Wind turbine manufacturer and project developer Gamesa has suspended its plans for an offshore wind project off Virginia.  Gamesa had sought permits to install a prototype 5 MW turbine and supporting infrastructure about 3 miles offshore in Chesapeake Bay, but ultimately chose a site off the Canary Islands off Africa instead.

What led Gamesa to pull out of the Virginia project – and does it suggest a larger trend? Headquartered in Spain, Gamesa Corporación Tecnologíca, S.A. focuses its business on the design, manufacture, installation and maintenance of wind turbines. With 34 production facilities in Europe, the U.S., China, India and Brazil, Gamesa has produced turbines totaling over 24,100 MW of installed capacity, deployed primarily at onshore sites.

Gamesa is a fairly large player in the international terrestrial wind market, with 2011 consolidated revenues in excess of 3 billion euro ($3.81 billion) and a net profit of 51 million euro ($64.8 million).

In early 2011, Gamesa subsidiary Gamesa Energy USA, LLC and Virginia-based Huntington Ingalls Newport News Shipbuilding proposed to install and operate a single 5 MW offshore wind turbine generator prototype, off Virginia’s Eastern Shore near the southern tip of the Delmarva Peninsula. The project was designed to test and demonstrate Gamesa’s G11X wind turbine generator, which would have been installed on a steel monopole tower about 3 miles southwest of Cape Charles Harbor.

In January 2012, Gamesa submitted a Virginia Standard Joint Permit Application (145-page PDF) for a coordinated project review by a variety of federal, state, and local agencies. In its application, Gamesa touted the project’s benefits, principally the value of providing a research and development platform for the development of larger, fully marinized turbine generators. Gamesa also pointed to local economic benefits: direct jobs from the project, plus indirect benefits ranging from economic activity providing services to project workers and even tourism related spending.

Gamesa also noted that the project would provide renewable electricity to the mainland electric transmission grid (albeit on a small scale, given the 5 MW nameplate capacity), and would serve as an example for other Mid Atlantic communities as to how renewable offshore energy might benefit their communities. Gamesa targeted installation in the third quarter of 2013 with commissioning and in-service capability by September 2013, making it a candidate to be the first operating offshore wind project in U.S. waters.

The project appeared to have political support and regulatory momentum; on March 27, having received no objections from the public, the Virginia Marine Resources Commission unanimously approved Gamesa’s request. The project was proudly touted by Gov. Bob McDonnell as supporting his goal to make Virginia the energy capital of the East Coast.

Despite this approval, Gamesa announced on May 7 that it had selected a site off Arinaga Quay near Gran Canaria in the Canary Islands for its G11X prototype. In its statement, Gamesa noted that this decision “freezes the offshore prototype project in Virginia” and that “the prospects for the U.S. offshore market and its regulatory conditions in this segment so far do not justify the next step, the installation of a prototype in the U.S.”

Reading between the lines, factors likely included uncertainty over the future direction of federal energy policy, including whether the production tax credit and other incentives for offshore wind development will be extended. Another factor left unmentioned may be the boom in shale gas availability in the U.S., and the resulting projections of lower-cost electricity in the U.S. from natural gas-fired power plants. Gamesa may also have preferred doing business in territory controlled by its home nation of Spain.

Is Gamesa’s decision part of a larger trend of multinational developers favoring European sites over U.S. sites? Gamesa’s statement says that it chose the Canary Islands site over Virginia through a rational decision-making process focused on regional and country-specific market conditions. These factors may not be specific to Gamesa; other developers appear to be making similar choices.

The sheer numbers are suggestive: by the end of 2011, ten European countries had 1,371 offshore wind turbines installed and grid connected, totaling 3,813 MW across 53 wind farms; by contrast, the U.S. still has no operating commercial offshore wind project. Gamesa’s Virginia project would have been more of a demonstration project than a pure commercial play, but there are signs that even demonstration projects are choosing European sites over U.S. waters. At least one other European offshore wind developer – Statoil – recently suggested that state-level support for a deepwater floating demonstration project proposed in Maine was insufficient and that its project would need further financial support at the federal level to develop offshore wind off the U.S. Atlantic coast.

What should policymakers do if they want to see the development of offshore wind projects in U.S. waters? Are developers playing each side of the Atlantic Ocean off against the other? As the European Union is wracked by financial troubles, would it be reasonable for the U.S. to engage in a bidding war of subsidies against European nations? If Europe lands all the demonstration projects, will the U.S. save money – or miss a key opportunity for economic development?

The game is not over, but it looks like this round goes to Europe – for now.

Todd J. Griset practices energy law with Preti Flaherty Beliveau & Pachios in Maine. He also writes a blog on offshore wind, renewable energy and policy issues.

The project is designed to connect offshore wind projects along the Atlantic seaboard, removing the need for each project to built a separate connection to the grid.

“The first-of-its-kind Atlantic Wind Connection is an encouraging sign of significant industry interest in developing the infrastructure to support offshore wind development,” said Deputy Interior Secretary David Hayes. “It’s the type of project that will spur innovation that will help us stand-up a clean energy economy to power communities up and down the east coast.”

Hayes announced the project along with BOEM Director Tommy Beaudreau. BOEM regulations require the agency to determine if there is any competition for a particular plot or project. If there is none — as in this situation — the permitting process becomes dramatically more streamlined.

“Our next step will be to evaluate the potential environmental impacts of issuing a renewable energy right-of-way grant for this project,” Beaudreau said.

The first phase of the proposed transmission project would run from New York City to Virginia Beach. In a press release, the company applauded the BOEM permitting process.

As the spring season hits North America, some coastal states’ legislatures are wrapping up their work for the session – and at least one proposed state offshore wind program did not receive legislative approval before legislators returned home for the summer.

Despite the support of the state’s House of Delegates, Maryland Gov. Martin O’Malley’s Offshore Wind Energy Act failed to receive a key vote by the Senate Finance Committee before the legislature adjourned.

This is not the first time that a major Maryland offshore wind bill has died in a legislative committee without being enacted by the General Assembly. The story of Gov. O’Malley’s repeated efforts to encourage the enactment of offshore wind legislation may hold lessons for future efforts in Maryland as well as in other states.

Gov. O’Malley floated his first offshore wind proposal in 2011. House Bill 1054, the Maryland Offshore Wind Energy Act of 2011, required developers to compete before the Maryland Public Service Commission for long-term contracts with the state’s four investor-owned electric companies.

In O’Malley’s 2011 vision, private developers would construct 400 to 600 MW of offshore wind capacity, located at least 10 nautical miles offshore Maryland or within nearby federal waters. Because these contracts would likely have been costlier to ratepayers than the status quo, especially in early years, the 2011 bill would have imposed a special charge on customers to equitably divide the cost of offshore wind.

However, the extent of those costs was a subject of key concern to the General Assembly. Estimates of the average monthly increase in residential bills ranged between $2.16 and $8.70, and some legislators questioned whether Maryland would benefit from economic development as a result of the bill. After being referred to the Senate Finance Committee, the 2011 bill died without a full vote of either legislative chamber.

In January 2012, Gov. O’Malley tried again, unveiling his revised plan for offshore wind development off Maryland. That bill, the Maryland Offshore Wind Energy Act of 2012, was filed in the House of Delegates as House Bill 441 and in the Senate as Senate Bill 237.

Based on the criticisms of last year’s proposal, the 2012 act took a different approach. Instead of requiring utilities to enter into long-term contracts for offshore wind, O’Malley’s 2012 bill featured a renewable portfolio standard for offshore wind. The bill required utilities to source 2.5% of the electricity they serve from offshore wind, starting in 2017. Utilities would have been free to satisfy this standard in several ways, buying offshore wind renewable energy credits (ORECs) from project developers or developing qualifying projects themselves.

In response to cost concerns, the 2012 Maryland offshore wind bill featured both a lower estimated cost – $1.50–2.00 on an average residential consumer’s monthly bill – as well as a cost-containment mechanism. Under the initial 2012 proposal, the Maryland Public Service Commission would suspend the program if it projected cost increases of more than $2 a month.

Polling suggested strong public support for the measure, along with the support of organized groups ranging from environmental advocates to labor unions. The bill also received significant support in the House of Delegates, but not in the Senate. Although the Senate held a public hearing on the SB 237 on February 14, the Senate bill never moved through the legislative committee process.

Meanwhile, the House held hearings on HB 441; the House bill was then amended to cap cost increases at $1.50 per month for residential customers (or 1.5% for commercial and industrial customers), and finally passed the House as amended with strong support in late March by a vote of 88-47.

At that point, the bill was referred to the Senate, which in turn referred it to the Senate Finance Committee on April 5 – where the bill stalled without a vote, and ultimately died last week without approval of both legislative chambers of the Maryland General Assembly.

So what happened in the Maryland Senate Finance Committee? The committee is formed of eleven senators, so six favorable votes were needed for the bill to pass through to the full Senate for a vote. Committee Chairman Senator Thomas Middleton had indicated that he would not hold a vote on the bill unless it had the firm support of a majority of committee members. At the beginning of April, with just two weeks left prior to adjournment, sources reported that the committee was one vote short of passage.

Despite significant lobbying and grassroots protests (at one point over 400 activists circled the Capitol building to show support for the bill), in the end supporters could not convert any of the three Republicans and three Democrats dissenting on the committee. Some observers quickly pointed to “petty power politics in Annapolis” to explain some of these votes, including opposition by one Democratic senator who has repeatedly sparred with Governor O’Malley throughout this session and did not receive the governor’s endorsement for a U.S. Senate race.

Whatever reasons led the Senate Finance Committee not to take action on Maryland’s 2012 offshore wind bill, the result is that it may be some time before the Maryland General Assembly takes the issue up again. The General Assembly meets for only 90 days each year, and the next session will not start until January of 2013. Gov. O’Malley is part way through his second term in office, and will be term-limited in 2014. That leaves just two more years for the legislature to enact his offshore wind vision while he remains in office.

In the meantime, Maryland’s offshore wind resource remains undeveloped and uncapitalized. Will the third time be the charm for offshore wind legislation in Maryland?

Todd J. Griset practices energy law with Preti Flaherty Beliveau & Pachios in Maine. He also writes a blog on offshore wind, renewable energy and policy issues.

Despite broad public support and overwhelming support in one branch of the Legislature, Maryland Governor Martin O’Malley’s Offshore Wind Energy Act once again died in the Senate on the last day of the legislative calendar.  The bill, which would have started a bidding process for developers to build about 200 Megawatts of wind power off of Maryland’s Eastern Shore, failed to come to a vote before the Senate Finance Committee.

The bill had previously passed the House of Delegates by a margin of 88-47.  Although supporters worked hard to secure a sixth “yea” vote in the eleven member finance committee, Committee Chairman Thomas Middleton said the panel would not vote unless the bill had firm majority support within the committee.

The sixth vote that failed to materialize was that of Prince George’s County Senator Anthony Muse.  His reluctance to support this bill came despite mounting pressure within his own district that included many minority owned businesses.   These businesses would have benefitted directly through the thousands of jobs that would have been created to build and maintain an offshore wind farm.  When contacted, a spokesman from his office cited the cost to ratepayers to explain Senator Muse’s opposition to this plan.

The cost that Senator Muse is concerned about was capped at $2.00 per month for residential customers under the Governor’s original proposal, and was lowered to $1.50 in the bill that finally passed the House.  All potential developers who wanted to build the wind farm authorized under this bill would have had to submit a proposal to Maryland’s Public Service Commission demonstrating how they would contain costs.

If approved, the rate increases would not have occurred until the project was completed and producing power sometime in 2017.  In addition, the bill would have created a $10 Million Offshore Wind Development Fund, paid for by the project developer and an agreement with Exelon Corporation, to support a local supply chain for small and minority-owned businesses and a potential wind business incubator.  State estimates predicted the project’s economic impact during the next five years could have reached $2 billion, with $8.7 million in additional state tax revenues.

Senator Muse’s opposition to this bill, which was proposed and strongly supported by Governor O’Malley, came amidst other attacks on the Governor’s legislative agenda.  Last Saturday, as lawmakers were scrambling to conclude a series of negotiations to finalize several other bills, Senator Muse produced a stack of amendments 18 inches high.  Although there is some speculation as to why the Senator tried to kill the Governor’s bills, many suspect that it is tied to his recently failed run for U.S. Senate.  The Governor publically endorsed Senator Muse’s opponent, current U.S. Senator Ben Cardin.

The frustration among supporters was evident in Annapolis today, culminating in the arrest of three students who blocked the entrance of the General Assembly to demand a vote on the Offshore Wind Energy Act.  Members of the Maryland Student Climate Coalition ignored police warnings and sat atop the steps with signs saying “Maryland Wind Works” for several minutes before they were arrested.

Ultimately, the protesters’ actions were in vain, as another legislative session came to a close in Maryland without a final vote on Governor O’Malley’s signature offshore wind legislation.

James S. McGarry received his master’s degree in environmental policy from the University of Maryland. He is an energy consultant and writer in Baltimore and can be contacted at jamessmcgarry@yahoo.com.

The deal is for 27.5 percent of Cape Wind’s output, according to the report.

Initially reluctant, NStar officials agreed to purchase Cape Wind power in exchange for the state’s approval of a proposed merger with Northeast Utilities.

“We know that it will take a diversified approach using all available renewable resources to meet the state’s climate change goals,’’ NStar spokeswoman Caroline Pretyman said.

Maryland Rally for Offshore Wind

Maryland activists surrounded the Statehouse and cheered Gov. Martin O’Malley’s call for offshore wind, the Washington Post reported today.

The governor’s offshore wind legislation was approved by the House of Delegates and is now in front of the Senate Finance Committee.

“It’s very, very important that you talk with [lawmakers] and that you ask them to support wind power now,” O’Malley said.

Earlier today, Gov. Martin O’Malley’s Offshore Wind Energy Act passed the Maryland House of Delegates by a vote of 88 to 47. The bill now must pass the Senate Finance Committee, where it has sat for over two months, before being debated in the Senate.

Questions were raised during debate about ratepayer costs and the risks of employing a technology with no commercial history in the United States. However, proponents such as Delegate Dereck Davis made clear that Maryland does “not have to explore this at the exclusion of other” renewable technologies, and that “ratepayers will not have to pay one cent” before the turbines start producing power.

Before passage, several amendments were added to the bill in the House.  Residential customers would now face a maximum charge of $1.50 on their monthly bills instead of $2.00, and commercial and industrial customers would see a maximum 1.5% increase instead of 2%.  Other amendments would create a $10 Million Offshore Wind Business Development Fund; ensure that the project would be built ten to thirty miles off Maryland’s coast; create more assurances that the project would utilize minority-owned Maryland businesses; and exempt large agricultural customers from paying the offshore wind ratepayer fee.

Additionally, the bill was amended to state that when the state evaluates and compares proposed wind projects, the Public Service Commission would be unable to consider the anticipated climate benefits, health benefits, or environmental benefits of the proposed projects, or their estimated ability to assist in meeting the state’s renewable portfolio standard goals.

Passage in the House was somewhat expected, but the bill now faces more challenges in the Senate, as its passage through the Finance Committee is far from certain.  The nine member committee needs five favorable votes to pass the bill through to the floor, but currently only four senators have spoken out in favor of the bill and the committee’s three republicans have spoken out against it.

In order to pass, the bill the will likely need to support of either Sen. Catherine Pugh, or Sen. Anthony Muse, both Democrats.  So far, neither senator has tipped their hand as to how they will vote on the bill, with a committee vote expected sometime in the next week.

James S. McGarry received his master’s degree in environmental policy from the University of Maryland. He is an energy consultant and writer in Baltimore. He can be contacted at jamessmcgarry@yahoo.com.

“This agreement among federal agencies and Great Lakes states is a smart, practical way to encourage the development of homegrown energy that will create jobs, power homes and reduce pollution in American communities,” said Nancy Sutley, chairwoman of the White House Council on Environmental Quality.

Illinois, Michigan, Minnesota, New York and Pennsylvania have signed onto the plan, according to the report.

Maryland Offshore Wind Bill Set To Pass House of Delegates

Maryland Gov. Martin O’Malley’s offshore wind legislation is on track for final passage in the state House of Delegates today, the Baltimore Sun reported.

Democrats in the House of Delegates rejected several Republican attempts to weaken the bill, including an amendment that would limit the offshore wind development to one prototype turbine.

The bill still faces a daunting challenge in the Senate, according to the Sun report.

Offshore Wind Wire: This week you submitted a petition to Dominion Power, pushing them to develop offshore wind. What prompted this effort?

Beth Kemler: My organization, Chesapeake Climate Action Network, and the Virginia Chapter of the Sierra Club collected 10,000 signatures urging Dominion to invest in offshore wind power to make it clear that Virginians want to see turbines off our coast and we know that Dominion can make that happen.  Not only do Dominion executives have the ability to make it happen- they really hold all the cards here.

As the largest non-party donor of campaign contributions in the state, Dominion has quite a lot of political clout.  Their political reach is evident all over the place, from the company’s VP of Alternative Energy sitting on the Virginia Offshore Wind Development Authority to lawmakers routinely telling environmental advocates that they need to find out Dominion’s opinion on a bill before deciding their own.

So while other states are setting up incentives or mandates for offshore wind, Virginians can’t even get our legislators to take a mandatory Renewable Portfolio Standard seriously or fix our greatly flawed voluntary RPS because of opposition from Dominion’s lobbyists.  Through the voluntary RPS, Dominion is getting a $76 million renewable energy reward through state-mandated rates, even though they generate ZERO wind or solar power.

While Dominion executives are currently using their political power to block progress on renewable energy in Virginia in quite a few ways, that power could be used for good if they chose to do so.  If Dominion executives feel enough pressure to develop or buy offshore wind, jumpstarting a whole new industry in Virginia, they have the power to make it happen.

OWW:  How difficult was it to gather signatures?

BK: It’s been easy to gather signatures.  Virginians are inspired by the idea of a brand new source of clean, American-made energy that could create a huge new manufacturing industry, bringing much-needed jobs along with it. Our members specifically are concerned about climate change and they know that in order to halt the worst impacts of the climate crisis, we are going to need to make a swift move toward major sources of clean energy, like offshore wind power.

OWW:  What near-term steps would you like to see from Dominion?

BK: The petition that 10,000 Virginians have signed asks the company to make a commitment by 2013 to invest in a utility-scale offshore wind farm. That’s when Dominion will submit its next Integrated Resource Plan where it will lay out its plans for the next 15 years.  While we think it’s more likely that they’d want to develop their own offshore wind farm, we’d also be happy to see them invest in offshore wind through a power purchase agreement.

The company’s 2011 IRP dismisses offshore wind power as too expensive.  On the other hand, they’ve said a number of times, both before the IRP was submitted and since then, that they planned to respond to BOEM’s call for the Virginia wind energy area, which is open until March 19.  So if they want to obtain lease blocks but have no concrete plan to utilize them, the only conclusion we can draw is that they plan to buy up blocks and then sit on them so that no one else can develop them either.

OWW: Dominion recently asked the federal government to suspend the development of the Atlantic Wind Connection. What is your reaction to that?

BK: Unfortunately, we weren’t surprised.  This was just one more example of Dominion executives trying to keep anyone else from bringing renewable energy into their sandbox.  We’ve seen this same pattern on solar power.
Obviously, thousands of Virginians have expressed that they want Dominion to get moving on offshore wind power but if they’re not going to do that, they should at least get out of the way and let others capitalize on this energy source.

 The utility filed documents with federal regulators arguing that right-of-way permission should not be granted until the project is approved by regional grid operators and the Bureau of Ocean Energy Management awards offshore wind leases.

Atlantic Wind Connection CEO Robert Mitchell told the paper that he was not surprised by the filing and that it likely represented Dominion’s desire to develop offshore wind infrastructure on their own. AWC officials have long argued that their project will deliver enormous economies of scale to the industry — as opposed to each project building its own transmission line.

Maryland GOP Tries To Block Offshore Wind Advocates

Republican state lawmakers in Maryland attempted to block two Public Service Commission nominees because they lobbied in favor of offshore wind last year, Southern Maryland Online reported.

“I don’t believe these two nominees can be objective enough to protect ratepayers,” State Sen. E.J. Pipkin said. “They were the governor’s two chief leaders in [offshore wind] proposals before us last year.”

“This is a big undertaking, but it’s not one beyond our grasp,” O’Malley told the Maryland House Economic Matters Committee.

An aide to the governor explained changes to this year’s version of the plan, including an amendment ensuring that businesses would pay the same electricity rate as residential customers; the measure already proposes to cap any increases in a business’ power expenses at 2.5 percent of its annual outlay.  Another tweak would ease business obligations to help subsidize other renewable energy projects.

North Carolina Offshore Wind At Least Five Years Away

North Carolina offshore wind experts have said that the Tarheel State will not see turbines off the coast for at least five years, Windturbines.net reported.

The estimate was contained in a report released by the governor’s office earlier this month.

“It’s not an industry that happens really fast,” said Brian O’Hara of the North Carolina Offshore Wind Coalition. “With the permitting and environmental studies that have to take place, the earliest we would see something off our coast is probably in the 2017-2018 time period.”