U.S. Offshore Wind: Mid-Year Update

by Sullivan & Worcester
Contact

[co-author: Morgan Gerard]

Several speakers at the recent American Wind Energy Association (AWEA) annual conference in New Orleans lauded the positive impact of Congress's extensions of the production tax credit (PTC) and investment tax credit (ITC) in December 2015. As they noted, these extensions position wind energy for a period of unprecedented stability and growth—at least for the onshore wind sector.

Offshore wind has tremendous potential in the United States, but unlike the onshore wind sector, offshore still has a long way to go to reach critical mass. The recent PTC/ITC extensions ramp down by the early 2020s. As a result, only a few early offshore projects are likely to be far enough along to benefit from the PTC/ITC extensions. Absent a further tax incentive specifically directed to offshore wind, as recently proposed by Senators Markey (D-Mass) and Whitehouse (D-RI), offshore wind will continue to rely on state-level policies to build out the necessary supply chain.

Where will U.S. offshore wind find support to attain critical mass? Here are six major areas of recent progress:

1. Massachusetts Offtake Legislation 

Massachusetts lawmakers recently introduced an omnibus bill, H.4336, which could spur as much as $10 billion of investment in offshore wind, according to Bloomberg. Several major Massachusetts projects could benefit, including those of DONG Energy, D.E. Shaw-backed Deepwater Wind and Blackstone-backed OffshoreMW. The bill would impose offshore wind energy procurement requirements on Massachusetts utilities, thereby ensuring guaranteed power sales and long-term revenues. In its current form, H.4336 would require utilities to purchase 1,200 megawatts of offshore wind, although industry proponents are pushing for a 2,000 megawatt commitment. Governor Baker is expected to support enactment of the bill although final details remain in play, particularly with regard to the balance between offshore wind and competing proposals to source clean energy from Canadian hydropower.

2. New York Renewables Standard and Proposed Lease Sale

Offshore wind should receive a major boost from Governor Cuomo’s Clean Energy Standard goal of 50% renewable generation by 2030. As Richard Kauffman, the state’s Chairman of Energy & Finance, has observed, New York is not going to meet that goal without offshore wind. Offshore developers and supply chain participants have heeded the call and are already mobilizing in anticipation of an offshore wind market centered in Long Island.

Long Island is a prime target for offshore wind developers. The wind resource is ample and the service territory massive (approximately 1.1 million people). In addition, the existing transmission infrastructure is constrained and the island’s geography is such that it would be difficult to construct new transmission lines. New lines would also likely become a rate-based asset, the costs of which would be passed along to the retail customer. Offshore wind could meet the island’s demand closer to the load reducing the need for new long-distance transmission lines coming from the mainland. Additionally, the price of power in Long Island and New York is generally expensive in comparison to the rest of the country, allowing developers room to benefit from higher competitive pricing.

On June 2, 2016, the U.S. Department of Interior (DOI) announced the proposed lease sale of over 81,000 acres for development approximately 11 miles south of Long Island. The proposed lease area was identified in March 2016 by the Bureau of Ocean Energy Management (BOEM) as a wind energy development area in response to an unsolicited proposal by the New York Power Authority to construct a potentially 700 megawatt installation. BOEM expects to issue its proposed sale notice soon, which will be subject to a 60-day public comment period. Additionally, there will be an associated environmental assessment and a 30-day comment period.

3. New Jersey Anticipating Post-Christie Policy Support

New Jersey is entering its gubernatorial election cycle, and offshore wind proponents are eagerly awaiting the next administration. Outgoing Governor Chris Christie recently vetoed legislation that would allow the New Jersey Board of Public Utilities (BPU) to approve qualified offshore wind projects and offer a 30-day window for developers to submit applications. The bill would have revived the 25 megawatt proposed Fishermen’s Energy project off the coast of Atlantic City, which was previously denied by the BPU. Fishermen’s Energy has garnered federal support and is eligible to obtain a nearly $50 million grant from the Department of Energy (DOE). Fishermen’s and other offshore proponents expect legislative efforts will ultimately succeed under a supportive state executive.

4. Steady Progress for Maryland 

Maryland has been supporting offshore wind since 2013 when Governor Martin O’Malley signed the Maryland Offshore Wind Energy Act. This legislation allows for the creation of credits to support wind projects 10 or more miles off the coast. The credits will act as fiscal mechanism in place to pay for at least some of the electricity generated from projected wind farms. Recently, US Wind procured federal leases to support approximately $2.3 billion in project development slated to start in 2017.

5. Industry Cooperation and Advocacy

In the last year activities of offshore sector groups and developers have picked up the pace in advocating for helpful state policies, coordinating strategies, and developing the supply chain. Offshore Wind Massachusetts and the Business Network for Offshore Wind have been central to the sector’s organizing efforts, supported by lobbying of several dozen other groups and companies. The entry of European heavyweight DONG Energy has been a major catalyst in moving the field forward not only in Massachusetts, but also elsewhere along the Eastern Seaboard, including New Jersey, where it recently acquired RES America's 160,480 acre lease area. DONG has been very active and successful in working with state policymakers.

6. Federal Activities and Preparing for the Next Administration

DOI and BOEM are pushing forward with ocean area wind leasing, environmental analysis and streamlined permitting. The Obama Administration has been generally supportive of offshore wind, but has not launched any major support at the federal level. The outcome of the upcoming presidential election obviously will be critical for offshore wind. Donald Trump is on record as a virulent opponent of offshore wind and has embraced a fossil-focused energy policy. By contrast, a Clinton Administration in 2017 could be fertile ground for executive actions seeking to accelerate progress in the industry. Offshore wind participants should begin organizing now to present transition materials and advocate for inclusion in first 100 days initiatives.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Sullivan & Worcester | Attorney Advertising

Written by:

Sullivan & Worcester
Contact
more
less

Sullivan & Worcester on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.