Offshore Wind in North Carolina
In 2017, the US Bureau of Ocean Energy Management (BOEM) awarded the first wind lease off the coast of North Carolina to Avangrid Renewables, LLC to develop Kitty Hawk Offshore, for a 122,000-acre area located more than 27 miles east of Corolla, North Carolina and extending about 30 miles in a general southeast direction (the “Lease Area”). This past year, on July 21, 2021, Kitty Hawk Wind, LLC (KHW), a wholly owned subsidiary of Avangrid, submitted its Construction and Operation Plan (“COP”) to BOEM for the development of 40 percent of the Lease Area, and days later BOEM announced its intent to prepare an Environmental Impact Statement (“EIS”) for review of the COP. BOEM expects to complete its draft EIS by September 2022, after which public comments will be received. BOEM will review and respond to comments and has targeted June 2023 as the date when it expects to issue a final EIS.
If all goes as planned, BOEM will issue a record of decision (ROD) by August 2023 after which time construction could commence. As proposed, the project will produce 2.5 GW, or enough wind-generated energy to power 700,000 homes. While North Carolina has set a goal of developing 2.8 gigawatts (GW) of offshore capacity by 2030 (enough energy for 2.3 million of the state’s 4 million homes) and 8.0 GW by 2040, this particular project is planned with 2 transmission cables making landfall in Virginia Beach, Virginia and to connect into the Pennsylvania-New Jersey-Maryland (PJM) Interconnection energy grid.
As such, more important to North Carolina’s residents is a second –proposed sale notice ("PSN") that BOEM recently issued for the Wilmington East Wind Energy Area (“WEA”). The PSN, issued on November 1, 2021, includes up to three commercial wind energy leases and includes nearly 128,000 acres that potentially may generate more than 1.5 GW of offshore wind energy—enough clean, renewable power for more than 500,000 homes in North Carolina. In December 2021, BOEM published a draft Supplemental Environmental Assessment (“EA”), which modified an assessment conducted in 2015 and which addresses revisions to leasing area and modified the site characterization and site assessment scenarios. This Supplemental EA concluded that for the site assessment stage of developing the WEA, impacts will be negligible to minor.
Prospective bidders were required to submit qualifications to BOEM by January 3, 2022. The final Supplemental Environmental Assessment and Final Sale Notice was announced today along with the list of 16 qualified bidders:
- 547 Energy LLC
- Arevia Power LLC
- Avangrid Renewables, LLC
- BP US Offshore Wind Energy LLC
- Invenergy Long Bay Offshore LLC
- Carolina Offshore Wind LLC
- Duke Energy Renewables Wind, LLC
- EDF Renewables Development, Inc.
- JERA Renewables NA, LLC
- Masdar Offshore Wind Americas LLC
- MRP Offshore Wind Farm LLC
- Orsted North America Inc.
- OW North America Ventures LLC
- RWE Offshore Wind Holdings, LLC
- Shell New Energies US LLC
- TotalEnergies Renewables USA, LLC
The qualified bidders must now submit a Bidder’s Financial Form and a bid deposit to BOEM, after which BOEM will hold an auction for the lease area(s) on May 11, 2022. Only after the winner of the lease sale is announced will the real work begin. The winning bidder must assess the site and submit a COP for review. Pursuant to the National Environmental Protection Act (NEPA), BOEM must review the COP, in consultation with other interested agencies, and prepare an EIS before any construction may commence. The site assessment and COP process can take as much as 5 years. If the COP is approved, construction can begin and may take 2 years to complete.
One other wrinkle that must be worked out for the WEA, is how energy from the turbines will connect to the grid. Unlike KHW that can connect to PJM (a wholesale energy marketplace), interconnection access for WEA is in the exclusive territory of Duke Energy. Thus any connection will require additional regulatory approvals and interconnection agreements with Duke Energy that may take additional time and expense to negotiate.
Offshore Wind Supply Chain Opportunities
Although there is a long road to hoe before North Carolina may reap the benefits of offshore wind energy, the offshore wind industry itself presents the State with an opportunity for some real short term benefits. According to the NC Department of Commerce, the state is ideally situated to become ground zero for the offshore wind supply chain industry. A March 2021 report issued by the Department of Commerce, Building North Carolina’s Offshore Wind Supply Chain Report, serves as a blueprint in fact for building an offshore wind industry in the Tar Heel State. The report notes the state’s competitive advantages, including:
- A pro-business climate;
- A pro green development administration that recently enacted an executive goal of 70 percent reduction in power sector greenhouse gas emissions by 2030 and a carbon-neutral power sector by 2050.
- Strategic geographic positioning, being centrally located on the East Coast;
- A relatively large electricity consumption level (nine percent of East Coast states’ electricity) and a growing demand for renewable energy with the state’s major electricity provider, Duke Energy, announcing a near-term carbon reduction goal of at least 50 percent by 2030 and long-term goal of net-zero by 2050;
- A relatively low CO2 electricity footprint; and
- A strong transportation network, including highway, rail and waterway outlets.
To further its positioning as a home for supply chain resources, the state is working collaboratively with Maryland and Virginia on developing a regional program to support offshore wind development throughout the Mid-Atlantic and Southeast.
NCTowers is Lighting the Way for the Offshore Wind Industry in North Carolina
In 2021, North Carolina Gov. Roy Cooper announced the formation of NCTowers, the North Carolina Taskforce for Offshore Wind Economic Resource Strategies. The task force serves as an advisory group to Gov. Cooper and state lawmakers on issues relating to offshore wind. Their specific duties include:
- Identifying economic and workforce opportunities and challenges presented by the offshore wind industry;
- Recommending policies and programs to capture strategic opportunities that foster a thriving offshore wind workforce and business community;
- Providing advice for developing the state’s offshore wind supply chain, workforce, and infrastructure;
- Fostering and supporting environmental justice and equitable access to opportunities for underserved communities; and
- Recommending policies and guidelines that prioritize offshore wind energy projects.
NCTowers held its first meeting in February 2022. At that meeting, the task force reviewed the NC Department of Commerce Building North Carolina’s Offshore Wind Supply Chain Report, with a particular focus on positioning North Carolina as a leader in offshore wind manufacturing and supply chain issues. The report notes that the state ranks first among East Coast states and fifth nationally in the value of its manufacturing sector’s Gross Domestic Product (GDP). Among East Coast states, North Carolina also is the most manufacturing-focused, as measured by this sector’s percentage of the state’s GDP (17.2 percent).
While the state has set carbon neutrality targets, much of the focus of offshore wind development by state leaders has been on the industry’s opportunities as a job creator, leveraging the state’s manufacturing and supply chain resources. The Department of Commerce points to estimates of 85,000 new jobs and $140 billion in capital expenditures in East Coast offshore wind development by 2035.
“Time is of the essence when we’re talking about offshore wind. The earlier we can get into this industry, the more we can reap the benefits from it,” Gov. Cooper said.
Subsequent NCTowers meetings are scheduled for May, August and November.