The Winds of Change: Are We Ready for Offshore Wind Energy?

Readers of this blog in Ohio, Pennsylvania and West Virginia may agree that we seem to be blessed with abundant energy sources in our own Appalachian backyards which have provided stable energy to fuel our factories, industrial might and status as a world superpower.  But the development of these resource has presented environmental concerns, reigniting the discussion about the need for an effective energy policy.  Baby boomers remember the Arab Oil Embargo of 1973, long lines at gas stations, and the determination of our federal government to develop an effective energy policy that would result in energy independence (just say no to Arab oil).  Much has happened in the forty years that have elapsed but few would agree we have benefited by a comprehensive energy policy in our quest for clean, reliable, and safe sources of energy.  The availability of fossil fuels is hard to resist but the recent revelation that carbon emissions may be contributing to extreme weather suggests we should consider other energy sources that do not produce carbon emissions.  Indeed, President Obama framed his “all-of-the-above” energy strategy in a press release on March 15, 2012, but his policy seems to be a misnomer since he wants to back away from coal and nuclear and he considers natural gas to be only a “transition” fuel. 

Fearing that we are heading to a critical tipping point that could result in cataclysmic changes wrought by carbon emissions into the atmosphere, the Obama Administration is embarking on a regulatory effort of de-carbonization of domestic energy sources to address climate change (while emerging market economies are expanding their carbon emissions at astounding rates, with China surpassing the U.S. as the largest carbon emitter in 2006, and increasing its emissions by 8 percent in 2007 according to a New York Times article published on June 14, 2008).   In his State of the Union address on January 28, 2014, President Obama reiterated his “all-of-the-above” energy strategy and declared that it “is working, and today, America is closer to energy independence than we’ve been in decades.”  The green NGO “EcoWatch” which describes itself as “one of the nation’s leading environmental platforms reporting on environmental news, green living and sustainable business” issued a post on their DeSmog/Blog on March 18, 2013, commenting on the President’s strategy.  EcoWatch noted President Obama’s appointments of experienced, well regarded agency heads for the EPA, the Department of Energy and the Department of the Interior but questioned their priorities and similarly scolded the President for focusing primarily on research (rather than development) of renewable energy which enables the continued use of shale gas while the feds conduct their research.

Given our energy profile of 37% from coal, 30% from gas, 19% nuclear, 7% from hydroelectric- and the remaining 7% from other, primarily renewable (solar, wind, geothermal) sources (based on 2012 Energy Information Agency statistics), it is difficult to understand how our energy policy will continue to work if we transition out of coal and nuclear, and if natural gas is merely a “transition fuel” as labeled by President Obama.  It seems obvious that we will need to greatly expand our development of new energy sources to help offset the reduction in energy from sources meeting over half of our needs for the past several decades (coal and nuclear).

Offshore wind has been a stable source of energy for many countries in Europe for decades but has not gained traction in the U.S. due to high start up costs.  However, offshore wind is strong and steadier than wind blowing inland because there are no mountains and other topographic features to disrupt flow.  With thousands of miles of oceanic coastline potentially available for our domestic use (as well as the Great Lakes), offshore wind energy seems to be ripe for utilization but it has not been featured prominently in the national discussion.  Where does offshore wind power fit in as a component of our renewable energy portfolio?

The federal government has been studying and supporting the development of offshore wind power which is estimated to provide surprisingly abundant energy.   The U.S. Department of Energy’s National Renewable Energy Laboratory (NREL) issued a report in 2010 that assessed the electricity generating potential of offshore wind resources in the United States.  According to the Assessment of Offshore Wind Energy Resources for the United States, 4,150 gigawatts of potential wind turbine nameplate capacity (maximum turbine capacity) from offshore wind resources are available in the United States.   This potential capacity is about 4 times as much as the actual national generating power in 2010!  However, the estimate did not describe actual planned offshore wind development, and the report did not consider that some offshore areas may be excluded from energy development on the basis of environmental, human use, or technical considerations. So the potential is purely theoretical but impressive, even if we use only half of the potential.  Accordingly, the U.S. Department of the Interior, Bureau of Ocean Energy Management (BOEM), has been moving forward with auctions of offshore leases as a necessary first step in the commercial development of offshore wind energy.

In July 2013, BOEM awarded the first competitive offshore wind energy lease auction to Deepwater Wind LLC, a Rhode Island-based developer of renewable energy projects, with a winning bid of $3.8 million.  Deepwater Wind intends to develop two sites off of Rhode Island and Massachusetts which will generate 1,000 megawatts of capacity through a 200-turbine wind farm.  Deepwater Wind is pursuing a joint development agreement with Rhode Island that will result in a 20 per cent credit, but the company must undertake verification steps to perfect the lease, a process that will take a few years before the project will proceed into a 4.5 year construction phase.

In September 2013, Dominion Virginia Power won the nation’s second competitive wind energy auction with a bid of $1.6 million for 112,800 acres offshore of Virginia that federal officials estimate could generate 2,000 megawatts of energy (enough to supply electricity to 700,000 residences).  Like Deepwater Wind, Dominion must undergo antitrust clearance and submit a site assessment plan and then a detailed construction plan that will take 4.5 years.  Dominion will enjoy a 33 year lease but must pay an annual rental fee of $338,000 as well as an operating fee that will depend on its annual power production.  Dominion has been studying the feasibility of wind energy in coastal waters since 2010, funded in part by a $500,000 federal grant.

These auctions indicate that we are moving forward with the development of new sources of renewable energy backed in part by federal research and resources.  Perhaps offshore wind energy’s time has come and will play a helpful role in our country’s effort to develop a more robust energy policy.  It will be interesting to follow the efforts of Deepwater Wind and Dominion Virginia Power as their projects advance and we continue to grapple with our dependence on solid carbon fuels and nuclear which supply over one-half of our energy needs.  We have much to do and will need to rely on natural gas as we develop offshore wind energy.  If we are to succeed in developing and implementing an effective energy strategy for the future, continued vigorous dialogue should be welcome to assure we consider all informed sides of this interesting and vital national debate.

Stephen Smith focuses his practice on environmental and energy-related matters including regulatory counseling and litigation, administrative law, governmental affairs and lobbying. He represents clients before federal and state courts and administrative agencies. He provides client counseling and advice on compliance, permitting and agency communications as well as business transactions.
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