="font-family: inherit;">The IRS' April 15 Notice sheds much needed light on this critical threshold that renewable energy developers must meet in order to incorporate tax credit financing as part of their financing structures. Developers of offshore wind projects that are essentially ready-to-build once financing is established (i.e., all state and federal permitting hurdles have been cleared), including <a href="http://www.capewind.org/index.php" target="_blank">Cape Wind</a>, <a href="http://dwwind.com/block-island/block-island-project-overview" target="_blank">Deepwater Wind's Block Island project</a>, and <a href="http://www.fishermensenergy.com/atlantic-city-windfarm.php" target="_blank">Fishermen's Energy's Atlantic City</a> project, will be looking to meet the December 31, 2013 deadline to take advantage of the tax incentives. In other words, the goal of meeting the "Begun Construction" test is one more reason to believe that we may see steel in the water before the end of 2013.</span></i><br />
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<i><span style="font-family: inherit;">Although IRS Notice 2013-29 offers some guidance with respect to the eligibility criteria, other questions still remain. For example, under the "Physical Work" test described below, </span></i><i><span style="font-family: inherit;"><span style="font-family: inherit;">the work must be a “continuous
program of construction,” subject to a list of permitted
disruptions such as“severe weather conditions”, “natural
disasters”, “labor stoppages” and “financing delays of less than six
months." Since offshore wind construction is subject to seasonal restrictions, it is not clear whether a work stoppage for winter would qualify as a permitted disruption. </span></span></i><br />
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<i><span style="font-family: inherit;"><span style="font-family: inherit;"> </span></span></i><i><span style="font-family: inherit;">The original version of this article reprinted below is available<a href="http://www.nixonpeabody.com/files/156424_SYND_Alert_04_16_13.pdf" target="_blank"> here</a>. For the benefit of the Ocean and Offshore Renewables blog readers, I have hyperlinked a few of the key documents discussed in Forrest's article.</span></i><br />
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<span style="font-family: inherit;">This client alert addresses an IRS notice issued on April 15, 2013, with great significance to projects that generate electricity from wind, geothermal, biomass, landfill gas, municipal solid waste, hydroelectric production, and marine and hydrokinetic energy.</span><br />
<span style="font-family: inherit;"><br />You will remember that before the <a href="http://www.gpo.gov/fdsys/pkg/BILLS-112hr8eas/pdf/BILLS-112hr8eas.pdf" target="_blank">American Taxpayer Relief Act of 2012</a> (ATRA) each of these technologies was eligible for a production tax credit (PTC) or investment tax credit (ITC) only if the facility was placed in service by the end of 2013 (except wind, which had to be placed in service by the end of 2012, and geothermal, which can also qualify for a 10% credit beyond that date). ATRA changed the sunset provision to depend on when the facility begins construction, rather than when the facility is placed in service. Now, if one of the facilities described above begins construction by December 31, 2013, it will be eligible for the applicable PTC or the 30% investment tax credit.</span><br />
<span style="font-family: inherit;"><br />On April 15, 2013, the IRS published Notice 2013-29, providing the tests that must be passed in order for these facilities to have “begun construction” by the end of 2013 and still qualify for tax credits. You will note that these tests are very similar to the Section 1603 Grant-in-lieu-of-tax-credit rules published by Treasury in connection with that program, which also has a begun construction requirement, albeit for projects placed in service after December 31, 2011.</span><br />
<span style="font-family: inherit;"><br />Like the Section 1603 program, there are two tests under the notice—the “physical work” test, and the “five percent safe harbor.” Passing either of these tests will be treated as beginning construction under the PTC and ITC rules. A very quick summary—</span><br />
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<span style="font-family: inherit;"><b>The Physical Work Test.</b> The work must be “physical,” such as setting anchor bolts or pouring concrete pads. The property must be “integral” to the activity, e.g., a transmission tower is not eligible. Note that “preliminary activities,” like designing the facility or securing financing do not qualify. Manufacturing components pursuant to a “binding written contract” is also includible, but not if the property is “in existing inventory or normally held in inventory by a vendor.” The work must also be a “continuous program of construction,” and the IRS has provided a list of permitted disruptions that range from “severe weather conditions” and “natural disasters” to “labor stoppages” and “financing delays of less than six months.”</span></blockquote>
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<span style="font-family: inherit;"><b>The Five Percent Safe Harbor.</b> Like Section 1603, the amount must be paid or incurred in accordance with the Section 461 regulations. Here, too, costs can be incurred pursuant to a binding written contract. An important new requirement states that the taxpayer must also make “continuous efforts to advance toward completion of the facility.” This is a significant change from the Section 1603 rules, which potentially allowed grandfathered equipment that met the five percent test to be warehoused and used years later. This new continuous efforts test is not unlike the rules that apply to the physical work test, bearing in mind that under the five percent test, the efforts do not have to be “physical”; illustrations include “paying or incurring additional amounts,” and “obtaining necessary permits,” as well as “performing physical work of a significant nature.” The notice repeats the exact same list of permitted disruptions that will not affect passing the “continuous efforts” test as applied to the “physical work” test.</span></blockquote>
<span style="font-family: inherit;">Four other things worth noting—first, there is no pre-approval process, like there was with the “preliminary applications” required under Section 1603. Second, there is no statement in the notice that a project must be specifically identified; it remains to be seen if that was an intentional omission. Third, the definition of “binding contract” is different from what it was under Section 1603; in the IRS notice, a contract is binding if it is “enforceable under local law against the taxpayer or a predecessor and does not limit damages to a specified amount (for example, by use of a liquidated damages provision).” Of course, under the Section 1603 rules, a provision limiting damages to five percent of the contract amount was specifically permitted. Finally, the notice gives two illustrations of the effect of cost overruns where the five percent safe harbor has been used—if the project consists of multiple facilities that could be operated independently (e.g., a wind farm), then the project may be scaled back (if necessary) to ensure that the smaller project passed the five percent test by the end of 2013. On the other hand, if the project is only one facility, e.g., a boiler and turbine generator, then it cannot be scaled back, and a cost overrun can be fatal. Other renewables that are still subject to the old rules. Thus, the tax credit rules for solar, fuel cells, small wind, microturbines, combined heat and power facilities, geothermal that generates heat, and geothermal that generates electricity, but that begins construction after 2013, continue to have the same placed-in-service tests as before ATRA. For example, solar facilities must still be placed in service by the end of 2016 to qualify for the thirty percent ITC. There is not a “begun construction” test for these facilities.</span><br />
<span style="font-family: inherit;"><br />For more information about renewable energy tax credits and/or IRS Notice 2013-29, please contact Forrest Milder at 617-345-1055 or fmilder@nixonpeabody.com, or Jennifer Simon Lento via this blog, at 617-345-1352, or at jsimonlento@nixonpeabody.com.</span>Jennifer Simon, Esq.http://www.blogger.com/profile/08405807621514416009noreply@blogger.com0tag:blogger.com,1999:blog-3652519002056141194.post-63433110143396008292013-03-27T09:14:00.000-07:002013-03-27T09:14:07.517-07:002013: A Big Year for Offshore WindIf you have been watching the offshore wind industry in the United States for the last decade -- and if you are reading this blog, I assume that you have -- you are probably tired of hearing the much-hyped announcement at the beginning of each year, <i>i.e.</i>, "THIS YEAR WILL BE THE YEAR THAT WE PUT STEEL IN THE WATER!!" Eleven months later, December arrives and we are forced to admit that this was not, in fact, "the year." <br />
<br />
Faithful readers, I beg you to put your skepticism and regulatory fatigue aside because 2013<b> </b>will actually<b> be</b> the year that we see the first wind turbines constructed in US waters. <br />
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<b>(1) Cape Wind Makes Strides Towards Obtaining Financing</b><br />
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More than twelve years after Cape Wind announced its plan to construct the United States' first offshore wind project in Nantucket Sound, the project's developers have signed on with the<a href="http://www.bk.mufg.jp/english/" target="_blank"> Bank of Tokyo-Mitsubishi UFJ (BTMU)</a> to arrange debt financing for the project. BTMU will also commit <a href="http://www.capewind.org/news1315.htm" target="_blank">"a significant amount of debt capital"</a> that will go toward development and
construction costs. Arranging financing for the project is the critical step that Cape Wind must complete before initiating construction on the project.<br />
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Cape Wind began seeking financing in 2012 after it finalized the second of its two 15-year power purchase agreements (PPA) with National Grid and NSTAR, the state's two
largest electric utilities. Cape Wind's PPAs account for 77.5% of its projected output.<br />
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Cape Wind Associates has designated<a href="http://www.barcap.com/client-offering/investment-banking/corporate-finance.html" target="_blank"> Barclays</a> to provide financial advisory services to Cape Wind. Barclays will continue to assist them to procure investors and equity financing for the project. Although Cape Wind has not disclosed its full project costs, <a href="http://www.capewind.org/news1315.htm" target="_blank">news analysts have predicted</a> that the project costs will approach $2.6 billion.<br />
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Cape Wind's deal with BTMU is strong evidence that the project is on track to meet its construction schedule. <a href="http://www.capewind.org/article26.htm" target="_blank">Cape Wind has stated</a> that it intends to begin <span class="pn-normal">construction on the planned 130 turbine-project by the end of 2013 with the expectation that the project will be partially commissioned in 2015 and fully
commissioned in 2016. </span><br />
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<span class="pn-normal">Potential investors have a keen interest in Cape Wind's ability to meet its end-of- 2013 "begin construction" milestone. </span><span class="pn-normal"><!--[if gte mso 9]><xml>
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</xml><![endif]--></span>If Cape Wind can begin construction before January 1, 2014, the American Taxpayer Relief Act
of 2012 (P.L. 112-240), or "ATRA", effective as of January 2, 2013, will enable Cape Wind to take advantage of the much-discussed Production Tax Credit ("PTC") or the Investment Tax Credit ("ITC"). <br />
<br />
Before the ATRA amendment, Internal Revenue Code Section 45(d)(1) provided that a project had to be placed in service “before January 1, 2013” in order to claim the PTC which is currently 2.2 cents per kilowatt hour sold to a third party. The January 2, 2013 Amendment now provides that a renewable energy project is eligible for the tax credit if
“the construction... begins before January 1, 2014”. In the same
legislation, a corresponding change inserting the language “the construction of
which begins before January 1, 2014” was made to Section 48(a)(5)(C)(ii) of the
Internal Revenue Code to allow facilities eligible under amended Section 45 the
option to elect to use the ITC in lieu of the extended PTC. <span class="pn-normal">The ITC will provide a potential investor with tax credits equivalent to up to 30% of the project cost. Of course, a project can only claim the ITC <b>or</b> the PTC-- not both.</span><br />
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Cape Wind says it has secured all if its federal and state permits and was the first recipient of a submerged land lease for the development of a renewable energy project in federal waters. Cape Wind has also received approval for its Construction and Operations Plan from the Department of the Interior.<br />
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<b>(2) DeepCWind Consortium to Install Floating Turbine in Maine State Waters</b><br />
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The <a href="http://www.deepcwind.org/" target="_blank">DeepCwind Consortium</a> is scheduled to place a one-eighth scale prototype of a floating deep-sea wind turbine
developed at the <a href="http://composites.umaine.edu/" target="_blank">Advanced Structures and Composites Center at the University of Maine</a> in Castine Harbor (mid-coast Maine)
sometime in April 2013. The prototype turbine would be the first ocean-based wind turbine installed in US waters. <br />
<br />
According to the most recent <a href="http://energy.gov/sites/prod/files/EA-1792-S1-DSEA-2013.pdf" target="_blank">Supplemental Environmental Assessment</a><a href="http://energy.gov/sites/prod/files/EA-1792-S1-DSEA-2013.pdf" target="_blank"> </a>documents filed with the Department of Energy in January, the 20 kilowatt floating prototype turbine tower has a total height of fifty-seven feet and will be moored with three lines and anchored at a thirty-meter depth. Its floating radius
will leave it five-hundred to one-thousand-feet west of land. The wind turbine is being built at the University of Maine's Advanced Structures and Composites Center. Once complete, the turbine will be shipped to marine construction and engineering firm <a href="http://www.cianbro.com/" target="_blank">Cianbro</a>'s facility in Brewer, Maine where it will be reconstructed in the Penobscot River. A <a href="http://www.mainemaritime.edu/" target="_blank">Maine Maritime Academy</a> tugboat will tow the turbine to its moorings in Castine Harbor. The turbine will be connected via a submerged cable to a small substation near Dyce Head that will feed the turbine's electric output into the grid. <br />
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The installation of the one eighth scale prototype is the second phase in DeepCwind Consortium's five-phase plan towards implementing a full-scale floating offshore wind farm off of the Maine coastline. The third phase, which is rumored to be scheduled to be implemented in the summer of 2013, includes the installation of up to two one-third scale (three hundred foot-tall) prototype floating turbines in the waters off of Monhegan Island. DOE has already issued a <a href="http://energy.gov/sites/prod/files/EA-1792-FONSI-2011.pdf" target="_blank">finding of no significant impact</a> with respect to the installation and testing of the one third scale turbines.<br />
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<span style="font-size: small;"><span style="font-family: inherit;">The development and testing of floating wind turbines in Maine is authorized and permitted in part<span style="font-size: small;"> </span>under<a href="http://www.mainelegislature.org/ros/LOM/LOM124th/124R1/PUBLIC270.asp" target="_blank"> Maine Public Law Chapter 270, An Act to Facilitate Testing and Demonstration of Renewable Ocean Energy Technology</a>, which provides generous permitting guidelines for projects located in designated deep water testing sites in Maine state waters. </span></span><br />
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<span style="font-size: small;"><span style="font-family: inherit;">The </span></span>DeepCwind Consortium consists of a collaboration of universities,
nonprofits, and utilities led by the University of Maine and funded in
part by the US Department of Energy and the National Science
Foundation. </div>
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Jennifer Simon, Esq.http://www.blogger.com/profile/08405807621514416009noreply@blogger.com0tag:blogger.com,1999:blog-3652519002056141194.post-80755226187163869832012-07-25T12:49:00.000-07:002012-07-25T12:49:11.528-07:00Summer 2012 Update: Projects and Agency DevelopmentsAlthough it's been pretty quiet in the U.S. offshore wind world this summer, there have been a few significant events both on the projects side and with respect to regulatory and agency developments. Cape Wind and Fishermen's Energy have reported important development and/or permitting milestones this summer. In addition, BOEM has published its Environmental Assessment for the Wind Energy Area (WEA) located off the coasts of Massachusetts and Rhode Island, as well as (in collaboration with FERC) updates to the guidelines governing new wave and tidal technologies.<br />
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<strong><u>Project Updates</u></strong> <br />
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<strong><em>Cape Wind: Litigation Dropped, Construction Surveys Begin</em></strong><br />
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<em>On June 26, 2012, Cape Wind </em><a href="http://www.capewind.org/news1261.htm" target="_blank"><em>announced</em></a><em> that a stipulation had been filed to resolve some of the claims in a pending litigation over fishing rights in Nantucket Sound.</em> The stipulation was filed by the Martha's Vineyard/Dukes County Fishermen's Association, who alleged that “[d]evelopment of the Cape Wind Energy Project will cause an effective closure of prime, historic fishing grounds on Horseshoe Shoal...” Several other plaintiffs listed in the lawsuit are still involved, including the Alliance to Protect Nantucket Sound, the town of Barnstable, and the Wampanoag Tribe of Gay Head (Aquinnah). The case is captioned as <em>Public Employees for Environmental Responsibility v. Bromwich</em>, 10-01067, and was filed in 2010 in the U.S. District Court, District of Columbia. <br />
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Although the settlement agreement with the Fishermen's Association was not officially disclosed, the Fishermen's Association now expresses unilateral support for the 120-turbine 468-megawatt wind farm: <br />
<blockquote class="tr_bq">
“Instead of being on different ends of the fence, we’re going to work together to determine which areas are open to fishing, what areas will be successful for different kinds of fishing and how to make that fishing safe and available to all fishermen,” said Warren Doty, president of the Fishermen's Association. </blockquote>
Mr. Doty further noted that in exchange for the Association's support, Cape Wind has agreed to support access and a new permit program for fishermen who make a living in the waters around Horseshoe Shoal: the newly-formed Martha’s Vineyard Fishermen’s Preservation Trust. The Trust will buy fishing permits and lease them at affordable rates to Island fishermen and will be operated through the Permanent Endowment for Martha’s Vineyard. The amount of any monetary contributions from Cape Wind toward the permit bank was not disclosed pursuant to a confidentiality agreement. <br />
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In addition, Mr. Doty said that the Association's initial concerns that an exclusionary zone would be created around the turbines have been addressed, with Cape Wind agreeing not to limit fishing access for the fishermen who harvest conch, scup and sea bass in the area. <br />
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<em>In early July, Cape Wind announced that it has initiated the next stages of geophysical and construction surveys that must be performed in advance of construction.</em> Cape Wind spokesman Mark Rogers reported that the survey would be a four-stage process building on work performed in previous years. <br />
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While earlier surveys related to Cape Wind's permitting efforts, the newest round of geotechnical survey work pertains to Cape Wind's final project design plans. Survey work will include investigations into sediment characteristics at the various depths at which Cape Wind expects to drive the wind-turbine foundation piles. Under the current plans, Cape Wind anticipates pile diameters of approximately 15-feet and expects to drive the foundations to a depth of about 80-feet below the sea bed.<br />
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The geotechnical survey work is being performed by the Dutch marine surveying company, <a href="http://www.fugro.com/" target="_blank">Fugro</a>. <a href="http://www.fugro.com/" target="_blank">Fugro</a> has conducted numerous marine based geotechnical surveys for oil and gas companies, mining operations, construction projects and many of the off-shore wind projects recently built in Europe. The company's U/S. headquarters is located in Norfolk, Virginia.<br />
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In addition to Fugro, <a href="http://fathomresearch.info/" target="_blank">Fathom Research</a> of New Bedford, MA will assist in the sediment analysis. Waltham, MA based <a href="http://www.essgroup.com/" target="_blank">ESS Group</a> will monitor and advise with respect to any potential disturbances to marine mammals. <br />
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<strong><em>Fishermen's Energy: </em></strong><br />
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<em>On July 19, 2012, <a href="http://www.fishermensenergy.com/index.html" target="_blank">Fishermen's Energy</a> <a href="http://www.fishermensenergy.com/press-releases/Press-Release%20Fishermen's-USACOE-Permits.pdf" target="_blank">announced </a>that (Atlantic City, NJ July 19, 2012) Fishermen’s Energy announced that it has received approval from the US Army Corp of Engineers (“USACOE”) for its Individual Permit under the Clean Water Act, for the Fishermen’s Atlantic City Windfarm (“FACW”).</em> Although Fishermen's Energy is still waiting to see whether the New Jersey Bureau of Public Utilities accepts its application under <a href="http://www.offshoreenergy.blogspot.com/2011/04/offshore-wind-state-update-mid-atlantic.html" target="_blank">New Jersey's Offshore Renewable Energy Credit</a> ("OREC") program, the Army Corps permit is the final federal permit required for the construction of the proposed 5-turbine Atlantic City area offshore wind farm.<br />
<blockquote class="tr_bq">
"This final permit from the US Army Corp of Engineers brings Fishermen’s Energy demonstration project off Atlantic City one step closer to fruition. This project is the catalyst needed to jumpstart the offshore wind industry in New Jersey and it sends the right signals to manufacturers that New Jersey is open for business," said Rhonda Jackson, Communications Director of Fishermen’s Energy.</blockquote>
<blockquote class="tr_bq">
"The Fishermen's Atlantic City Windfarm fully demonstrates how renewable energy projects can be developed in an environmentally responsible manner. Fishermen's Energy has worked diligently to ensure that all regulatory and environmental concerns raised by State and Federal agencies are completely addressed. This project will serve as an example of how offshore wind projects should be pursued" said Chuck Harman, Principal Ecologist and Project Manager for <a href="http://www.amec.com/" target="_blank">AMEC Earth & Environmental</a> (“AMEC”).</blockquote>
Before Fishermen’s Energy can begin construction, the company must finalize its status under the New Jersey OREC program as well as select its construction contractors. Fishermen's has indicated that it hopes to select New Jersey vendors whenever practical and plans to commence onshore port and facilities construction in Atlantic City in 2013 with offshore construction and commissioning in 2014.<br />
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<strong><u>BOEM and FERC Updates</u></strong><br />
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<strong><em>MA/RI Environmental Assessment:</em></strong><br />
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On July 2, 2012, Secretary of the Department of the Interior, Ken Salazar, <a href="http://www.doi.gov/news/pressreleases/Salazar-Announces-Onshore-Offshore-Wind-Energy-Milestones.cfm" target="_blank">announced</a> the publication of an <a href="http://www.boem.gov/uploadedFiles/BOEM/Renewable_Energy_Program/Smart_from_the_Start/BOEM_RI_MA_EA_2012-070_719.pdf" target="_blank">environmental assessment</a> for commercial wind leases and site assessment activities on the Outer Continental Shelf off of Rhode Island and Massachusetts (the EA). This EA pertains to an area also known as the "Area of Mutual Interest" or "AMI" pursuant to an agreement between Massachusetts and Rhode Island. A copy of the Federal Register Notice of Availability is available <a href="http://www.boem.gov/uploadedFiles/2012-16155.pdf" target="_blank">here</a>. BOEM will accept public comments on the EA until August 2, 2012 and will consider any comments submitted before determining whether to issue a Finding of No Significant Impact (FONSI), require revisions to the EA, or determine that a more comprehensive Environmental Impact Statement is required. <br />
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In sum, the EA considers six (6) alternative approaches to leasing submerged land in the AMI, including one "no action alternative." The six alternatives are:<br />
<ol>
<li>Lease issuances in all areas of the designated AMI Wind Energy Area (WEA)-- This is the proposed action and preferred alternative. </li>
<li>Lease issuances in all areas of the designated AMI WEAs, with certain areas designated as important to North Atlantic Right Whales excluded. </li>
<li>Exclusion of all areas within the AMI WEA that are located within 15 nautical miles of inhabited Massachusetts coastal areas.</li>
<li>Exclusion of all areas within the AMI WEA that are located within 21 miles of inhabited Massachusetts coastal areas.</li>
<li>Exclusion of any areas within the AMI WEA that are host to submerged telecommunications cables.</li>
<li>No action alternative.</li>
</ol>
BOEM hosted information sessions in Rhode Island and Massachusetts to provide additional opportunities for public input on the Environmental Assessment and to explain the commercial leasing process on July 16 and on July 17. A copy of BOEM's presentation is available <a href="http://www.boem.gov/uploadedFiles/BOEM/Renewable_Energy_Program/Smart_from_the_Start/BOEM%20RI%20EA%20info_meeting071612%20Presentation%20(2).ppt" target="_blank">here</a>. <strong><em></em></strong><br />
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<strong><em>BOEM and FERC Revise Guidelines for Wave and Tidal Projects:</em></strong><br />
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On July 19, 2012, The Bureau of Ocean Energy Management (BOEM) and the Federal Energy Regulatory Commission (FERC) <a href="http://www.boem.gov/BOEM-Newsroom/Press-Releases/2012/Press07192012.aspx" target="_blank">announced </a>revised guidelines for potential marine hydrokinetic energy developers interested in pursuing technology testing and commercial development activities on the nation’s Outer Continental Shelf (OCS). The revised guidelines replace 2009 guidelines issued by BOEM’s predecessor agency, the Minerals Management Service (MMS), and FERC and are available <a href="http://www.boem.gov/BOEM-Newsroom/Press-Releases/2012/BOEM-FERC-staff-guidelines-pdf.aspx" target="_blank">here</a>. <br />
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Wave and tidal generation projects located on the OCS are subject to approval and permitting requirements overseen by both BOEM and FERC. This joint agency oversight was established pursuant to a <a href="http://www.boem.gov/Renewable-Energy-Program/DOI_FERC_MOU.aspx" target="_blank">Memorandum of Understanding</a> between the Department of the Interior and FERC that was issued in April 2009. <br />
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Like the 2009 guidelines, the revised guidelines include an explanation regarding the respective responsibilities of each agency and instructions on how best to navigate the process of obtaining a marine hydrokinetic lease and license on the OCS. Topics include, among others: provisions for obtaining leases and licenses, fee structures, and hybrid (<em>e.g</em>., wind and marine hydrokinetic) project considerations. The revised guidelines were issued to "promote further clarity for the regulatory process and facilitate a more efficient process in authorizing marine hydrokinetic (<em>e.g.</em>, energy developed from waves and ocean currents) research and testing activities."Jennifer Simon, Esq.http://www.blogger.com/profile/08405807621514416009noreply@blogger.com2tag:blogger.com,1999:blog-3652519002056141194.post-73302081718402924522012-04-25T08:10:00.000-07:002012-04-25T08:10:29.088-07:00Offshore Energy Blog Author Featured in Law360: BOEM Requests Comments on Limited Lease for New Hydrokinetic TechnologyIt's been relatively quiet in the U.S. offshore wind industry lately, so it's great to see some movement in other ocean-energy development projects. Yesterday, <a href="http://www.boem.gov/">BOEM</a> <a href="http://www.boem.gov/BOEM-Newsroom/Press-Releases/2012/press04242012.aspx">announced</a> that it has published a <a href="http://www.archives.gov/federal-register/public-inspection/index.html">Notice</a> in the Federal Register announcing the beginning of a 30 day public comment period on an environmental assessment that considers the effects of issuing a lease for testing equipment designed to use the force of ocean currents to generate renewable energy. <br />
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The lease would be the first limited lease granted for the purpose of testing experimental hydrokinetic devices that produce energy from ocean and tidal currents on the outer continental shelf. The applicant, <a href="http://www.fau.edu/" target="_blank">Florida Atlantic University</a>, hopes that the lease will lead to the development of successful power-producing hydrokinetic instruments that can be deployed for commercial energy production. The proposed lease area is 17,080 total acres and is located approximately nine to 15 nautical miles offshore Fort Lauderdale. <br />
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<a href="http://www.law360.com/articles/333446/boem-considers-first-offshore-hydrokinetic-power-lease">Law360</a> published an article including additional details about the project and featuring the following third party commentary from yours truly: <br />
<blockquote>
Energy and project finance attorneys are keeping a close eye on new hydropower technologies, like the ones Florida Atlantic University seeks to test, according to Jennifer Simon Lento of <a href="http://www.nixonpeabody.com/" target="_blank">Nixon Peabody LLP</a>, an attorney who writes an offshore energy blog. </blockquote>
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Despite advances in land-based wind and solar power, the U.S.' enormous clean energy resources remain underutilized, and efforts to increase offshore energy production deserve support, Lento said. </blockquote>
<blockquote class="tr_bq">
“This is a very important intermediary step to progressing a new ocean-based energy technology, but it's still an early step," Lento said. “Any time I see the government clearing the way to allow one of these other technologies to move forward, it can only be a good thing.” </blockquote>Jennifer Simon, Esq.http://www.blogger.com/profile/08405807621514416009noreply@blogger.com3tag:blogger.com,1999:blog-3652519002056141194.post-15237738073461992422012-02-17T13:06:00.001-08:002012-02-27T14:39:52.453-08:00Cape Wind: Ready to Seek Project FinancingFollowing years of challenges, litigations, delays, and concerns, <a href="http://www.capewind.org/index.php">Cape Wind</a> has <a href="http://www.capewind.org/news1235.htm">announced</a> that it is ready to seek project financing for its 420 megawatt 130-turbine offshore wind generation project in Nantucket Sound. The announcement was made in the wake of a <a href="http://www.mass.gov/eea/pr-2012/120215-pr-nstar-nu-merger.html">deal brokered by Massachusetts’ Governor Deval Patrick’s administration </a>with respect to a proposed merger between <a href="http://www.nstar.com/about_nstar/">NSTAR Electric Company, NSTAR Gas Company</a>, and <a href="http://www.wmeco.com/">Western Massachusetts Electric Company </a>and its holding company parent <a href="http://www.nu.com/">Northeast Utilities</a>. The proposed merger includes a condition that requires the merged utility to purchase 27.5% of Cape Wind’s output—that is, 129 megawatts of capacity from the proposed 468-megawatt project—via a 15 year power purchase agreement (“PPA”). In combination with the sale of 50% of its output to National Grid, Cape Wind now has buyers for 77.5% of the wind farm’s total proposed output which Cape Wind President Jim Gordon has stated is enough to seek project financing. <br /><br />Before investors will commit to financing the project, merchant generators such as Cape Wind must demonstrate that investors will be able to earn a return on their investment. For energy generators, this means securing purchasers for the majority of the energy generation project’s proposed output—usually via a PPA. <br /><br />The PPA with NSTAR is one of several conditions of a settlement brokered by the Patrick administration with respect to the NSTAR/ Northeast Utilities merger, a $17.5 billion transaction. The merger has been heavily litigated since the utilities initially petitioned the <a href="http://www.mass.gov/eea/grants-and-tech-assistance/guidance-technical-assistance/agencies-and-divisions/dpu/">Massachusetts Department of Public Utilities (DPU)</a> for approval in 2010. Under the proposed settlement, the utilities will be permitted to merge subject to certain conditions designed to create enhanced benefits for Massachusetts ratepayers. Thus, conditions include a four-year freeze on base energy distribution rates and a one-time $21 million credit for ratepayers. Massachusetts Attorney General Martha Coakley has stated that the deal will save Massachusetts consumers an estimated $217 million. Copies of the proposed settlement documents are available <a href="http://www.mass.gov/eea/energy-utilities-clean-tech/electric-power/proposed-nstar-nu-merger-settlement-documents.html">here</a>. <br /><br />If the DPU approves the settlement proposal and allows the merger, NSTAR will have to negotiate the price terms of the PPA with Cape Wind. Under the proposed Settlement, NSTAR and Cape Wind must file a Memorandum of Understanding ("MOU") with DPU within 20 days of the Settlement to set forth proposed timetables and methods by which the parties will negotiate the terms of the PPA. In turn, the parties must file an executed PPA with DPU no later than March 30, 2012. See <a href="http://www.mass.gov/eea/docs/dpu/electric/dpu-10-170-settlement-agreement-nstar-nu-merger.pdf">here</a>. <br /><br />Notably, the Settlement includes an "out" for NSTAR in the event that Cape Wind fails to begin construction of its facility by December 31, 2015. Specifically, the Settlement provides that if the DPU determines that Cape Wind has not commenced "physical construction" by December 31, 2015, "then NSTAR Electric shall terminate the Cape Wind Contract [the PPA] as of December 31, 2015." "Physical Construction" is defined as "any physical installation of equipment or materials into the seabed of the Cape Wind construction site that is integral to the assembly of the wind turbine generation units." Id.<br /><br />The NSTAR PPA will likely contain terms similar to those set forth in the National Grid PPA which was approved by DPU and <a href="http://www.offshoreenergy.blogspot.com/2012/01/2011-wrap-up-part-1-northeast-projects.html">upheld by the Massachusetts Supreme Court </a>in December 2011. Under the National Grid PPA, National Grid will purchase power from Cape Wind at a starting price of 18.7 cents per kilowatt-hour, escalating 3.5 percent annually over a 15-year term. <br /><br /><br />Cape Wind has obtained all of the necessary environmental permits and, in 2010 received the first-ever submerged land lease for a renewable energy project to be located on the outer continental shelf from the U.S. Department of the Interior.Jennifer Simon, Esq.http://www.blogger.com/profile/08405807621514416009noreply@blogger.com1tag:blogger.com,1999:blog-3652519002056141194.post-58778980946249454932012-01-25T12:14:00.001-08:002012-02-27T13:01:42.003-08:00Some Encouraging Developments: Submerged Land Leases in the Mid-Atlantic to Be Issued in 2012; New Funding Opportunities from DOEAlthough we are already well into the first quarter of 2012, there are still a number of unresolved 2011 matters that deserve some attention. We are still grappling with the biggest elephant in the room-- that is, the on-going congressional effort to extend and/or authorize certain tax incentives (<em>e.g</em>., the <a href="http://www.offshoreenergy.blogspot.com/2011/10/offshore-wind-investment-tax-credit.html">Offshore Wind Investment Tax Credit </a>) designed to promote renewable energy projects. However, despite the ongoing lethargy and frustrations with respect to tax incentives, the Obama Administration continues to authorize agency initiatives supporting the development of a U.S. offshore renewable energy industry. In the last two days, both the Department of the Interior ("<span id="SPELLING_ERROR_0" class="blsp-spelling-error">DOI</span>") and the Department of Energy issued important and (pardon the pun) groundbreaking announcements impacting offshore wind.<br /><br /><strong><span id="SPELLING_ERROR_1" class="blsp-spelling-error">DOI</span> Announces Three Important Things in One Week! </strong><br /><br />Industry participants and observers alike are likely reeling from the sheer volume of industry-moving announcements issued by <span id="SPELLING_ERROR_2" class="blsp-spelling-error">DOI</span> in the last week.<br /><br /><span style="color:#ff0000;">First,</span> on February 2, 2012, <span id="SPELLING_ERROR_3" class="blsp-spelling-error">DOI</span> Secretary Ken Salazar and Bureau of Ocean Energy Management ("<span id="SPELLING_ERROR_4" class="blsp-spelling-error">BOEM</span>") Director Tommy P. <span id="SPELLING_ERROR_5" class="blsp-spelling-error">Beaudreau</span> <a href="http://www.doi.gov/news/pressreleases/Obama-Administration-Announces-Major-Steps-toward-Leasing-for-Offshore-Wind-Projects-in-Mid-Atlantic.cfm">announced</a> the results of the National Environmental Policy Act ("<span id="SPELLING_ERROR_6" class="blsp-spelling-error">NEPA</span>") <a href="http://www.boem.gov/uploadedFiles/BOEM/Renewable_Energy_Program/Smart_from_the_Start/Mid-Atlantic_Final_EA_012012.pdf">environmental assessment</a> ("EA") performed with respect to proposed Wind Energy Areas ("<span id="SPELLING_ERROR_7" class="blsp-spelling-error">WEAs</span>") located on the Outer Continental Shelf ("<span id="SPELLING_ERROR_8" class="blsp-spelling-error">OCS</span>") off the coasts of New Jersey, Delaware, Maryland and Virginia. The Environmental Assessment, which was <a href="http://www.boem.gov/uploadedFiles/BOEM/Renewable_Energy_Program/Smart_from_the_Start/NOA%20Mid%20Atlantic%20EA%20and%20FONSI_02032012.pdf">published today in the Federal Register</a>, concluded that there would be no significant environmental and socioeconomic impacts from issuing wind energy leases in the designated mid-Atlantic <span id="SPELLING_ERROR_9" class="blsp-spelling-error">WEAs</span>.<br /><br />The <a href="http://www.boem.gov/uploadedFiles/BOEM/Renewable_Energy_Program/Smart_from_the_Start/Mid-Atlantic_Final_EA_012012.pdf">EA</a> considered potential impacts arising out of site characterization and assessment activities that would need to occur before developers could build generation facilities on the <span id="SPELLING_ERROR_10" class="blsp-spelling-error">OCS</span>. These activities include geophysical, <span id="SPELLING_ERROR_11" class="blsp-spelling-error">geotechnical</span>, <span id="SPELLING_ERROR_12" class="blsp-spelling-error">archeological</span> and biological surveys and the installation and operation of meteorological towers and buoys. The EA will provide baseline data and provide substantial context for <span id="SPELLING_ERROR_13" class="blsp-spelling-error">BOEM's</span> consideration of future leasing proposals in the mid-Atlantic Wind Energy Areas and in the Bureau's review of developers' site assessment plans. If a lessee proposes a wind energy generation project on its lease, <span id="SPELLING_ERROR_14" class="blsp-spelling-error">BOEM</span> would prepare a separate site- and project-specific analysis under <span id="SPELLING_ERROR_15" class="blsp-spelling-error">NEPA</span> of its construction and operations plan, and provide additional opportunities for public involvement.<br /><br />Although the <span id="SPELLING_ERROR_16" class="blsp-spelling-error">NEPA</span> clearance should enable developers to move forward more quickly with projects proposed for the mid-Atlantic <span id="SPELLING_ERROR_17" class="blsp-spelling-error">WEAs</span>, <span id="SPELLING_ERROR_18" class="blsp-spelling-error">BOEM</span> and <span id="SPELLING_ERROR_19" class="blsp-spelling-error">DOI</span> have yet to finalize the <a href="http://offshoreenergy.blogspot.com/2011_12_01_archive.html">lease auction process </a>through which developers must compete with one another for leases. Notwithstanding the pending auction methodologies, Secretary Salazar stated today that submerged land lease proposals for projects in the mid-Atlantic <span id="SPELLING_ERROR_20" class="blsp-spelling-error">WEAs</span> will be vetted before the end of 2012.<br /><br />In <span id="SPELLING_ERROR_21" class="blsp-spelling-error">DOI's</span> press release, Depute Secretary of the Interior David J. Hayes offered the following comments on the EA and <span id="SPELLING_ERROR_22" class="blsp-spelling-error">FONSI</span>:<br /><br />“Today’s announcement opens up the ‘sweet spots’ off the mid-Atlantic coast for development of our nation's remarkable offshore wind resource... Interior will continue to do its part to build a world-class offshore wind industry that provides clean, reliable, home-grown power and the American jobs that come with it.”<br /><br /><span style="color:#ff6600;">Second,</span> in a surprisingly efficient move for <span id="SPELLING_ERROR_23" class="blsp-spelling-error">BOEM</span>, the Bureau simultaneously published Calls for Information and Nominations ("<span id="SPELLING_ERROR_24" class="blsp-spelling-error">CFI</span>") for <span id="SPELLING_ERROR_25" class="blsp-spelling-error">WEAs</span> located off of <a href="http://www.boem.gov/BOEM-Newsroom/Press-Releases/2011/press02022012(2).aspx">Maryland</a> and <a href="http://www.boem.gov/BOEM-Newsroom/Press-Releases/2011/press02022012.aspx">Virginia</a>. The <span id="SPELLING_ERROR_26" class="blsp-spelling-error">CFIs</span> were issued to solicit lease nominations from potential project developers and to request public comments regarding site conditions, resources and multiple uses of the Wind Energy Areas.<br /><br /><span style="color:#009900;">Finally,</span> <span id="SPELLING_ERROR_27" class="blsp-spelling-error">BOEM</span> published a <a href="http://www.archives.gov/federal-register/public-inspection/index.html">new submerged land lease form in the Federal Register</a>. <span id="SPELLING_ERROR_28" class="blsp-spelling-error">BOEM</span> developed the lease form following consultation with the public and with industry representatives with the hope that the form will "streamline the issuance of renewable energy leases on the <span id="SPELLING_ERROR_29" class="blsp-spelling-error">OCS</span>." The lease form will be effective 15 days following publication, i.e., on February 17, 2012.<br /><br />Readers, I know it's a lot to take in. But wait. There's more!!<br /><br /><strong>DOE Wants to Give You Money!</strong><br /><strong></strong><br />On February 1, 2012, the US Department of Energy's Wind and Water Program published a <a href="http://www.gpo.gov/fdsys/pkg/FR-2012-02-01/pdf/2012-2264.pdf">notice in the Federal Register </a>announcing its intention to release a Funding Opportunity Announcement ("<span id="SPELLING_ERROR_30" class="blsp-spelling-error">FOA</span>") tentatively entitled "U.S. Offshore Wind: Advanced Technology Demonstration Projects." The preliminary notice of the <span id="SPELLING_ERROR_31" class="blsp-spelling-error">FOA</span> has been published to solicit comments from the public and from prospective <span id="SPELLING_ERROR_32" class="blsp-spelling-error">FOA</span> applicants in advance of the final <span id="SPELLING_ERROR_33" class="blsp-spelling-error">FOA</span> publication on February 29, 2012.<br /><br />This <span id="SPELLING_ERROR_34" class="blsp-spelling-error">FOA</span> is being issued in furtherance of one of the two primary goals set forth February 2011 DOE/<span id="SPELLING_ERROR_35" class="blsp-spelling-error">DOI</span> inter-agency <a href="http://offshoreenergy.blogspot.com/2011/02/another-big-news-day-salazar-chu.html">Strategic Work Plan</a>, an initiative designed to implement the Obama administration's <a href="http://www1.eere.energy.gov/wind/pdfs/national_offshore_wind_strategy.pdf">National Offshore Wind Strategy</a>. The two essential goals of the Strategic Work Plan included the creation and implementation of <span id="SPELLING_ERROR_36" class="blsp-spelling-error">DOI's</span> Smart from the Start program, and the creation of oversight of incentives and funding by DOE for innovative processes and technologies that will help lower the cost of offshore renewable energy to <span id="SPELLING_ERROR_38" class="blsp-spelling-error">DOE's</span> 2020 goal of $.10/kWh.<br /><br />According to the Federal Register notice, DOE distributed $26.5 million to 19 offshore wind technology projects and $16.5 million to 22 "market-barrier removal" projects in 2011. The Federal Register notice does not indicate how much money will be available through this round of funding.<br /><br />In addition to accepting comments by postal and electronic mail, DOE has scheduled a public meeting on February 7, 2012 from 9:30am to 12:30pm at the L'Enfant Plaza Hotel, 480 L'Enfant Plaza Southwest, Washington, D.C. to address comments and questions from the public and from prospective applicants.Jennifer Simon, Esq.http://www.blogger.com/profile/08405807621514416009noreply@blogger.com1tag:blogger.com,1999:blog-3652519002056141194.post-8794209498357433942012-01-03T14:04:00.000-08:002012-01-03T14:59:40.368-08:002011 Wrap Up, Part 1: Northeast Projects UpdateFor offshore wind industry participants (and spectators), 2011 was a bit of an emotional roller coaster -- and some of the most intense drama occurred in the last days of December. From Congressional battles over expiring tax incentive <a href="http://www.offshoreenergy.blogspot.com/2011/10/offshore-wind-investment-tax-credit.html">legislation</a>, to highly influential and precedential <a href="http://www.offshoreenergy.blogspot.com/2011/10/court-orders-reconsideration-of-faa.html">court decisions </a>and <a href="http://www.offshoreenergy.blogspot.com/2011/04/offshore-wind-state-update-mid-atlantic.html">project specific developments</a>, the events of 2011 have set the stage for what could become a climactic 2012.<br /><br />The next several posts will be dedicated to addressing where some high-profile projects left off in 2011 and considering where those projects may go in 2012 by geographical region. This post will discuss New England projects including <a href="http://www.capewind.org/index.php">Cape Wind</a>, Deepwater Wind's Block Island project, and <a href="http://anbarictransmission.com/">Anbaric Transmission's </a>recently announced Bay State Offshore Wind Transmission System.<br /><br /><strong>Massachusetts - Cape Wind: Another Year of Courtroom Battles Comes to a Close</strong><br /><br />As has been the case for most of the last decade, the bulk of activity relating to the proposed Cape Wind Offshore Wind farm in 2011 took place in the Courtroom. <em>See e.g,</em> <a href="http://www.offshoreenergy.blogspot.com/2011/10/court-orders-reconsideration-of-faa.html">Circuit Court ruling remanding FAA’s No Adverse Effect Decisions</a>. However, in the final days of 2011, Cape Wind secured a favorable ruling from the Massachusetts Supreme Court upholding its proposed power purchase agreement (PPA) with National Grid. See <a href="http://weblinks.westlaw.com/result/default.aspx?action=Search&cnt=DOC&db=MA%2DORCS%2DWEB&eq=search&fmqv=c&fn=%5Ftop&method=TNC&n=1&origin=Search&query=CO%28SJCF+SJCRES+SJCOPJ+APPF+APPRES%29+%26+DA%2812%2F28%2F2011%29&rlt=CLID%5FQRYRLT73101631531&rltdb=CLID%5FDB756671531531&rlti=1&rp=%2Fsearch%2Fdefault%2Ewl&rs=MACS1%2E0&service=Search&sp=MassOF%2D1001&srch=TRUE&ss=CNT&sskey=CLID%5FSSSA406831531531&sv=Split&vr=1%2E0">Alliance to Protect Nantucket Sound et al., v. Department of Public Utilities, et al., No. SJC-10934 (Dec. 28, 2011)</a>.<br /><br />On December 28, 2011, the Massachusetts Supreme Court issued its <a href="http://weblinks.westlaw.com/result/default.aspx?action=Search&cnt=DOC&db=MA%2DORCS%2DWEB&eq=search&fmqv=c&fn=%5Ftop&method=TNC&n=1&origin=Search&query=CO%28SJCF+SJCRES+SJCOPJ+APPF+APPRES%29+%26+DA%2812%2F28%2F2011%29&rlt=CLID%5FQRYRLT73101631531&rltdb=CLID%5FDB756671531531&rlti=1&rp=%2Fsearch%2Fdefault%2Ewl&rs=MACS1%2E0&service=Search&sp=MassOF%2D1001&srch=TRUE&ss=CNT&sskey=CLID%5FSSSA406831531531&sv=Split&vr=1%2E0">decision</a> to uphold the PPA between Cape Wind and National Grid (National Grid PPA). The National Grid PPA requires National Grid to purchase 50% of the energy, capacity and Renewable Energy Credits (RECs) produced by Cape Wind —<em>i.e</em>., up to 234 megawatts—and will extend for fifteen years beginning on the date that Cape Wind begins commercial operation. The National Grid PPA was the first to be approved under a provision of Massachusetts’ <a href="http://www.malegislature.gov/Laws/SessionLaws/Acts/2008/Chapter169">Green Communities Act </a>that allows renewable energy generators to enter directly into long term contracts with utilities.<br /><br />The lawsuit was filed in late 2010 after the Massachusetts Department of Public Utilities (DPU) issued a formal approval of the PPA. The plaintiff group, comprised of long-standing opposition group <a href="http://www.saveoursound.org/">Alliance to Protect Nantucket Sound</a>, trade organizations <a href="http://www.aimnet.org/AM/Template.cfm?Section=Home">Associated Industries of Massachusetts</a> and <a href="http://www.nepga.org/">New England Power Generators Association</a>, and Canadian energy distributer <a href="http://www.transcanada.com/powermarketing.html">TransCanada Power Marketing, Ltd</a>, alleged that (1) the National Grid PPA violates the commerce clause of the United States Constitution; (2) the DPU improperly found that the National Grid PPA was in the public interest and cost-effective; (3) the National Grid PPA should have been solicited through a competitive bidding process; and (4) the DPU made a mistake when it both approved a method for recovering project costs from all distribution customers and required the National Grid PPA to include financing provisions sufficient to fund development of a renewable energy generation source.<br /><br />Massachusetts Supreme Court Justice Margot Botsford wrote in the decision that while the Massachusetts Green Communities Act does not explicitly address the authority of state regulators to approve cost-recovery methods for renewable power:<br /><br /><blockquote><br /><p>[I]t is well established that the (Massachusetts Department of Public Utilities)<br />has the statutory authority to rule on the appropriateness of proposed<br />cost-recovery formulas…</p><br /><p>(T)he department's decision in this proceeding is not precluded by the fact that the proposed cost recovery method is novel, particularly in light of the new emphasis on development of renewable energy in the (Green Communities Act)… </p><br /><p>The department permissibly determined that the environmental benefits of (the power purchase agreement) … will accrue to all National Grid customers, and it is therefore appropriate to require all customers to share in the costs of acquiring these benefits, in accordance with departmental precedent…</p></blockquote>Although the affirming Supreme Court decision removes the uncertainty associated with outstanding legal challenges to the National Grid PPA, it remains to be seen whether the resolution of that challenge will yield sufficient confidence to inspire another utility to enter into a PPA with Cape Wind for the remaining 50% of its projected output. <br /><br /><br /><strong>Rhode Island- Block Island 5-Turbine Demonstration Project: 2012 Could Be The Year.<br /><br /></strong>Following the <a href="http://www.offshoreenergy.blogspot.com/2011/07/rhode-island-supreme-court-affirms.html">resolution of a much belabored challenge to the Rhode Island Department of Public Utilities’ approval of its PPA</a>, Deepwater Wind hopes that 2012 will be the year that they can begin construction on its five-turbine wind farm -- and recent events suggest that they may be able to bring that goal to fruition.<br /><br />In late December, Rhode Island <a href="http://block-island.villagesoup.com/business/story/deepwater-to-announce-new-investor-in-early-2012/194443">news sources reported </a>that Deepwater Wind’s Chief Administrative Officer Jeff Grybowski has stated that the company will announce the involvement of a major new investor in early 2012. Although the identity of the new investor has not yet been announced, Grybowski said it is a “major global industrial company that sees a bright future for offshore wind.” The unnamed new investor will partner with investment management firm <a href="http://www.deshaw.com/">D.E. Shaw </a>to fund the development of the Block Island wind farm, which is slated to be constructed within three nautical miles of Block Island in Rhode Island state waters.<br /><br />Also in December 2011, Deepwater Wind hosted a public meeting to ensure sufficient public involvement and support for the proposed 15-mile transmission line that would connect the Block Island wind farm to the grid. The current plan shows the transmission line beginning at the 5-turbine Block Island Offshore wind farm, making landfall at the Narragansett Pier through the seawall and then following a route through Narragansett’s shorefront. The transmission line would and end at a private transmission station in South Kingstown before feeding into National Grid’s network. Deepwater has commited to spending $6 million to conduct environmental surveys of the sea floor and along the entire route where the transmission line would be constructed proposed, and along the route of a 14-mile cable that would link the project, and Block Island, to the Rhode Island power grid.<br /><br />Deepwater Wind has stated that it hopes to complete the transmission line and the Block Island Wind facility by 2014.<br /><br /><strong>New England Coastal Waters - Anbaric Transmission: An Offshore “Backbone” Transmission Line for the Northeast<br /><br /></strong>Following the positive feedback from government agencies and some industry insiders in response to <a href="http://atlanticwindconnection.com/">Atlantic Wind Connection’s </a>proposed “backbone” transmission project for the Mid-Atlantic region (a/k/a, the <a href="http://offshoreenergy.blogspot.com/2010/10/google-invests-in-offshore-wind.html">"Google project"</a>), it was only a matter of time before someone proposed to construct a similar project in the northeast. And so, it was not a huge surprise when <a href="http://anbarictransmission.com/">Anbaric Transmission</a>, an experienced subsea transmission project developer, announced in mid-November 2011 that it had filed a request for interconnection with the New England ISO for what it calls the “Bay State Offshore Wind Transmission System.”<br /><br />The Bay State Offshore Wind Transmission system is designed to accommodate 2,000 MW of offshore wind energy and will serve generation developers who responded to the Bureau of Ocean Energy Management’s <a href="http://offshoreenergy.blogspot.com/2011/08/doi-boemre-issue-new-call-for.html">Requests for Interest </a>for designated Wind Energy Areas off of New England coastlines. See <a href="http://www.raabassociates.org/Articles/Krapels%20Presentation%2012.9.11.sr%202.pdf">here</a>, pg. 12-14. BOEM has received responses from ten developers proposing to build a total of 8,000 megawatts of offshore wind.<br /><br />Anbaric Transmission has been involved with two previous subsea transmission projects: the Neptune Regional Transmission System, a 660-MW submarine connection between New Jersey and Long Island, and the Hudson Transmission System, a 660-MW line under construction beneath the Hudson River between New Jersey and Manhattan.Jennifer Simon, Esq.http://www.blogger.com/profile/08405807621514416009noreply@blogger.com1tag:blogger.com,1999:blog-3652519002056141194.post-41739619580103617822011-12-07T14:05:00.000-08:002011-12-07T16:00:19.241-08:00Federal Update: BOEM Requests Comments on Proposed Lease Auction Process<strong>BOEM Issues Auction Format Information Request; Public Comments Due on January 12<br /></strong><br />On December 5, 2011, the <a href="http://www.boem.gov/">Bureau of Ocean Energy Management </a>(BOEM) published a notice in the Federal Register entitled “<a href="http://www.gpo.gov/fdsys/pkg/FR-2011-12-06/pdf/2011-31222.pdf#page=1">Request for Information on the State of the Offshore Renewable Energy Industry—Auction Format Information Request (AFIR)” </a>(AFIR) which seeks comments on proposed lease-sale auction procedures designated for offshore wind energy development on the Outer Continental Shelf. The AFIR provides for a 45-day public comment period set to expire on January 12, 2012. BOEM has also announced a workshop designed to educate stakeholders about the proposed auction format options and to solicit feedback. The workshop will take place on Friday December 16, 2011 from 8:30 a.m. to 3:30 p.m at the South Interior Building in Washington, D.C. Additional information about the workshop can be found <a href="http://www.boem.gov/Renewable-Energy-Program/Regulatory-Information/Renewable-Energy-Auction-Formats.aspx">here</a>.<br /><br />The auction methods proposed in the AFIR were designed in consideration of BOEM’s program objectives, which include: </p><br /><br /><ul><br /><br /><li>BOEM’s statutory obligation to seek a “Fair Return” for leases granted on the OCS;<br />economic efficiency; </li><br /><br /><li>program efficiency and manageability; </li><br /><br /><li>“lease boundary flexibility” to enable bidders to select optimal lease areas within the confines directed by BOEM;</li><br /><br /><li>fair competition among all interested bidders;<br />process transparency; </li><br /><br /><li>equal treatment and consideration of all bids by BOEM; and</li><br /><br /><li>consistency. </li></ul><br /><br /><p><br />The AFIR proposes several potential auction formats for use in a variety of circumstances including single lot leases and multiple lot leases. For example, for single lot auctions, BOEM proposes to employ a “simultaneous ascending clock auction” or SACA format. Under a SACA, BOEM would set the minimum bid price for a specific lot. If more than one bidder is willing to meet the asking price, BOEM would increase the price incrementally, requesting bidder acceptance at each increase until only one bidder remains. If all bidders drop out at the same price point, BOEM has indicated a number of possible approaches to break the tie. BOEM has also suggested a number of rules that would apply to bidders in a SACA, such as minimum and maximum numbers of lots that a prospective bidder can bid upon.<br /><br />For multiple lot auctions, BOEM proposes a number of alternative auction formats including variations on the SACA approach. One proposed alternative to the SACA approach would ask bidders to submit bids at or above the designated minimum lot price in each round of bids. The auction would end when each subsequent round of bidding yields the same bid prices as the previous round. BOEM would then award the lease to the bid producing maximum revenue.<br /><br />A general description of the proposed auctions is provided in the AFIR. A more comprehensive explanation of the auction formats along with BOEM’s commissioned study of various auction formats for the issuance of renewable energy leases (conducted by <a href="http://www.powerauctions.com/">Power Auctions LLC</a>) is available <a href="http://www.boem.gov/Renewable-Energy-Program/Regulatory-Information/Renewable-Energy-Auction-Formats.aspx">here</a>.</p>Jennifer Simon, Esq.http://www.blogger.com/profile/08405807621514416009noreply@blogger.com0tag:blogger.com,1999:blog-3652519002056141194.post-56981468616559264242011-10-31T15:15:00.000-07:002011-10-31T15:49:49.602-07:00Court Orders Reconsideration of FAA Approvals for Cape Wind Offshore Wind ProjectOn Friday October 28, 2011, the United States Circuit Court of Appeals for the District of Columbia issued a decision vacating and remanding the <a href="http://www.faa.gov/">Federal Aviation Administrations’</a> ("FAA") 130 identical Determinations of No Hazard which were issued with respect to the proposed <a href="http://www.capewind.org/index.php">Cape Wind </a>130-turbine offshore wind farm. See <em><a href="http://www.cadc.uscourts.gov/internet/opinions.nsf/4804795E91B8FA5F85257937004EDC66/$file/10-1276-1338470.pdf">Town of Barnstable, et al, v. Federal Aviation Administration, No. 10-1276 (D.C. Cir. 2011)</a></em>.<br /><br /><strong>Summary of the Decision</strong><br /><br />The lawsuit, filed by long-standing opposition group <a href="http://www.saveoursound.org/">Alliance to Protect Nantucket Sound</a> (the “Alliance”) and the town of <a href="http://town.barnstable.ma.us/">Barnstable, MA </a>(together, the “Petitioners”), alleged that the FAA “violated its governing statute, misread its own regulations, and arbitrarily and capriciously failed to calculate the dangers posed to local aviation.” The FAA, along with intervening party <a href="http://www.capewind.org/index.php">Cape Wind Associates, LLC</a>, responded by alleging that the petitioners had no Article III standing to challenge the FAA determinations. <em><a href="http://www.cadc.uscourts.gov/internet/opinions.nsf/4804795E91B8FA5F85257937004EDC66/$file/10-1276-1338470.pdf">Id.</a></em> at 3. Although the Court’s decision is likely to lead to additional delays for Cape Wind, the ruling does not <em>per se</em> negate the validity of the <a href="http://www.boemre.gov/offshore/renewableenergy/PDFs/CapeWind_signed_lease.pdf">submerged land lease </a>issued by the <a href="http://www.doi.gov/index.cfm">Department of the Interior </a>(“DOI”) to Cape Wind in October 2010.<br /><br />With respect to the threshold question of standing, the FAA argued that even if the Petitioners could allege harm, the fact that “FAA’s hazard determinations, by themselves, have ‘no enforceable legal effect’” means that reversal of the FAA hazard determinations would not redress the grievance. <em><a href="http://www.cadc.uscourts.gov/internet/opinions.nsf/4804795E91B8FA5F85257937004EDC66/$file/10-1276-1338470.pdf">Id.</a></em> at 5. Although the Court agreed that the FAA hazard determinations were not enforceable on their own, the DOI incorporated a provision into the submerged land lease requiring that Cape Wind abide by “any future mitigation measures that the FAA might deem necessary to reduce or eliminate a hazard on Cape Wind.” <em><a href="http://www.cadc.uscourts.gov/internet/opinions.nsf/4804795E91B8FA5F85257937004EDC66/$file/10-1276-1338470.pdf">Id.</a></em> at 6. Accordingly, the Court held that the DOI’s inclusion of the FAA hazard mitigation provision is sufficient basis to find it “‘likely as opposed to merely speculative,’ that [DOI would cancel or retract the Cape Wind lease] if faced with an FAA determination that the project posed an unmitigatable hazard.” <em><a href="http://www.cadc.uscourts.gov/internet/opinions.nsf/4804795E91B8FA5F85257937004EDC66/$file/10-1276-1338470.pdf">Id.</a></em> at 10 (additional citations omitted).<br /><br />The Court then considered whether FAA properly issued its No Hazard Determinations. Although the petitioners’ alleged that the FAA violated both its governing statute (<a href="http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=browse_usc&docid=Cite:+49USC44718">49 U.S.C. Sec. 44718(b)</a>) and its own internal guidelines (“<a href="http://www.faa.gov/documentLibrary/media/Order/AIR.pdf">Procedures for Handling Airspace Matters</a>”, FAA Order 7400.2G (April 10, 2008)), the Court’s ultimate ruling regarding the FAA’ hazard determinations rests solely on the FAA’s application of its internal guidelines. <a href="http://www.cadc.uscourts.gov/internet/opinions.nsf/4804795E91B8FA5F85257937004EDC66/$file/10-1276-1338470.pdf"><em>Id.</em></a> at 10. Importantly, the Court did not issue a declaration stating that the Cape Wind turbines present a hazard – mitigatable or otherwise. Rather, the Court merely remanded the determinations to FAA “to require the FAA to address the issues and explain its conclusion.” <a href="http://www.cadc.uscourts.gov/internet/opinions.nsf/4804795E91B8FA5F85257937004EDC66/$file/10-1276-1338470.pdf"><em>Id.</em> </a>at 13-14.<br /><br /><strong>What Happens Next?<br /></strong><br />There are at least two possibilities as to what will happen in the wake of the Circuit Court’s decision. First, the FAA and Cape Wind Associates could appeal the decision by submitting a writ of <em>certiorari</em> to the Supreme Court of the United States. However, if the Supreme Court does not grant <em>certiorari</em>, the decision of the Appeals Court will stand. Moreover, even if the Supreme Court does choose to hear the matter, a Supreme Court affirmation of the lower court ruling could further dampen the perception that the U.S. offshore wind industry has the support of the U.S. government.<br /><br />The alternative is for FAA to follow the Circuit Court’s order. FAA would be within its authority to re-issue all 130 Determinations with a “No Hazard” finding provided FAA includes further explanation of its conclusions. Under principles of administrative law, the FAA’s hazard determinations must not be "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." <a href="http://www.gpo.gov/fdsys/pkg/USCODE-2010-title5/pdf/USCODE-2010-title5-partI-chap7-sec706.pdf">5 U.S.C. § 706(2)(A</a>). In other words, the agency must “adequately explain its result…." <a href="http://scholar.google.com/scholar_case?case=3494361502357935461&hl=en&as_sdt=2&as_vis=1&oi=scholarr">Public Citizen, Inc. v. FAA</a>, 300 U.S. App. D.C. 238, 988 F.2d 186, 197 (D.C. Cir. 1993).<br /><br />Nevertheless, even if FAA finds that it must issue one or more determinations indicating a hazard, the Circuit Court decision indicates that FAA may make recommendations for mitigation measures to overcome these hazards. Accordingly, the only circumstance under which DOI may need to reconsider Cape Wind’s lease is in the event that FAA finds that there are unmitigatable hazards associated with the Cape Wind turbines.<br /><br /><strong>Litigants’ Statements About the Case<br /></strong><br />Given the longstanding enmity between Cape Wind Associates and the Alliance, both parties issued public statements regarding the decision of the Circuit Court.<br /><br />The Alliance to Protect Nantucket Sound issued a <a href="http://www.saveoursound.org/press_releases/reader.php?id=11">press release </a>stating that the decision is "a resounding victory for the Cape and Islands community and the citizens of Massachusetts" and that the "FAA case is the first of multiple federal lawsuits challenging this poorly sited and expensive project and is just the tip of the iceberg of the problems the courts will consider relative to the Nantucket Sound location."<br /><br />Cape Wind spokesman Mark Rodgers issued Cape Wind's <a href="http://www.capewind.org/news1216.htm">official response </a>to the decision: "The FAA has reviewed Cape Wind for eight years and repeatedly determined that Cape Wind did not pose a hazard to air navigation," he said. "The essence of today's court ruling is that the FAA needs to better explain its Determination of No Hazard ruling."Jennifer Simon, Esq.http://www.blogger.com/profile/08405807621514416009noreply@blogger.com2tag:blogger.com,1999:blog-3652519002056141194.post-43699485585311139762011-10-20T06:56:00.000-07:002011-10-20T07:01:26.317-07:00Offshore Wind Investment Tax Credit: House Companion Bill IntroducedOn October 18, 2011, Representative Bill Pascrell, Jr. (NJ-D) introduced <a href="http://thomas.loc.gov/cgi-bin/query/z?c112:H.R.3238:">H.R. 3238</a>. H.R. 3238 is the companion bill to <a href="http://thomas.loc.gov/cgi-bin/query/z?c112:S.1397:">S. 1397</a> (previously discussed <a href="http://offshoreenergy.blogspot.com/2011_07_01_archive.html">here</a>) which was introduced on July 21, 2011 by Senators Tom Carper (D-DE) and Olympia Snowe (R-ME). The bills, both titled the “Incentivizing Offshore Wind Power Act”, propose an extension of the investment tax credit (“ITC”) for qualified offshore wind energy generation projects.<br /><br />The bills, which contain nearly identical provisions, call for the Treasury to select up to 3000 MW of offshore wind projects which will qualify for tax credits if they are placed into service over a 5 year period. The tax credit would be the same 30% ITC that is granted to many other renewable energy sources. The five year extension of the ITC for offshore wind projects has been proposed in recognition of the longer siting, permitting and finance process required for offshore renewable energy projects-- a process that is currently estimated to take between 5-7 years. The existing ITC has a sunset provision expiring in 2012 that will render nearly all of the proposed offshore wind projects ineligible for the credit. <br /><br />Co-sponsors for the Senate bill include Sen. Sherrod Brown (OH), Sen. Benjamin Cardin (MD), Sen. Susan Collins (ME), Sen. Christopher Coons (DE), Sen. Frank Lautenberg (NJ), Sen. Robert Menendez (NJ), Sen. Jack Reed (RI), and Sen. Sheldon Whitehouse (RI), all of whom represent states hosting active offshore wind development projects. The co-sponsor for the House bill is Representative Frank LoBiondo (NJ-R). There are at least three offshore wind generation projects proposed for both state and federal waters off the coast of New Jersey.Jennifer Simon, Esq.http://www.blogger.com/profile/08405807621514416009noreply@blogger.com1tag:blogger.com,1999:blog-3652519002056141194.post-72798997154523941342011-10-14T13:06:00.000-07:002011-10-14T14:34:44.195-07:00AWEA Offshore 2011: The HighlightsAt last year's <a href="http://www.awea.org/">American Wind Energy Association </a>Offshore Windpower Conference and Exhibition in Atlantic City, Secretary of the Interior Kenneth Salazar and Jim Gordon from Cape Wind <a href="http://http//offshoreenergy.blogspot.com/2010/10/secretary-salazar-and-cape-wind-sign.html">signed </a>the first-ever submerged land lease for an offshore wind farm on the United States' federally managed outer continental shelf. Many of those in attendance last year fully expected that the lease-signing would signal an increase in project momentum-- and many industry participants and observers fully believed that construction on the Nation's first offshore wind farm might begin in 2011.<br /><br />At this year's <a href="http://www.offshorewindexpo.org/">Offshore Windpower Conference and Expo</a>, attendees spent three days discussing what has happened-- and what has not happened-- since October 2010. Here are some quick highlights from the event:<br /><br /><br /><br /><p><strong>Secretary Salazar and Maryland Governor O'Malley Present Keynote</strong><br /><br />The Conference kicked off with a keynote address presented by Department of the Interior Secretary Ken Salazar, Maryland Governor Martin O'Malley, AWEA CEO Denise Bode, Michelle Siekerka from the New Jersey Department of Environmental Protection, and program co-chairs Aileen Kenney (Deepwater Wind) and Jim Lanard (Offshore Wind Developers Coalition).<br /><br />Following last year's lease signing, Secretary Salazar's comments seemed a little more subdued this year. Although the Secretary did not release any industry-shaking news, he affirmed that both he and the Obama administration are committed to creating an offshore wind industry in the United States. To that end, Secretary Salazar announced that the Bureau of Ocean Energy Management expects to announce lease agreements for as many as five wind farms in as little as a few weeks or months.<br /><br /><strong>Deepwater Wind Announces Siemens as Turbine Supplier</strong><br /><br /></p><br /><br /><p><a href="http://dwwind.com/">Deepwater Wind </a>announced that it signed an agreement with <a href="http://www.energy.siemens.com/hq/en/power-generation/renewables/wind-power/">Siemens Energy</a> to buy the company’s latest offshore wind turbines for deployment in the <a href="http://dwwind.com/block-island/block-island-project-overview">Block Island Wind Farm</a>, a project that remains on track to be the nation’s first offshore wind farm.<br /><br />Under the agreement, Siemens will supply five of its new 6.0-megawatt direct drive offshore wind turbines for the Block Island Wind Farm. This will be the first project in the United States, and one of the first anywhere in the world, to use the new turbine, which will be commercially available for the project.<br /><br />The Block Island Wind Farm is one of several proposed small demonstration-scale offshore wind projects (such as <a href="http://www.fishermensenergy.com/">Fishermen's Energy's </a>proposed <a href="http://www.fishermensenergy.com/press-releases/Fishermen-Filing.pdf">6-turbine project </a>to be located 2.8 miles off of Atlantic City, NJ) that may become the first offshore wind farm built in North America. The Block Island Wind Farm is a 30-megawatt project to be located in Rhode Island state waters. The project also includes a transmission cable connecting the island to the mainland grid for the first time. Pursuant to a <a href="http://offshoreenergy.blogspot.com/2011/04/offshore-wind-state-update-new-england.html">heavily litigated </a>but now approved 20-year power purchase agreement, <a href="http://www.nationalgridus.com/">National Grid </a>has agreed to buy all of the output from the project.<br /><br />The project is scheduled to be in the construction phase in 2013 or 2014, although the timing of construction is dependent on the permitting process and final turbine specifications.<br /><br /><strong>Highlights from the Developers' Panel</strong><br /><br />The last session of the conference offered attendees to hear updates from two full panels of offshore wind developers actively pursuing offshore wind projects in the United States. The thirteen developers on the two panels represented the largest number of developer panelists ever put on stage at an AWEA Offshore Windpower Event.<br /><br />Developers represented on the panel included: Tim Ryan (<a href="http://www.apexwind.com/">Apex Wind</a>/ North Carolina), Ian Hatton (<a href="http://www.blogger.com/www.baryonyxcorp.com">Baryonyx</a>/ Texas), Bill Moore (<a href="http://www.dwwind.com/">Deepwater Wind </a>/ Rhode Island), Doug Copeland (<a href="http://www.blogger.com/www.enxco.com">enXco</a> / California), Andy Kinsella (<a href="http://www.blogger.com/www.mainstreamrp.com">Mainstream Renewable Power</a>/ United Kingdom), Erich Stephens (<a href="http://www.blogger.com/www.offshoremwllc.com">Offshore MW</a>), Dennis Duffy (<a href="http://www.blogger.com/www.capewind.org">Cape Wind Associates</a>/ Massachusetts), Daniel Cohen (<a href="http://www.blogger.com/www.fishermensenergy.com">Fishermen's Energy</a>/ New Jersey), Chris Wisseman (<a href="http://www.blogger.com/freshwaterwind.com">Freshwater Wind</a>/ Ohio), Robert Gibbs (<a href="http://www.blogger.com/www.gardenstatewind.com">Garden State Offshore Energy</a>/ New Jersey), Peter Mandelstam (<a href="http://www.blogger.com/www.bluewaterwind.com">NRG Bluewater Wind</a>/ Delaware), Carolyn Heeps (<a href="http://www.blogger.com/www.res-offshore.com">RES-Offshore</a>), and Theo de Wolff (<a href="http://www.blogger.com/www.seawind-renewable.com">Seawind Renewable Energy Corp.</a>).<br /><br />Following an opportunity for each developer representative to provide an overview of his/her company and project status, the panel responded to questions from the audience. One of the most compelling responses was offered up by Theo de Wolff from Seawind Renewable Energy. Jim Lanard asked the panel to consider whether the <a href="http://www.doe.gov/maps/2011-grants-offshore-wind-power">Department of Energy's recent grants </a>(bestowed upon research and development facilities seeking to lower the cost of offshore renewable energy projects) were supporting the right technologies. Mr. de Wolff responded by saying that, with all due respect to the Department of Energy, at least some of the $43 million in grant money would be better spent deploying existing offshore wind technology and getting "steel in the water." Mr. de Wolff's comments echoed the frustration of many industry participants in the audience who responded with enthusiastic applause.<br /><br />Finally, Jim Lanard presented his closing remarks by setting forth three challenges. His first challenge was to the federal government. He asked federal officials to be prepared to respond to the question, "what have you done for this industry lately?" at next year's Offshore Windpower event in Virginia Beach. Second, Jim challenged state officials to work harder to develop markets and market-promoting mechanisms that will enable developers to get projects into the water sooner. Finally, he challenged the non-governmental organizations to report back on how to reach consensus among parties with different opinions, approaches, objections and concerns about offshore wind.</p>Jennifer Simon, Esq.http://www.blogger.com/profile/08405807621514416009noreply@blogger.com0tag:blogger.com,1999:blog-3652519002056141194.post-32898436877164217032011-08-22T08:54:00.000-07:002011-08-22T09:14:25.227-07:00DOI, BOEMRE issue new Call for InformationOn August 17, 2011, the Department of the Interior and the Bureau of Ocean Energy Management, Regulation and Enforcement’s announced a Call for Information and Nominations (“<span id="SPELLING_ERROR_0" class="blsp-spelling-error">CFI</span>”) for the development of offshore renewable energy projects on the Outer Continental Shelf adjacent to the state waters of Massachusetts and Rhode Island. The Federal Register notice of the Call for Information and Nominations is available <a href="http://www.archives.gov/federal-register/public-inspection/index.html">here</a>.
<br />
<br />The <span id="SPELLING_ERROR_1" class="blsp-spelling-error">CFI</span> invites developers to identify proposed project locations within the <a href="http://www.google.com/url?sa=t&source=web&cd=2&sqi=2&ved=0CCAQFjAB&url=http%3A%2F%2Fseagrant.gso.uri.edu%2Fcoast%2Fcmsp_material%2Fri_ma_area_mutual_interest.pdf&rct=j&q=July%202010%20Area%20of%20Mutual%20Interest&ei=931STvW5BsqCgAfRoKXsAQ&usg=AFQjCNHCz-VRL7117xksDRhvCwYJ6Vtk0A&sig2=WvzZnEnI1vK0yC_1fPV48g">Area of Mutual Interest</a> (“AMI”, also known as “the Call area”) identified by the state of Rhode Island and Massachusetts in a landmark agreement in July 2010. The Call area was designated in consideration of the <a href="http://www.crmc.ri.gov/samp_ocean/finalapproved/RI_Ocean_SAMP.pdf">Rhode Island Special Area Management Plan </a>and through a process involving <span id="SPELLING_ERROR_2" class="blsp-spelling-error">BOEMRE</span>’s Rhode Island and Massachusetts Renewable Energy Task Forces, which include federal, state, and tribal government partners.
<br />
<br /><span id="SPELLING_ERROR_3" class="blsp-spelling-error">BOEMRE</span> is also seeking public comment – through a Notice of Intent to Prepare an Environmental Assessment – on important environmental issues and reasonable alternatives related to the proposed leasing, site characterization and assessment activities in the offshore area under consideration. The Notice of Intent to prepare the EA is available <a href="http://www.archives.gov/federal-register/public-inspection/index.html">Request for Interest </a>(<span id="SPELLING_ERROR_4" class="blsp-spelling-error">RFI</span>) regarding another area of the Outer Continental Shelf adjacent to Massachusetts state waters. <span id="SPELLING_ERROR_5" class="blsp-spelling-error">BOEMRE</span> is currently reviewing the information and nominations received in response to the <span id="SPELLING_ERROR_6" class="blsp-spelling-error">RFI</span> and will be drafting a separate Call to determine competitive interest after consulting with the <span id="SPELLING_ERROR_7" class="blsp-spelling-error">BOEMRE</span> – Massachusetts Renewable Energy Task Force. Once <span id="SPELLING_ERROR_8" class="blsp-spelling-error">BOEMRE</span> has completed its review of the <span id="SPELLING_ERROR_9" class="blsp-spelling-error">RFI</span> responses and <a href="http://www.regulations.gov/#!docketDetail;dct=PS;rpp=10;po=0;D=BOEM-2010-0063">public comments</a>, the agency plans to issue a Call for Information and Nominations and will prepare an environmental assessment.
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<br />On August 18, 2011, <a href="http://www.neptunewind.com/">Neptune Wind</a>, an ocean-based renewable energy developer headquartered in Winchester, MA, announced its plan to respond to the <span id="SPELLING_ERROR_10" class="blsp-spelling-error">CFI</span> with a proposal to develop, construct and operate a 500 MW offshore wind farm approximately 20 nautical miles south of the Massachusetts/Rhode Island border. The project, entitled <span id="SPELLING_ERROR_11" class="blsp-spelling-error">Nomans</span> Wind, would be constructed in depths ranging from 20 to 40 meters and will employ turbines featuring a jacket structure foundation <a href="http://www.google.com/url?sa=t&source=web&cd=7&ved=0CEwQFjAG&url=http%3A%2F%2Fwww.ewec2010proceedings.info%2Fproceedings%2Fstatscounter2.php%3Fid%3D5%26IDABSTRACT%3D68%26fl%3D..%2Fallfiles2%2F68_EWEC2010presentation.pdf&rct=j&q=offshore%20wind%20%22jacket%20structure%22&ei=9XhSTqSAEZCcgQevkdyHBw&usg=AFQjCNF835I05K9_yl9OcKg2biAtuhpeGg">press release</a>, Neptune Wind stated that it expects to submit its response and proposal by the October 3, 2011 deadline.
<br />Jennifer Simon, Esq.http://www.blogger.com/profile/08405807621514416009noreply@blogger.com0tag:blogger.com,1999:blog-3652519002056141194.post-41142860740701831262011-07-25T06:48:00.000-07:002011-07-25T14:13:27.001-07:00Federal Legislative Update: Politics and GeographyOffshore wind project developers and industry supporters have spent almost as much time clamoring for a comprehensive tailored legislative package as they have working on their own projects. Although some progress has been made at both the state and federal levels, there is nearly universal agreement that the absence of coordinated federal and state regulatory schemes has seriously impeded project progress and, worse, has discouraged investors from committing to capital-intensive offshore wind projects in the United States. While everyone seems to agree that top-down legislation would help streamline offshore wind in the United States, legislators have yet to agree on what that legislation will look like.<br /><br />Since June 2011, three pieces of proposed legislation affecting offshore renewable energy have been introduced on Capitol Hill. The first two bills, <a href="http://thomas.loc.gov/cgi-bin/t2GPO/http://www.gpo.gov/fdsys/pkg/BILLS-112hr2170ih/pdf/BILLS-112hr2170ih.pdf">H.R. 2170</a> and <a href="http://thomas.loc.gov/cgi-bin/query/z?c112:H.R.2173:">H.R. 2173</a>, propose to fast track offshore wind projects abating certain prerequisite environmental studies and curtailing the associated public comment periods. The third bill, S.1397, proposes to extend the Investment Tax Credit (“ITC”) for offshore wind. Notably, the congressmen who are sponsoring the first two bills are mostly from states without active offshore wind projects. These bills have been met with significant industry resistance. In contrast, the congressmen who introduced the third bill all hail from states with active offshore wind projects. This bill has been widely lauded by industry members and advocates.<br /><br /><strong>H.R. 2170 and H.R. 2173</strong><br /><br />On June 14, 2011, United States Representative Rob Wittman (VA-1) introduced two bills: <a href="http://thomas.loc.gov/cgi-bin/t2GPO/http://www.gpo.gov/fdsys/pkg/BILLS-112hr2170ih/pdf/BILLS-112hr2170ih.pdf">H.R. 2170</a>, “Cutting Federal Red Tape to Facilitate Renewable Energy Act”; and <a href="http://thomas.loc.gov/cgi-bin/query/z?c112:H.R.2173:">H.R. 2173</a>, “Advancing Offshore Wind Production Act”. These bills seek to streamline the development of offshore energy projects by limiting or entirely eliminating certain obligations normally required under the National Environmental Policy Act (“NEPA”).<br /><br />Unless a proposed action is eligible for a categorical exclusion, NEPA requires federal agencies to consider detailed evaluations of the environmental impact of any (a) the proposed action; (b) a no action alternative; and (c) alternative courses of action.<br /><br />Proposed bill <a href="http://thomas.loc.gov/cgi-bin/t2GPO/http://www.gpo.gov/fdsys/pkg/BILLS-112hr2170ih/pdf/BILLS-112hr2170ih.pdf">H.R. 2170</a> limits the scope of environmental assessments associated with offshore wind projects. Accordingly, <a href="http://thomas.loc.gov/cgi-bin/t2GPO/http://www.gpo.gov/fdsys/pkg/BILLS-112hr2170ih/pdf/BILLS-112hr2170ih.pdf">H.R. 2170</a> eliminates the need to consider alternative courses of action in the environmental assessment as follows:<br /><br /><blockquote>a Federal agency shall—<br />(1) consider only the proposed action and the no action alternative;<br />(2) analyze only the proposed action and the no action alternative; and<br />(3) identify and analyze potential mitigation measures only for the proposed action and the no action alternative.</blockquote>See <a href="http://thomas.loc.gov/cgi-bin/t2GPO/http://www.gpo.gov/fdsys/pkg/BILLS-112hr2170ih/pdf/BILLS-112hr2170ih.pdf">H.R. 2170</a>. In addition, <a href="http://thomas.loc.gov/cgi-bin/t2GPO/http://www.gpo.gov/fdsys/pkg/BILLS-112hr2170ih/pdf/BILLS-112hr2170ih.pdf">H.R. 2170</a> shortens the public comment period from the statutory minimum of 45 days to 30 days.<br /><br /><a href="http://thomas.loc.gov/cgi-bin/query/z?c112:H.R.2173:">H.R. 2173</a> legislates a categorical exclusion for offshore meteorological site testing and monitoring projects. Accordingly, offshore wind developers would be allowed to install meteorological site testing and monitoring projects without preparing the otherwise mandatory environmental assessments and/or impact statements.<br /><br />Although both <a href="http://thomas.loc.gov/cgi-bin/t2GPO/http://www.gpo.gov/fdsys/pkg/BILLS-112hr2170ih/pdf/BILLS-112hr2170ih.pdf">H.R. 2170</a> and <a href="http://thomas.loc.gov/cgi-bin/query/z?c112:H.R.2173:">H.R. 2173</a> would have the potentially desirable effect of shortening the list of regulatory mandates for developers, both industry representatives (see <a href="http://naturalresources.house.gov/Calendar/EventSingle.aspx?EventID=246984 ">testimony of Chris Taylor on behalf of AWEA</a>) and environmental advocacy groups (see <a href="http://naturalresources.house.gov/Calendar/EventSingle.aspx?EventID=246984">Brandi Collander on behalf of NRDC</a>) have indicated strong opposition to both bills on the grounds that reduced or eliminated opportunities for public involvement will lead to an increase in litigation volume, which, in turn, will cause more development delays.<br /><br />Both bills were co-sponsored by the same nine additional House members: Rep. Paul Broun (GA-10), Rep. Jeff Duncan (SC-3), Rep. John Duncan, Jr. (TN-2), Rep. Bill Flores (TX-17), Rep. Doc Hastings (WA-4), Rep. Raul Labrador (ID-1), Rep. Doug Lamborn (CO-5), Rep. Jeffrey Landry (LA-3) , Rep. Tom McClintock(CA-4), Rep. Steve Southerland (FL-2). With the exception of Representatives Wittman (VA) and Flores (TX) whose districts are not directly involved with offshore wind, none of the bills’ sponsoring congressmen hail from states with active offshore wind. Notwithstanding the opposition testimony, both bills were approved by the House of Representatives’ Natural Resources Committee on July 11, 2011.<br /><br /><strong>S. 1397</strong><br /><br />On July 21, 2011, Senators Tom Carper (D-DE) and Olympia Snowe (R-ME), filed S. 1397, the “Incentivizing Offshore Wind Power Act.” S. 1397, also known as “A Bill to Amend the Internal Revenue Code of 1986 to Provide For an Investment Tax Credit Related to the Production of Electricity from Offshore Wind.” Although the text of S. 1397 is not yet available, Sen. Carper’s office has issued a press release describing the terms of the bill as follows:<br /><br /><blockquote>Specifically, the Incentivizing Offshore Wind Power Act provides the offshore wind industry with enhanced stability by extending investment tax credits for the first 3,000 MW of offshore wind facilities placed into service – which is an estimate of 600 wind turbines. These tax credits are vital for this new clean energy technology because there is a much longer lead time for the permitting and construction of offshore wind turbines, compared to onshore wind energy. Once awarded a tax credit, companies have five years to install the offshore wind facility. Companies cannot receive other production or investment tax credits in addition to the offshore wind investment tax credit.</blockquote>See, <a href="http://carper.senate.gov/public/index.cfm/pressreleases?ContentRecord_id=fdef0fd4-8302-488e-aae6-4caf97975ba1">Offshore Wind Development Coalition</a> ("OWDC") have announced their support for S. 1397. In fact, the OWDC had <a href="http://www.offshorewinddc.dreamhosters.com/our-point-of-view/">previously identified legislation extending the ITC </a>as a key goal.<br /><br />Co-sponsors for S.1393 include: Sen. Sherrod Brown (OH), Sen. Benjamin Cardin (MD), Sen. Susan Collins (ME), Sen. Christopher Coons (DE), Sen. Frank Lautenberg (NJ), Sen. Robert Menendez (NJ), Sen. Jack Reed (RI), and Sen. Sheldon Whitehouse (RI). Significantly, all of S.1397’s sponsoring legislators represent states hosting active offshore wind development projects.Jennifer Simon, Esq.http://www.blogger.com/profile/08405807621514416009noreply@blogger.com0tag:blogger.com,1999:blog-3652519002056141194.post-12363932194793819752011-07-05T13:17:00.000-07:002011-07-06T15:27:57.136-07:00Rhode Island Supreme Court Affirms Block Island PPAOn Friday July 1, 2011, the Rhode Island Supreme Court unanimously voted to uphold the Rhode Island Public Utilities Commission’s approval of a power purchase agreement between utility National Grid and offshore wind developer Deepwater Wind with regard to a proposed wind energy installation to be located three nautical miles southeast of Block Island in Rhode Island state waters (the “PPA”). See <a href="http://www.courts.ri.gov/Courts/SupremeCourt/OpinionsOrders/opinions/10-273.pdf">In re: Review of Proposed Town of New Shoreham Project, No. 2010-273-M.P. (4185)(July 1, 2011)</a>(“New Shoreham”). <br /><br />The New Shoreham decision resolved a challenge brought by third party intervenors, Conservation Law Foundation (“CLF”), Toray Plastics (“TP”) and Polytop Corp.(“PTC”) (together, the “intervenors”) as to the legality of a PPA submitted by Deepwater Wind and National Grid in 2010 ("2010 PPA"). Under the 20-year 2010 PPA, National Grid will pay up to 24.4 cents per kilowatt hour for electricity in the first year of operation with an annual 3.5% increase over the lifetime of the project. The intervenors alleged that the rates set by the PPA are nearly three times higher than the 6.9 cents per kilowatt hour that National Grid pays for electricity from traditional generation sources such as natural gas-fired facilities and nuclear power plants, and therefore are not “commercially reasonable” as required under R.I. Gen. Laws § 39-26.1-7 (2010) (Rhode Island’s Long Term Contracting Standard for Renewable Energy statute) (the “LTC statute”). <br /><br />At the heart of the parties dispute is the definition of the term “commercially reasonable”. Under the original LTC statute passed by the General Assembly in 2009, the PUC was required to review the Block Island PPA using the definition set forth at § 39-26.1-2(1): “terms and pricing that are reasonably consistent with what an experienced power market analyst would expect to see in transactions involving newly developed renewable energy resources.” <br /><br />In 2009, National Grid and Deepwater Wind submitted their initial PPA to the PUC (the “2009 PPA”). Citing the above definition of “commercially reasonable”, the PUC rejected the 2009 PPA. Specifically, the PUC found that when it compared the terms and pricing of the 2009 PPA to any renewable energy project, “regardless of sizing restrictions, technology, location or novelty”, the 2009 PPA was not “commercially reasonable.” See <a href="http://www.ripuc.org/eventsactions/docket/4111-NGrid-Ord19941(4-2-10).pdf">2009 PUC Decision</a>.<br /><br />Subsequently in 2010, the Rhode Island General Assembly issued an <a href="http://www.rilin.state.ri.us/Statutes/TITLE39/39-26.1/INDEX.HTM">amended version of the LTC statute</a> ("Amended LTC"). The Amended LTC included, among other changes, a special new definition of the term “commercially reasonable” which was to be applied solely with regard to the PUC’s review of a Block Island offshore wind project PPA. The Amended LTC definition provides that the PPA’s “terms and conditions [will be considered] commercially reasonable [if the] terms and pricing…are reasonably consistent with what an experienced power market analyst would expect to see for a project of similar size, technology and location, and meeting the policy goals in [§ 39-26.1-7(c)(i); (c)]." <br /><br />Following the enactment of the Amended LTC, National Grid and Deepwater Wind resubmitted their PPA to the PUC ("2010 PPA"). The 2010 PPA contained pricing and terms that are virtually identical to those set forth in the 2009 PPA. The PUC approved the 2010 PPA in August 2010. <br /><br />The intervenors appealed the PUC’s decision to the Rhode Island Supreme Court through a petition for certiorari filed in September 2010. The intervenors argued that the PUC had “exceeded its authority or acted illegally, arbitrarily, or unreasonably” when it approved the 2010 PPA.<br /><br />Following exhaustive briefing and oral arguments by both parties (see here), the Rhode Island Supreme Court issued its decision on July 1. In its 75 page opinion, the Court unanimously rejects the intervenors’ challenge and upheld the PUC’s approval of the PPA. In so doing, the Court stated:<br /><br /><blockquote>Although we view with trepidation the General Assembly’s unwavering quest to sink this demonstration wind farm into the sediment of Rhode Island’s continental shelf, we nonetheless are constrained by our standard of review and the bounds of the revised [long-term contracting] statute.</blockquote> <br /><br />Notably, the Court held that the Amended LTC statute did not require the PUC to balance the costs of the project against the benefits. Rather, the PUC’s review of the PPA needed only to consider the criteria set forth in the Amended LTC statute. Thus, held the Court, the PUC acted appropriately when it considered only potential positive impacts of the project.<br /><br />The Court concluded the Opinion with what could be construed both as a critique of the General Assembly's 2010 amendments to the LTC as well as a whimsically quaint wish for the ultimate success of the Block Island offshore wind project, and for the U.S. Offshore Wind industry generally:<br /><br /><blockquote>...it is this Court's fervent hope that our Legislature's William Seward-esque policy decision championing this amended purchase-power agreement proves as lucrative and majestic as the Alaska Purchase of 1867.</blockquote><br /><br />Because the case does not concern federal law or a federal constitutional challenge to Rhode Island state law, this decision is final and is not eligible for review on certiorari to the U.S. Supreme Court. Nevertheless, while this particular obstacle to development of the project has been eliminated, Deepwater Wind still has significant hurdles to overcome before it can begin construction of its Block Island project. For example, Deepwater Wind must still secure permitting from, among other agencies, the Rhode Island Coastal Resources Management Council and the U.S. Army Corps of Engineers. Hopefully, the affirmation of its PPA with National Grid will bolster investor confidence and help Deepwater Wind to procure the over $200 million in front-end financing needed for the project. <br /><br />The New Shoreham case is among the first of what will likely be many challenges to PPAs fashioned for offshore wind installations. Because the upfront development, permitting, supply-chain, and construction costs for offshore wind are so high, PPAs negotiated for these projects typically present rates that are significantly higher than rates associated with traditional and/or existing generation sources. As in Rhode Island, states will most likely be forced to enact legislation that authorizes exceptional terms (see e.g., <a href="http://www.votesmart.org/billtext/31215.pdf">New Jersey</a>) and/or requires state utility commissions to employ special analytical criteria for new renewable generation projects if these projects have any hope of being built.Jennifer Simon, Esq.http://www.blogger.com/profile/08405807621514416009noreply@blogger.com0tag:blogger.com,1999:blog-3652519002056141194.post-29616972143782481112011-06-22T08:56:00.000-07:002011-06-23T06:02:27.374-07:00And we're back!Dear Friends and Colleagues,<br /><br />You may have noticed that things have been very quiet for the last month here at the Ocean and Offshore Energy Projects and Policy Blog—and it isn’t for lack of developments in the offshore renewable energy world.<br /><br />I have recently relocated from Philadelphia to join <a href="http://www.blogger.com/www.nixonpeabody.com">Nixon Peabody LLP</a>’s <a href="http://www.nixonpeabody.com/services_overview.asp?SID=71">Environmental</a> and <a href="http://www.nixonpeabody.com/services_overview.asp?SID=7">Energy</a> Practice Group in the firm’s Boston office. Among the many reasons that factored into my decision is Nixon Peabody’s unparalleled expertise with the legal issues that impact ocean-based renewable energy projects and the firm’s commitment to and enthusiasm for working with developers and other interested entities who want to see the United States’ offshore renewable energy industry flourish.<br /><br />Nixon Peabody has one of the broadest energy practices in the country and has served the needs of energy industry clients for more than 100 years. Our energy practice includes a wide variety of renewable energy clients including developers of wind, solar, biomass and other renewable<br />technologies.<br /><br />With regard to marine-based renewable energy projects, Nixon Peabody’s attorneys have:<br /><br /><ul><br /><li>Assisted developers to prepare Responses to Requests for Proposals and Requests for Information with regard to potential offshore wind installations in the Northeast, Mid-Atlantic, and Great Lakes regions;</li><br /><li>Assisted developers to negotiate leases to install met towers in both state and federal waters; </li><br /><li>Assisted a developer to secure a Memorandum of Understanding for a Power Sales Agreement; </li><br /><li>Provided clients with advice and analysis regarding the permitting requirements involved in both offshore generation and transmission plans; </li><br /><li>Advised clients with regard to structuring a practicable financing plan for developments;<br />Assisted clients through all stages of submarine electric transmission project development and financing, including state and federal siting and permitting issues, commercial agreements such as supply chain and construction contracts, federal market-based and incentive rate proceedings, transmission capacity purchase and sale agreements, and financial structuring; and </li><br /><li>Advised and assisted clients to comply with various legislative and regulatory schemes including those governed by BOEMRE, the United States Army Corps of Engineers, NOAA, and various other local, state, and federal authorities. </li></ul><br /><p>The energy practice has 5 attorneys listed in Chambers USA America’s Leading Lawyers for Business (2011), and supported by additional teams of lawyers in such areas as intellectual property, creditor’s rights and workouts, and litigation and arbitration.<br /><br />Nixon Peabody attorneys are frequent speakers at conferences presented by national industry trade groups such as SEIA, AWEA, and ACORE. The firm is also an active member of these groups. Many of our attorneys also speak at conferences presented by commercial sponsors such as Infocast, EUCI, Euromoney, Platt’s, and LSI.<br /><br />I am extremely honored and excited to join the team here at Nixon Peabody LLP and hope that you will feel free to contact me at my new professional home.<br /><br />Thanks for being patient during this transitional period. Keep an eye out for my next post where I will resume my usual analysis of timely events in offshore renewable energy development and policy!<br /><br />Best,<br />Jennifer Simon Lento, Esq.<br />Nixon Peabody LLP<br />100 Summer St.<br />Boston, MA 02110<br />jsimonlento@nixonpeabody.com<br />617-342-1352<br /><a href="http://www.blogger.com/www.nixonpeabody.com">http://www.blogger.com/www.nixonpeabody.com</a><br /></p><br /><ul></li></ul>Jennifer Simon, Esq.http://www.blogger.com/profile/08405807621514416009noreply@blogger.com0tag:blogger.com,1999:blog-3652519002056141194.post-30179754996020688072011-05-17T15:01:00.000-07:002011-05-17T14:40:15.216-07:00Offshore Wind State Update: Mid-Atlantic Edition (New Jersey, Maryland, Virginia, North Carolina)<span style="font-size:180%;"><strong>New Jersey</strong><br /></span><br /><strong><em>Offshore Wind Renewable Energy Credit Program:</em></strong><br /><br />On Monday May 16, 2010, the <a href="http://nj.gov/bpu/">New Jersey Board of Public Utilities</a> <a href="http://www.nj.gov/bpu/pdf/boardagendas/20110516.pdf">announced and confirmed</a> that they have begun accepting applications for offshore wind projects in state waters. Applications must be received by or before June 14, 2011.<br /><br />Under the recently adopted <a href="http://www.state.nj.us/bpu/pdf/rules/oswregs1.pdf">Offshore Renewable Energy Credit regulations</a>, applications will enter a six-month review process after they have been received and deemed administratively complete.<br /><br /><strong><em>Fishermen's Energy:</em></strong><br /><br />Fishermen's Energy, the developer spearheading an effort to build a windfarm in New Jersey state waters off of Cape May, NJ, has announced that the New Jersey Department of Environmental Protection (NJDEP) has issued the major environmental permits to build its demonstration-scale six turbine Fishermen's Atlantic City Windfarm to be located in New Jersey State waters off the coast of Atlantic City.<br /><br />In a May 6, 2011 press release, Fishermen’s Energy announced that they have now received approval from the New Jersey State House Commission for a Green Acres permit and the Tidelands Council for an electric line easement and turbine locations license required to build its demonstration-scale six turbine Fishermen's Atlantic City Windfarm. These were the remaining State permits required for the project to<br />commence construction.<br /><br />This wind energy project will be located in New Jersey State waters off the coast of Atlantic City. Fishermen’s Energy also announced the completion of a year of pre-construction avian and marine mammal monitoring, keeping the project on target for a Fall 2012 commissioning.<br /><br />Earlier this spring, NJ DEP issued the project's CAFRA Individual Permit, Waterfront Development Permit and Water Quality Certificate after technical, legal, and staff review of the project application and after a public notice and comment period which garnered only positive support from a variety of stakeholders.<br /><br /><span style="font-size:180%;"><strong>Maryland</strong><br /></span><br />Despite strong support from Maryland's Governor O'Malley, the Maryland legislature has decided to shelve proposed legislation which would have required state utilities to enter into power purchase agreements with offshore wind generation facilities to be developed off of Maryland's coastline.<br /><br />Supporters of the legislation, entitled the <a href="http://mlis.state.md.us/2011rs/bills/hb/hb1054f.pdf">Maryland Offshore Wind Energy Act</a>, hope to reintroduce the proposed law again early next year.<br /><br /><strong><span style="font-size:180%;">Virginia</span></strong><br /><br />On May 10, 2011, the Associated Press reported that Virginia Utility <a href="http://www.dom.com/dominion-virginia-power/index.jsp">Dominion</a> Power announced that it will not include offshore wind as part of its generation portfolio until that offshore wind power becomes cost-competitive with traditional forms of generation. Dominion issued this statement in response to the launch of <a href="http://va4wind.com/">VA4Wind</a>, a consortium of environmental and green economy offshore wind energy advocates.<br /><br />“The costs must become competitive with other conventional or renewable forms of generation for the technology to be chosen,” Jim Norvelle, a Dominion spokesman, wrote in an e-mail to the Associated Press. “Dominion continues to pursue cost reduction options and would put plans in place to build when it is cost effective to do so.”<br /><br /><span style="font-size:180%;"><strong>North Carolina</strong><br /></span><br />On April 19, 2011, Republican State Sen. Fletcher Hartsell filed a bill in the North Carolina legislature entitled <a href="http://www.ncga.state.nc.us/Sessions/2011/Bills/Senate/PDF/S747v1.pdf">An Act to Encourage the Development of the State's Offshore Wind Energy Resources and to Attract Jobs and Economic Development</a>. The bill was filed just short of the deadline for bills that can be considered during the current legislative session.<br /><br />The Hartsell bill, which follows (but does not replicate) both New Jersey's 2010 <a href="http://www.votesmart.org/billtext/31215.pdf">Offshore Wind Economic Development Act</a> and the now-shelved <a href="http://mlis.state.md.us/2011rs/bills/hb/hb1054f.pdf">Maryland Offshore Wind Energy Act</a>, requires the North Carolina Utilities Commission to issue regulations mandating that state utilities enter into power purchase agreements for up to 2,500 megawatts of offshore wind energy. The legislation stipulates that the offshore wind generation facilities would be built over a period of seven to ten years, and requires the first project to begin producing power by Dec. 31, 2017. The legislation also sets the goal of building 5,000 megawatts of offshore nameplate capacity by 2030.<br /><br />The regulations issued by the State Utilities Commission pursuant to the bill set forth a series of aggressive deadlines in order to meet the 2017 project completion date: <br /><p></p>January 1, 2012: The Commission must issue a request for proposals soliciting bids from offshore wind project developers.<br /><br />April 30, 2012: Responses to the RFP from potential project developers are due.<br /><br />October 31, 2012: The Commission must review the Responses and award bids.<br /><br /><br /><p></p>Jennifer Simon, Esq.http://www.blogger.com/profile/08405807621514416009noreply@blogger.com2tag:blogger.com,1999:blog-3652519002056141194.post-87084400874371039442011-04-28T06:38:00.000-07:002011-04-28T07:02:29.892-07:00Offshore Wind: An Argument for AestheticsMany of those opposed to offshore wind power have argued that offshore wind turbines are an aesthetic blight. Typically, my response to that position has been, "Ok, but have you ever seen a coal fired power plant?" With the understanding that aesthetics are somewhat subjective, I think we can all agree that this:<br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh-ufUINCNHpIeuImaVSAhfsfxWOlN0sz18BAv-KF4o0331gg07VwTPB8Bj3XWuTVjasxFeMIzOe-Fbip37iUvIkf1TaMhrDTt8JzUw4llftotPnoLNrTZEDXJjHIO5qx1AHX9fS3Vx1njP/s1600/osw.jpg"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 278px; height: 181px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh-ufUINCNHpIeuImaVSAhfsfxWOlN0sz18BAv-KF4o0331gg07VwTPB8Bj3XWuTVjasxFeMIzOe-Fbip37iUvIkf1TaMhrDTt8JzUw4llftotPnoLNrTZEDXJjHIO5qx1AHX9fS3Vx1njP/s320/osw.jpg" border="0" alt=""id="BLOGGER_PHOTO_ID_5600631996633727842" /></a><br /><br />is not as ugly as this:<br /><br /><a href="http://gallery.usgs.gov/images/03_17_2010/mIYLc55bb7_03_17_2010/medium/coalplant.jpg"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 360px; height: 485px;" src="http://gallery.usgs.gov/images/03_17_2010/mIYLc55bb7_03_17_2010/medium/coalplant.jpg" border="0" alt="" /></a><br /><br />In the spirit of wind-favorable aesthetic comparisons, a California-based non-profit organization which advocates for electric vehicles recently issued the following public service announcement. This may be the first domestic video advertisement in support of offshore wind:<br /><br /><object style="height: 390px; width: 640px"><param name="movie" value="http://www.youtube.com/v/3QA5aLjEgfc?version=3"><param name="allowFullScreen" value="true"><param name="allowScriptAccess" value="always"><embed src="http://www.youtube.com/v/3QA5aLjEgfc?version=3" type="application/x-shockwave-flash" allowfullscreen="true" allowScriptAccess="always" width="640" height="390"></object>Jennifer Simon, Esq.http://www.blogger.com/profile/08405807621514416009noreply@blogger.com1tag:blogger.com,1999:blog-3652519002056141194.post-5356707423246883102011-04-21T11:36:00.001-07:002011-04-21T11:44:00.478-07:00Ocean & Offshore Energy Projects and Policy Blog is one of LexisNexis' Top 50 Blogs for 2011!<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjQHNfLnO9YFwz3O2nZ-172vFF_qkwX0bxk-gz3bpTeBRer-20pEzcjMZYlM8CbnoMEGcHJz3mb2yucsE4BcPB-zXH3z25TWZQdr-qMntSQ95dbk7hpjuAj4OsC9T01ldIVh1J44jcT_8cD/s1600/enviro-community-blogs-banner-2011-114x145.jpg"><img style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;width: 114px; height: 145px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjQHNfLnO9YFwz3O2nZ-172vFF_qkwX0bxk-gz3bpTeBRer-20pEzcjMZYlM8CbnoMEGcHJz3mb2yucsE4BcPB-zXH3z25TWZQdr-qMntSQ95dbk7hpjuAj4OsC9T01ldIVh1J44jcT_8cD/s320/enviro-community-blogs-banner-2011-114x145.jpg" border="0" alt=""id="BLOGGER_PHOTO_ID_5598109421345926402" /></a><br />Dear Offshore Energy Blog Readers, Colleagues and Friends:<br /><br />Thanks to your support and readership, the LexisNexis Environmental Law & Climate Change Community has selected this blog as one of the top 50 blogs of 2011. <br /><br />I look forward to continuing to publish timely analysis of cutting edge developments in ocean energy project development, regulation, and policy making in 2011 and beyond. <br /><br /><br />Best, <br />Jennifer Simon Lento, Esq.Jennifer Simon, Esq.http://www.blogger.com/profile/08405807621514416009noreply@blogger.com0tag:blogger.com,1999:blog-3652519002056141194.post-45802171098280779012011-04-19T08:26:00.000-07:002011-04-19T08:34:40.320-07:00Secretary Salazar Announces Approval of Cape Wind's Construction and Operations Plan!At 10:30am on April 19, 2011, Department of the Interior Secretary Ken Salazar announced that Cape Wind's Construction and Operations plan has been approved. Secretary Salazar made the announcement at the Charlestown Navy Yard in Boston and was accompanied by Jim Gordon, the President and CEO of Cape Wind, LLC and Massachussetts governmental representatives. <br /><br />The Department of the Interior posted the following ><a href="http://www.doi.gov/news/pressreleases/Salazar-Announces-Approval-of-Cape-Wind-Energy-Project-Construction-and-Operations-Plan.cfm">press release </a> at the DOI website:<br /><br /><blockquote>WASHINGTON, DC – Secretary of the Interior Ken Salazar today announced that the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) has approved a Construction and Operations Plan (COP) submitted for the Cape Wind Energy Project, which is required before construction may begin on the generation facility planned in Nantucket Sound. The timeframe reported in the COP submitted by Cape Wind Associates suggests that construction of the nation’s first offshore wind farm could begin as early as the fall. <br /><br />“The Department has taken extraordinary steps to fully evaluate Cape Wind’s potential impacts on environmental and cultural resources of Nantucket Sound,” said Secretary Salazar. “By signing the Construction and Operations Plan today, we are even closer towards ushering in our Nation’s first offshore wind energy facility while creating jobs.” <br /><br />“After a thorough review of environmental impacts, we are confident that this offshore commercial wind project – the first in the nation – can move forward. This will accelerate interest in the renewable energy sector generally and the offshore wind sector specifically, and spur innovation and investment in our nation’s energy infrastructure,” said BOEMRE Director Michael R. Bromwich.<br /><br />"With today's announcement by Secretary Salazar, we are one step closer to benefiting from the clean energy, green jobs and long-term economic benefits that will result from creating the nation's first offshore wind farm," said Governor Deval Patrick. "States up and down the East Coast are now looking to Massachusetts with envy as we launch this brand new American industry." ?<br /><br />The proposed action, including its size and location, remain substantially the same as analyzed in the Cape Wind Final Environmental Impact Statement (FEIS) that was published in January 2009. The Cape Wind energy project calls for 130 3.6± megawatt wind turbine generators, each with a maximum blade height of 440 feet, to be arranged in a grid pattern on the OCS in Nantucket Sound, offshore Cape Cod, Martha’s Vineyard, and Nantucket Island.<br /><br /><br />As part of its evaluation of the COP, the bureau conducted an Environmental Assessment (EA) under the National Environmental Policy Act (NEPA) to determine whether there were any significant impacts that had not been discussed in the 2009 FEIS or other environmental assessments, and concluded that all impacts had been properly examined. BOEMRE also issued a Record of Decision for the COP approval, which details the terms and conditions that Cape Wind Associates will need to follow these terms and conditions are in addition to those established in the lease agreement.<br /><br />A notice about the preparation of an EA was posted on the BOEMRE website in February which initiated a comment period and provided an opportunity for public input. BOEMRE received and considered approximately 160 comments during the comment period. Issues considered in the EA include: additional surveys and sampling, conflicts with aviation traffic and fishing use, emergency response, migratory birds, microclimate, oil within wind turbine generators, permits issued by other federal agencies and consultations with other agencies. <br /><br />For more information about the Cape Wind energy project, including the COP, previous environmental reviews, Record of Decision, lease and related documents, please visit: http://www.boemre.gov/offshore/RenewableEnergy/CapeWind.htm.</blockquote>Jennifer Simon, Esq.http://www.blogger.com/profile/08405807621514416009noreply@blogger.com2tag:blogger.com,1999:blog-3652519002056141194.post-9880679171873421032011-04-06T09:32:00.000-07:002011-04-18T13:11:51.267-07:00Offshore Wind State Update: New England Edition (Maine, Massachusetts and Rhode Island)The States have been busy this year. Maine has been focusing on developing new technologies. Massachusetts and the Cape Wind project have finally (fingers crossed here!) overcome the worst of the legal obstacles but now must find solutions to financial challenges. Rhode Island's Deepwater Wind Block Island project is still ensnared in legal challenges related to financing issues. See the below for more detailed updates.<br /><br /><strong>MAINE</strong> <br /><br />WindFloat Maine LLC of Camden, a subsidiary of Principle Power Inc., and a member of the DeepCwind Consortium at the University of Maine's Advanced Structures and Composites Center, received a grant of $500,000 from the Maine Technology Institute. The money will be used towards the development of a <a href="http://www.marineitech.com/downloads/WindFloatBrochure.pdf">floating wind turbine platform </a>design, also called Windfloat. WindFloat Maine also brought in a $500,000 matching investment. <br /><br />The significance of viable floating wind turbine technology should not be underestimated. The turbines that are presently installed at offshore wind farms must be secured to the ocean floor via monopile or gravity offset mechanisms. For this reason, all currently installed offshore windfarms worldwide are installed in waters that are <30 meters. Although new advances in marine turbine technology has made it practicable to install turbines off the eastern seaboard of the United States at depths of up to approximately 40-50 meters. <br /><br />However, the western seaboard of the United States has significantly steeper ocean bathymetry-- that is, the ocean floor drops off precipitously relatively close to shore. This makes the western seaboard a poor candidate location for offshore windfarms regardless of the available wind resources (and Pacific coastal wind resources are not insignificant). See, e.g., <a href="http://www.nrel.gov/docs/fy10osti/45889.pdf">NREL Offshore Wind Resource Map for Washington State</a>. However, proposed floating turbine technology would allow offshore windfarms to be constructed at depths of 40-900 meters, thus effectively opening up the Pacific coast of the United States.<br /><br /><strong>Massachussetts</strong> <br /><br />Cape Wind may begin construction as early as this year. However, Cape Wind Associates, LLC, the developer of the 130-turbine 420MW project, may be in trouble if it cannot obtain sufficient financial backing. <br /><br />At present, half of the power generated from Cape Wind will be sold to National Grid PLC subject to a 15-year power purchase agreement. Cape Wind has not been able to secure a power purchase agreement for the remaining name plate capacity. The guarantee of a back-end revenue stream yielded through a power purchase agreement provides lenders with the assurance and comfort that loans for front-end costs (like construction) will be repaid. Therefore, Cape Wind's inability to secure a PPA for the entirety of its production does not bode well. <br /><br />The first phase of construction will cost approximately $1.7 billion. Cape Wind now hopes to find a "strategic partner" that would invest a significant portion of the estimated $500 million of equity needed before debt financing can be launched to round out the complete financing package.<br /><br /><strong>Rhode Island</strong><br /><br />On Wednesday April 6, the Rhode Island Supreme Court heard oral arguments in a case wherein the Rhode Island Attorney General along with a variety of intervenors (most vocally, the Conservation Law Foundation (“CLF”), Toray Plastics (“TP”) and Polytop Corp.(“PTC”)) have challenged the legality of an amended power purchase agreement between National Grid and Deepwater Wind (In re: Review of Amended Power Purchase Agreement between Narragansett Electric Company d/b/a National Grid and Deepwater Wind Block Island, LLC pursuant to R.I. Gen.Laws § 39-26.1-7, <a href="http://www.ripuc.org/eventsactions/docket/4185page.html">Docket No. 4185</a>). The power purchase agreement governs National Grid’s purchase of certain quantities of power generated by a proposed 8-turbine offshore wind farm planned to be located off of Block Island in the jurisdictional waters of Rhode Island. <br /><br />The court's decision is expected within 60 days. If the Supreme Court finds the intervenors’ arguments convincing, it will likely mean that Deepwater Wind’s Block Island wind farm will not get built.<br /><br />The history of the case is somewhat confusing. Back in December 2009, the Rhode Island Public Utilities Commission received for its review a power purchase agreement between National Grid and Deepwater Wind. This PPA was subject to Rhode Island Gen. Laws § 39-26.1-1 to 8. The relevant provision of the law required National Grid to “solicit proposals for one newly developed renewable energy resources project of ten (10) megawatts or less that includes a proposal to enhance the electric reliability and environmental quality of the Town of Shoreham.” See R.I. Gen. Laws §39-26.1-7(a). Once National grid had identified the project, National Grid was to enter into negotiations with the selected project developer with the goal of “achieving a commercially reasonable contract.” R.I. Gen. Laws §39-26.1-7(b). <br /><br />During the course of the R.I. PUC’s review of the December 2009 PPA, a variety of intervenors, including CLF, TP and PTC, entered submissions arguing that the December 2009 PPA was not “commercially reasonable.” See <a href="http://www.ripuc.org/eventsactions/docket/4111page.html">R.I. PUC Docket No. 4111</a>. On that basis, the R.I. PUC concluded that the 2009 PPA did not comply with the requirements of R.I. Gen. Laws §39-26.1-7(b), and refused to approve it. See <a href="http://www.ripuc.org/eventsactions/docket/4111-NGrid-Ord19941(4-2-10).pdf">R.I. PUC Opinion</a>. <br /><br />On April 28, 2010, the Rhode Island legislature adopted revised legislation that significantly altered the Rhode Island Gen. Laws § 39-26.1-1 to 8. See <a href="http://www.rilin.state.ri.us//BillText10/SenateText10/S2819Aaa.pdf ">revised legislation here</a>. Most notably, the new legislation (a) specifically authorized National Grid to enter into a PPA for an 8-turbine offshore wind project; (b) changed the criteria under which the R.I. PUC was to review that PPA; (c) and provided explicitly for the same intervenors whom had challenged the original PPA to challenge the amended PPA again within the scope of a streamlined process. <br /><br />Subsequently, National Grid and Deepwater Wind resubmitted their PPA to the Rhode Island PUC. The intervenors, not surprisingly, again the challenged the PPA. However, instead of challenging the PPA exclusively, the intervenors now also argue that the new legislation is itself illegal. <br /><br />For a summary of the parties’ arguments, see the <a href="http://www.projo.com/business/content/DEEPWATER_SUPREME_04-07-11_85NDLEK_v14.18632f6.html">Providence Journal</a>.Jennifer Simon, Esq.http://www.blogger.com/profile/08405807621514416009noreply@blogger.com0tag:blogger.com,1999:blog-3652519002056141194.post-66050963758218337752011-03-18T11:26:00.000-07:002011-03-18T12:09:37.615-07:00Japan and the Resilience of Wind PowerAlthough this blog focuses on the United States Offshore Wind industry, things occasionally happen outside of the United States that warrant coverage here. For those of us watching from the safety of the Western Hemisphere, the horrific destruction caused by the earthquakes and tsunami in Japan is simply incomprehensible. And, as if the physical impact of the earthquakes and tsunami weren`t enough, the crisis at the Fukushima Nuclear Plant appears to be getting worse by the hour, and news sources are now reporting that radiation leaks may be severe enough to impact human health and welfare. <br /><br />According to the <a href="http://www.world-nuclear.org/info/inf79.html">World Nuclear Association</a>, Japan's nuclear power plants provide approximately 30% of consumed electricity in Japan. At least 25% of Japan's 55 nuclear reactors have been shut down since the earthquake and tsunami on March 11, 2011. <br /><br />As Japan begins the long road of "rebuilding the country <a href="http://www.washingtonpost.com/business/japanese_prime_minister_urges_nation_not_to_be_discouraged_as_it_rebuilds_from_scratch/2011/03/17/AB2gabn_story.html?wprss=rss_local-business">from scratch</a>", it is important to highlight the infrastructure that survived the catastrophes. <br /><br />Amazingly, Yoshinori Ueda, leader of the International Committee of the Japan Wind Power Association & Japan Wind Energy Association has reported that there has been no damage reported at any of Japan's member wind generation plants-- including the Kamisu semi-offshore wind farm. The Kamisu wind farm, which is located approximately 300km from the epicenter of the quake, was designed to withstand earthquakes-- and the merit of that design should plainly be lauded. <br /><br />According to the <a href="http://www.huffingtonpost.com/kelly-rigg/battleproof-wind-farms-su_b_837172.html">Huffington Post's Kelly Rigg</a>, Mr. Ueda has confirmed that the majority of Japanese wind turbines are fully operational and have been asked to increase output to make up for shortages due to the disaster: <br /><br /><blockquote>Eurus Energy Japan says that 174.9MW with eight wind farms (64% of their total capacity with 11 wind farms in eastern part of Japan) are in operation now. The residual three wind farms (Kamaishi 42.9MW, Takinekoshirai 46MW, Satomi 10.02MW) are stopped due to the grid failure caused by the earthquake and Tsunami. Satomi is to re-start operations in a few days. Kamaishi is notorious for tsunami disaster, but this wind farm is safe because it is locate in the mountains about 900m high from sea level.</blockquote><br /><br />The resilience of wind power in the face of incredible natural forces should not be overlooked. <br /><br />Should you wish to contribute to organizations that are providing much-needed services and assistance to those who have been impacted by the earthquakes and tsunami in Japan, please consider donating to the following organizations:<br /><br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhUFikaGQ1L4YGE94l_c0XuyO2rPcz50ZCCjvhHee5JZYkc1OBu52G0qs5nbtLzbwt8lfs6Tm8h3K9hvu6NUSyxLamAOuLbWGGMRpqrISK845f104eiVZwQimLjheqvi0W9QQSqosQr-LVf/s1600/redcrosslogo.gif"><img style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;width: 169px; height: 51px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhUFikaGQ1L4YGE94l_c0XuyO2rPcz50ZCCjvhHee5JZYkc1OBu52G0qs5nbtLzbwt8lfs6Tm8h3K9hvu6NUSyxLamAOuLbWGGMRpqrISK845f104eiVZwQimLjheqvi0W9QQSqosQr-LVf/s320/redcrosslogo.gif" border="0" alt=""id="BLOGGER_PHOTO_ID_5585498294852700658" /></a><br /><a href="http://www.redcross.org/portal/site/en/menuitem.d8aaecf214c576bf971e4cfe43181aa0/?vgnextoid=46f51a53f1c37110VgnVCM1000003481a10aRCRD&vgnextfmt=default">The Red Cross<br /></a><br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg7_zmf2sZVHYri2KbP3k97vbG8QwH7pcyxZ9e3arM-Vym36SOIYQ3nExC7wOr17ntOZ4vjhxpOVATOCrvwpT2mqpZ2AUJYavAGQGRf6-Fi7qq9RC60H5WT2-YQVwgeM-Za0DrJj5r6XlJ-/s1600/msf-logo-header.jpg"><img style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;width: 209px; height: 70px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg7_zmf2sZVHYri2KbP3k97vbG8QwH7pcyxZ9e3arM-Vym36SOIYQ3nExC7wOr17ntOZ4vjhxpOVATOCrvwpT2mqpZ2AUJYavAGQGRf6-Fi7qq9RC60H5WT2-YQVwgeM-Za0DrJj5r6XlJ-/s320/msf-logo-header.jpg" border="0" alt=""id="BLOGGER_PHOTO_ID_5585498847751664274" /></a><br /><a href="http://www.doctorswithoutborders.org/donate/overview.cfm">Doctors Without Borders<br /></a>Jennifer Simon, Esq.http://www.blogger.com/profile/08405807621514416009noreply@blogger.com0