US Getting Ready for Offshore Wind Energy Project
Despite economy slows down the federal government is moving ahead to grant leases for the U.S.'s first offshore wind projects in history and at the same time state-based projects moving ahead too.
Comments on federal rules to govern a host of alternative energy projects proposed in federal waters off the coast of the U.S. drew about 225 responses by Monday's deadline, as the U.S. Mineral Management Service, or MMS, moves ahead with plans to lease the outer continental shelf to several companies.
Maureen Bornholdt, program manager of the MMS offshore alternative energy program, said the Interior Department remains on track to complete drafting the rules by the end of the year, wrapping up a three-year process.
There is a "very strong level of interest," she said. "We received a lot of substantial, constructive comments after workshops around the nation. We'll hunker down for the next several weeks."
Bornholdt declined to offer a specific dollar value on the leases that the government will be awarding, but she pointed out that the Energy Policy Act requires the federal government to receive a "fair return" through rents and operating fees, and competitive lease auctions.
"It's not free," she said of the leases. "We need to get a return there."
In another sign of growth in the ocean wind business, the American Wind Energy Association -- the leading trade group for wind in the U.S. -- drew more than 400 participants this week at an offshore wind conference in Delaware, about double the expected attendance, Bornholdt noted.
In terms of the first possible offshore project in the U.S., Delaware appears to have jumped to the front of the line to tap into nation's vast ocean wind resource, some 15 years after Europe led the way with the world's first major offshore projects.
Bluewater Wind of Hoboken, N.J., which proposes to build turbines with 40-foot blades about 12 miles off the coast of the state, marked the first wind developer in federal waters to ink a power purchase agreement for its project. Over the summer, the unit of Babcock & Brown inked a 25-year electric power supply contract with public utility Delmarva Power, a unit of Pepco Holdings Inc. (POM). Bluewater said the project could generate 450 megawatts, enough for 110,000 homes.
That project, along with several others for the coasts of New York, California, Rhode Island and New Jersey, as well as separate bid by Cape Wind for Nantucket Sound in Massachusetts, are moving to the front burner. New federal rules will help clear the way for several of them.
"The big story for offshore wind is the momentum," said Laurie Jodziewicz, manager of siting policies for the American Wind Energy Association. She pointed out that the Bluewater project, along with separate requests in state jurisdictions in New Jersey and Rhode Island, are picking up steam.
The proposals include a bid by fisherman of New Jersey, who are proposing an offshore wind farm to diversify into the energy business.
"We see a lot of interest from other companies," Jodziewicz said.
Brett Hellerman, who runs the $250 million Wood Creek Capital fund, said solar and particularly wind are drawing support in the alternative investment arena, where interest continues to build around the trading of carbon emission credits.
His firm continues to look for possible niche opportunities in the alternative energy arena as an example of the institutional interest behind wind projects.
Now that federal offshore leases appear on track, a number of regulatory hurdles will likely await the U.S.'s offshore wind projects, said Howard Siegel, a partner at Brown Rudnick and co-leader of the firm's energy and utilities practice group.
The Federal Energy Regulatory Commission will likely govern transmission lines to be built to the offshore wind turbines, and various state public utility commission will play a role as well, Siegel said.
"Building any new power plant isn't easy," he said. "It takes years."
But he noted that regulations on renewable portfolio standards, as well as the need for more electricity near the country's population centers on the coast, will push projects along.
"Offshore power does make good sense," he said. "It has the best ability to scale up of all renewables, along with solar."
Nevertheless, some barriers remain. Industry proponents are calling for the U.S. Congress to renew tax breaks for wind energy, set to expire at the end of the year.
Locally, some residents of affluent shoreline communities continue to object to projects based on their aesthetic and possible impact on local wildlife.
Meanwhile, several players continue to move ahead with offshore energy plans:
* Delaware: Bluewater Wind Delaware LLC
* New Jersey: Bluewater Wind New Jersey Energy LLC; also Fisherman's Energy of New Jersey and Winergy Power LLC.
* Georgia: Southern Co. .
* Florida: Aquantis LLC/Aquantis Development Co. Inc. for ocean current data collection and technology testing, Vision Energy, Florida Power & Light .
* California: Pacific Gas & Electric Co. and Marine Sciences.
* Massachusetts: Cape Wind project
(Courtesy CNN)