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US eyes flood of offshore wind lease sales in 2022

28 August 2021 Keiron Greenhalgh

The US government plans a dramatic increase in offshore wind lease sales in 2022, even as critics call for speedier permitting to meet the Biden administration's 30 GW by 2030 goal for the sector.

The Bureau of Ocean Energy Management (BOEM) could hold as many as three offshore wind lease sales in 2022, Amanda Lefton, the agency's director, told the Business Network for Offshore Wind's 2021 International Partnering Forum (IPF) 26 August, and more could be on the agency's to-do list.

A 1.6-GW lease sale for waters off the coast of North Carolina is on tap for 2022, said Lefton. North Carolina Governor Roy Cooper was more specific, telling the IPF conference in Richmond, Virginia, that a Wilmington East lease sale would be held in the spring of 2022. Cooper issued a 9 June executive order that laid out a 2.8 GW by 2030 offshore wind target and an 8 GW by 2040 goal for the state.

The Wilmington East lease sale, if it happens, must be held before the end of June 2022 due to the Trump administration's moratorium on leasing in Outer Continental Shelf waters south of Virginia, which takes effect July 1, 2022.

In 2017, BOEM held a lease sale for the Kitty Hawk lease area in North Carolina waters. The lease was won by Avangrid Renewables. In 2015, BOEM considered lease sales for the Kitty Hawk Wind Energy Area (WEA), as well as the Wilmington East and West WEAs, but progress slowed during the Trump administration.

In July, BOEM said it would conduct an environmental review of Avangrid's 2.5-GW Kitty Hawk Wind project. "If approved, the Kitty Hawk offshore wind project will not only provide clean, reliable energy where it is needed most, it will help boost the region as a manufacturing and supply chain hub for the offshore wind industry," Lefton said in the Department of the Interior statement announcing the review.

A lease sale for the New York Bight is expected by the end of 2021 or early in 2022, and another one across the country on the Pacific Coast, Lefton said. She told the conference she is really excited by the agency's partnerships with California, with a lease sale possible as soon as 2022 in the Golden State's waters. There are "great opportunities in the Pacific," she added.

The Biden administration must also take a "hard" look at Gulf of Maine leasing, she told IPF attendees, noting particular interest in offshore wind from New Hampshire and Maine.

Previously, BOEM has held eight competitive offshore wind lease sales and issued 17 active commercial leases in Atlantic Coast waters from Massachusetts to North Carolina. The last held was for Massachusetts waters in December 2018.

The agency is also exploring wind potential in the Gulf of Mexico.

BOEM's fiscal 2022 budget, if approved, will advance the new lease areas as it provides extra funds for the agency, she said.

Permitting criticism

Despite the efforts of the Biden administration, with the 30-GW goal, environmental approvals, and now the potential for further lease sales, criticism surfaced at the conference that BOEM and its fellow federal agencies aren't doing enough to speed up permitting.

"We can definitely speed up the regulatory progress," Senator Ed Markey, Democrat-Massachusetts, told IPF attendees. Markey, an offshore wind advocate, also wants to boost support for the industry's US supply chain and manufacturing capabilities. Markey unveiled the Offshore Wind American Manufacturing Act earlier in August.

American Clean Power Association Federal Affairs Director Claire Richer told the conference that if she had a magic wand that could alter one thing in the offshore wind arena, her target would be a speeding up of the understanding of permitting at BOEM and the National Oceanic and Atmospheric Administration.

Senator Mark Warner, Democrat-Virginia, said there were options for expediting the permitting process. He said the US could learn from other countries, such as naming a facility a project of national importance.

"We need to bring that kind of expedited process to offshore wind," he said, adding: "We have no time to lose."

BOEM needs to boost its staffing capacity, he said. One option could be borrowing some staff from the US Army Corps of Engineers, he said. And Warner said the environmental community should scale back its demands on BOEM's site reviews if it wants to advance its climate agenda.

Lefton argued that the agency team recruited by President Joe Biden is very different to the one it replaced, and the impact is starting to be evident. BOEM, she said, is looking at a standardization of the lease process based on the lessons learned from the first phase of leasing.

"We've made remarkable progress and we've got a lot more coming," she said.

BOEM has moved away from a state-by-state approach, she said, and is engaging with stakeholders across the board to smooth the path to an expansion of offshore wind capacity.

Public engagement can lead to real-world results, said Lefton, and she pledged that the agency isn't leaving ocean health and biodiversity behind in its search for appropriate offshore wind locations. BOEM would continue to protect marine ecosystems, she promised.

The 30 GW by 2030 target that Biden set out in January is achievable, said Department of the Interior Deputy Secretary Tommy Beaudreau, adding that it ties up well with state processes and goals. "We know there is a market for every one of those gigawatts," he said.

Meeting the Biden administration's target for offshore wind involves three components, said Dominion Energy CEO Bob Blue—supportive public policy, intra-jurisdictional cooperation, and a skilled workforce, he said.

Virginia "all in for wind"

Evidence of ongoing progress emerged at the 24-26 August conference. Dominion Energy inked a deal at the conference to lease 72 acres of the Portsmouth Marine Terminal from the Port of Virginia.

The company will use the terminal space as a staging and pre-assembly area for the foundations and turbines that will be installed 27 miles off the coast of Virginia Beach at its 2.6-GW Coastal Virginia Offshore Wind (CVOW) project. The lease term is 10 years—for almost $4.4 million annually—and includes an option for two five-year renewals.

Dominion's deal with the Port of Virginia will "dramatically accelerate" the state's plans to reach its 5.2 GW by 2034 offshore wind target, said Governor Ralph Northam, who unveiled the agreement during a speech at the conference, and make Virginia a "national leader in offshore wind power production." Northam added "we are all in for offshore wind."

Northam told the conference that Virginia has a four-pronged plan. That plan's components, he said, are harnessing the state's natural assets, taking a co-operative approach, training a workforce, and providing the land and resources.

Orsted, meanwhile, announced a deal with Kiewit to build the first US-made offshore wind substation. The deal and others like it position the US to be a world leader in offshore wind, Orsted North America CEO David Hardy said, adding "we're behind, but we can catch up." Hardy said he looks forward to the day the US can export offshore wind ideas to the rest of the world.

Logistics problems?

Dominion's deal to supply CVOW with turbines assembled at the Port of Virginia might be the easiest of its kind in the US, according to executives from European construction and engineering companies involved in the US offshore wind sector.

Air draft restrictions are killing the possibilities for a lot of US assembly sites, said Smulders Business Development Manager Eric Finé, bemoaning the number of bridges between potential facilities and the open water. Air draft is the vertical clearance between the water's surface and the maximum height above the water due to a restriction.

Finé said he had spent the past few days looking for a fabrication site along the US East Coast and is still looking. He appealed to conference attendees for aid, quipping that a backyard of 100 or more acres would fit the bill.

Smulders earlier in the week inked a deal that will see the steel construction company work with Marmen Welcon to produce offshore wind structures at the Port of Albany in New York. Marmen Welcon is working with Norway's Equinor, the port, and the New York State Energy Research and Development Authority on an offshore wind tower manufacturing facility. Production is expected to begin at the end of 2023. Equinor is behind the 816-MW Empire Wind and Beacon Wind projects in New York waters.

"We are surprised how many good places [for fabrication or assembly] are closed off by bridges," concurred Jan De Nul Group Senior Business Development Manager Carl Heiremans.

In another deal announced during the week, Vineyard Wind selected Jan De Nul Group to supply and install cables for what is expected to be the first utility-scale offshore wind facility in the US when the 800-MW project is up and running.

More problems for Vineyard?

On the other side of the ledger—and backing up Warner's comment about environmentalists sometimes asking for too much—environmental groups are suing over the approval of the much-delayed Vineyard Wind facility. A lawsuit filed this week alleges BOEM failed to conduct an adequate environmental review of Vineyard Wind before green-lighting the project in May.

The group also alleges that BOEM, the National Oceanic and Atmospheric Administration, and the National Marine Fisheries failed to ensure that the project would not jeopardize the survival of federally listed species, including North Atlantic right whales.

"Some people oppose the industrial offshore development because it will harm their ocean view. Some people oppose it because it will result in higher electricity rates. Some will oppose it because it will hurt commercial fishing," said Val Oliver, a co-founder of Nantucket Residents Against Turbines, which filed the suit.

"While those are all valid and true concerns, what motivates us in our opposition to the industrial offshore development is the fact that it will result in the destruction of our ocean floor, its ecosystem, and have a deadly impact to countless bugs, birds, bats, fish and the critically endangered North Atlantic right whale," she added.

Vineyard Wind Chief Development Officer Rachel Pachter declined to comment on the suit to Net-Zero Business Daily at the conference.

Optimism abounds

Despite the challenges, optimism for offshore wind continues to abound in government and industry circles.

"We've been through so many problems that I have faith in this industry," said Beaudreau, who was the first director of BOEM.

Beaudreau is so optimistic, he believes Lefton has the best job in the federal government, he told the conference 25 August. A day later, Lefton agreed with him when addressing the conference.

That optimism is echoed at the Department of Energy. "When the winds of change blow, some build walls, some build wind turbines," said Secretary of Energy Jennifer Granholm.

The Biden administration is "the best partner you have ever had" for offshore wind, she said.

And executives are similarly focused. Dominion's Blue said: "We'll keep driving forward until we reach net zero," and CVOW is "key component" of the Richmond-based company's efforts to reach net zero. CVOW is now much more cost effective than ever before due to the ability to install bigger turbines, he added.

The company's plans involve getting "as clean as we can as fast as we can," said Blue, adding "we know our customers want clean energy."

Fellow developer US Wind is betting on the same enthusiasm up the US East Coast in Maryland, with its plans for over 2.5 GW of capacity in waters off the Mid-Atlantic state. The company expects to have a deal with a steelmaker for its Sparrows Point production facility in Baltimore within the next couple of months, CEO Jeff Grybowski told the conference, adding that US offshore wind success depends on a manufacturing base being established.

Some historical perspective on the expectations for offshore wind in the US was provided by Warner.

"Offshore wind is where the wireless industry was in the mid-1980s," he said, noting there are great opportunities in terms of jobs and money to be made.

Warner is either the richest or second-richest man in Congress, depending on which set of rankings one consults. The lawmaker made his fortune in the wireless telephone industry in the 1980s, in particular the cellular spectrum, co-founding Capital Cellular, which invested in Nextel. He said he got rich because he took a chance Wall Street and established telecoms players weren't willing to take, and that he hoped IPF attendees would achieve the same success with offshore wind as he did in the wireless telecoms industry.

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