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More than 20 GW of US offshore wind generation capacity will
only get up and running if the Biden administration is able to
streamline and accelerate the federal permitting and approval
process.
The US offshore wind industry has great promise, with many a
developer vying to tap into its potential off the country's east
and west coastlines, but the sector has yet to deliver in terms of
actual-up-and-running projects.
To date, only two facilities totaling 42 megawatts (MW) are
operational: the 30-MW, five-turbine Block Island Wind Farm in
Rhode Island waters; and the 12-MW, two-turbine Dominion Coastal
Virginia Offshore Wind pilot in federal waters off the Virginia
coast.
When compared with a global offshore wind installed base of at
least 29 gigawatts (GW) by the end of 2020, the US' share is
"negligible," according to Rear Admiral (Ret.) Samuel De Bow, who
was involved in developing Rhode Island's special area zone
management plan as director of University of Rhode Island's Center
Of Excellence in Research on Offshore Renewable Energy.
He said the US is the second-largest builder of wind farms on
land, but right near at the bottom when it comes to offshore wind
facilities.
De Bow, attorneys, analysts, and developers attribute the reason
for the slow buildout to extensive environmental impact studies,
federal and state permitting coordination approvals, and a lack of
infrastructure to support the construction of offshore wind towers
and related equipment.
Winds of change
President Joe Biden, upon taking office in late January, singled
out renewable energy, offshore wind in particular, as one way the
country can generate carbon-free power by 2035.
At the launch of the administration's climate blueprint on 27
January, Biden directed the Secretary of Interior to identify ways
to expedite the permitting and siting of renewable energy
generating facilities on public lands and waters that have been
languishing for months.
The winds have already begun to shift at the Bureau of Ocean
Energy Management (BOEM), the Department of Interior's lead agency
charged with overseeing the entire offshore wind development
process. BOEM is authorized under the Energy Policy Act of 2005 to
issue leases, easements, and rights of way for renewable energy
development including offshore wind on the Outer Continental
Shelf.
On 3 February, Amanda Lefton, BOEM's newly appointed director,
indicated the agency would resume its review of the 800-MW Vineyard
Wind project off the coast of Massachusetts. The review was halted
in December 2020 at the developer's request.
Vineyard Wind had requested a pause in the process after it
decided to use a larger turbine than originally indicated, an
action the prior administration saw as a reason to start the permit
process anew, which observers saw as yet another delaying
tactic.
"BOEM is committed to conducting a robust and timely review of
the proposed project," Lefton added in a statement.
The question is whether BOEM's commitment to conducting a timely
review will translate into more offshore wind facilities coming
online sooner than the developers have projected.
"The speed with which BOEM and other state, local, and federal
agencies complete their reviews will depend on the complexity of a
given project, such as its size, location, environmental, and
safety impacts, among others," Rafael McDonald, IHS Markit director
of North American Renewable Power, said 5 February.
Buxton, who has been involved in negotiating offshore wind
approvals at the state and federal level, expects Biden's directive
will result in a positive response from regulators. "I think at the
very least it means newly filed applications will move more
quickly, but it should also mean that existing projects get
completed more quickly," he said.
Developers not only have to obtain an approval, but also must
reassure regulators they will comply with the conditions of
approvals. Delays usually occur when someone makes a mistake or
seeks a change to a permit.
Until now, the regulatory process - in BOEM's own words - could
take anywhere from five to 25 years, depending on the size and
scope of the project, approvals of site assessment and construction
and operations plans, and coordination with state and federal
agencies, among other variables.
Source: US Bureau of Ocean Energy Management
IHS Markit data show at least 21.9 GW related to 21 offshore
wind projects dotting the US Atlantic Coast in varying stages of
permitting, planning, and construction.
Of this total, the data show BOEM has approved site assessment
plans for 13 projects totaling 13.5 GW, while six projects with
7.99 GW of capacity remain under review.
A total of 10 projects are in various stages of BOEM review
today, including Revolution Wind Farm, a 704-MW joint project of
Ørsted, a Danish energy company, and Eversource Energy that will
send power to Connecticut and Massachusetts, and Dominion's 2,640
MW commercial Coastal Virginia Offshore Wind (CVOW) project.
Permitting hurdles
The data show that permitting, not cost, is the limiting factor.
And states as well as the federal government often are the culprits
in permit delays.
It's not enough to just get awarded a lease to build an offshore
wind facility, IHS Markit Senior Research Analyst Abhishek Singh
said. Developers then must contend with obtaining a variety of
environmental permit, equipment design, construction, and operation
plan approvals from BOEM as well as other federal, state, and local
agencies.
"Permitting for any commercial offshore wind project is a matter
of years, not just months," Anthony Buxton, who chairs Preti
Flaherty's energy practice in Portland, Maine, and served as the
regulatory counsel for the New England Aqua Ventus I
project—the first demonstration floating offshore wind project
in New England and the nation. The New England demonstration
project, which also will showcase a first-of-its-kind floating
platform made of concrete, is scheduled to come online in 2023. The
floating offshore wind turbines that Norwegian oil firm Equinor has
successfully installed off the coasts of Norway and Scotland. The
difference is the European floating turbines are made of steel, and
are akin to a "straw floating in glass," Buxton said.
Until now, Buxton said, a developer has typically been looking
at a five-to-eight-year period between filing a permit application
and coming online. Others like De Bow place the timeline at least
10 years.
It took Dominion just shy of eight years to get all the
necessary permit and design approvals to have its 12-MW pilot
project in service off the Virginia coast in fall of 2020. The
pilot became operational in October 2020 and entered service in
January 2021.
The CVOW pilot project, which is the first one to be owned by an
electric utility, has been an important first step toward offshore
wind development for Virginia and the United States, company
spokesman Jeremy Slayton said. With its completion, Dominion is
developing the next installation - the 2,640 MW CVOW commercial
project, where it plans to apply the lessons it learned in seeking
permits and approvals.
The proposed commercial offshore wind project, which Dominion
says would be the nation's largest offshore facility, is in the
throes of securing federal and state approvals and won't come
online before 2026. The Richmond, Virginia-based utility said
construction won't begin until 2024, as BOEM must approve
Dominion's commercial and operating plan, which was submitted in
December 2020.
The Trump administration is suspected of using the environmental
impact study of Vineyard Wind's impact along the entire Atlantic
Coast as a reason to hold up the project, Buxton said. "Maybe that
assessment will help solve the need for further studies as this one
was done so extensively," he added.
De Bow, who is currently a senior adviser at the environmental
and water permitting firm of Dawson & Associates, describes the
federal permitting process as "ominous."
In the US, one of the biggest impediments to progress is making
sure projects not only comply with federal laws, but also state
coastal management plans, he said.
The process also entails extensive coordination and approvals
from various federal agencies, De Bow said; and it's more
complicated if they aren't on the same page, not to mention
objections from special interests like the fishing industry or
citizen groups that are looking to protect marine life.
To date, BOEM has approved not a single construction and
operation plan for any major offshore wind project, Mark Kresowik,
the eastern deputy regional director of the Sierra Club's Beyond
Coal Campaign told IHS Markit.
Vineyard Wind was the only developer that came close to the
finish line, but its approvals were held up too by BOEM under the
prior administration, Kresowik said. This 800-MW project off the
Massachusetts coast may have lost a year due to the BOEM holdups,
Buxton said, adding that is his opinion.
Lack of infrastructure
A lack of support infrastructure also is hampering progress in
the US offshore wind sector, Buxton said, especially compared with
developments across the Atlantic Ocean in Europe. Port facilities
capable of handling and staging materials and equipment for the
foundations of offshore facilities that are bolted into the seabed
are needed, or which float, he said. Offshore wind turbines can
measure 850 feet from the water to the tip of the blade, while
floating offshore wind platforms, which developers find can easily
be deployed in waters deeper than 60 meters, can span 300 feet in
diameter, about the size of a football field.
"Europe has already developed the infrastructure, but we are
still in the beginning stages," Buxton said.
According to a 21 January IHS Markit outlook for floating
offshore wind, almost 80 MW of floating wind capacity is installed
in the United Kingdom, Japan, France, and Norway, and more than 150
MW is either under construction or has been approved by local
authorities in the United Kingdom, Portugal, and Norway.
Buxton and De Bow also pointed to the lack of certain classes of
vessels that are compliant with the Jones Act, a century-old US
maritime law requiring goods, including offshore wind equipment,
only be transported between US ports and waters on ships built,
owned, and operated by US citizens or permanent residents.
Dominion in December announced plans to build the nation's first
Jones Act-compliant vessel capable of transporting foundations and
turbines from ports to offshore sites. This vessel, with a hull
length of 472 feet and a width of 184 feet, also will include a
main crane with a boom length of 426 feet and lifting capacity of
2,200 short tons.
The company expects the offshore wind turbine installation
vessel to be available to support US offshore wind turbine
installations by the end of 2023, according to Slayton.
Once constructed, Slayton said, "the vessel will be available
for charter hire, including by Dominion Energy Virginia, subject to
the approval of the Virginia State Corporation Commission, in
connection with the installation of the [CVOW] commercial
project."
In the interim though, offshore wind developers must rely on
foreign-flagged vessels that will supply equipment via Jones
Act-compliant feeder vessels.
States driving offshore wind
Sierra Club's Kresowik expects to see a whole suite of projects
receive approval from New York to Virginia, Massachusetts to
Maryland, and New Jersey under the Biden administration.
States along the East Coast are driving demand for offshore
wind, according to IHS Markit's Singh.
Connecticut, Maryland, Massachusetts, New Jersey, New York, and
Virginia have established targets to procure a total of 28 GW of
power produced by offshore wind facilities by at least 2035 and had
selected approximately 9 GW of projects as of January 2021 to help
meet these goals, he added.
US offshore wind development is and will continue to be paced by
state mandates rather than strictly competitive economics,
according to IHS Markit's McDonald.
"The lower project levelized cost of electricity (LCOE) made
possible (for longer) by the latest federal policy developments
could inspire eastern states to increase mandates beyond current
levels, which could then lead to a higher build," McDonald
said.
IHS Markit estimates the current LCOE through the lifetime of an
offshore facility is $103 per megawatt-hour (MWh).
Aside from economics, the benefit of offshore wind, as most of
the world is discovering, is its high capacity factor of 65%, which
is much higher than the average 35% capacity factor that the US
Energy Information Administration calculated for wind in 2019.
Buxton said the high capacity factor for offshore wind alone
could be a boon for Biden who is seeking to replace fossil fuels
and especially for Northeastern states, which are looking to reduce
their reliance on fossil fuel for heating during the winter
months.
'Dramatic impact' of tax credit
The recently enacted investment tax credit for offshore wind
generation is expected to have a dramatic impact in the current
decade, driving LCOEs as much as $22/MWh lower than they would have
been absent the extension, according to an IHS Markit outlook for
the North American renewable power industry published in December
2020.
US Senator Ron Wyden, Democrat-Oregon, worked with then Senate
Finance Committee Chairman Chuck Grassley, Republican-Iowa, to
secure the offshore wind tax credit in a December 2020 spending
package that also included a host of reforms to modernize the US
energy sector.
"I hope these extensions serve as a bridge to the comprehensive
reform desperately needed to end our dependence on Big Oil and
ensure that green jobs are good jobs. I plan to keep at it until
America kicks its carbon habit once and for all," said Wyden at the
time.
On 4 February, Wyden assumed the helm of the chamber's finance
committee, which will oversee any future tax credit expansions or
extensions.
Posted 08 February 2021 by Amena Saiyid, Senior Climate & Energy Research Analyst, IHS Markit