“BOEM recognizes the proactive steps that the commonwealth has taken to encourage environmentally sound offshore wind energy development and we are working together to refine a suitable Wind Energy Area off the coast of Massachusetts,” said BOEM Director Tommy P. Beaudreau. “We will follow marine spatial planning principles as we continue to gather information and coordinate with other OCS users throughout the leasing process.”

According to a BOEM press release, the Call Area under consideration is located off the coast of Massachusetts beginning approximately 12 nautical miles south of Martha’s Vineyard and 13 nautical miles southwest of Nantucket. From its northern boundary, the Call Area extends 33 nautical miles southward to the 60 meter depth contour and has an east/west extent of approximately 47 nautical miles. The Call Area is approximately 826,241 acres and contains 132 whole OCS lease blocks as well as 19 partial blocks.

BOEM plans to conduct information sessions in Massachusetts during the comment period to explain the commercial leasing process and provide additional opportunities for public input on the scope of the Environmental Assessment. Details will be posted on BOEM’s website:  http://www.boem.gov/Renewable-Energy-Program/State-0Activities/Massachusetts.aspx.

The officials will appear at the Baltimore World Trade Center with BOEM Director Tommy Beaudreau.

According to the announcement, the press conference will focus on a “major step towards developing wind energy on the Outer Continental Shelf off the coasts of Maryland, Virginia, New Jersey and Delaware.”

Former Congressman Will Support Offshore Wind Project For Free

Former Massachusetts Rep. Bill Delahunt has announced that he will not accept payment for his consulting work to support the town of Hull’s offshore wind project, the Patriot Ledger reported yesterday.

Delahunt was recently criticized in several high-profile articles for consulting on the Hull project shortly after helping them secure federal funding.

“It’s a big plus for us,” said Patrick Cannon, who heads the Hull Municipal Light Board. That money “can be spent toward that project.”

UK Company Teams With Samsung On New Offshore Wind Gear System

U.K.-based company David Brown is working with Samsung Heavy Industries to design, develop and build a new 7 megawatt wind turbine gearbox, North American Windpower reported today.

The project would be supported by up to $530,000 in Energy Department funding, according to the report.

Maryland Labor Groups Want Guarantees

Maryland labor groups are asking for guaranteed involvement in offshore wind development in exchange for their support on Gov. Martin O’Malley’s resubmitted plans, the Baltimore Sun reported Friday.

“There’s got to be something written in the bill to include organized labor for us to totally commit to the project,” said Rod Easter, president of the Baltimore Building & Construction Trades Council. “We cannot be standing on the curb watching people go to work who don’t live in Maryland.”

Former Congressman In Spotlight For Consulting Work

Former Massachusetts congressman William Delahunt’s office denied any conflict of interest in consulting work on an offshore wind project for which he also earmarked federal funds, the Boston Globe reported.

Delahunt helped the town of Hull receive $1.7 million in federal funds for an offshore wind project and recently received a $72,000 contract to provide strategic guidance on the same issue.

“I think what’s been spun out there is that somehow we’ve been hired by the town to lobby, and that’s not true,’’ said Mark Forest, executive director of The Delahunt Group. “We’re not lobbying; we’re providing guidance and counsel to the town … we’ve had a lot of experience in this area. And our hope is that there is something productive that can be done in this area.’’

The January 3 report said that “the ISO and its consultants … have determined that it is unlikely that the project will achieve Commercial Operation” by June 1, 2015.

The company disagreed with the ISO New England assessment.

“We think it is very likely we’ll be online by June 2015, either in whole or in part,” said Cape Wind Vice President Dennis Duffy.

Atlantic City Project Aims For 2013 Commissioning

Fishermen’s Energy vice president and senior counsel Paul Gallagher said yesterday that his company’s Atlantic City offshore wind project is almost ready to begin construction, the Press of Atlantic City reported today.

Construction is waiting on a decision in March from the New Jersey Board of Public Utilities on the sale of the project’s electricity.

“We have arranged our financing, selected our turbines and lined up our contractors … We are, in what Obamaspeak refers to, as ‘shovel ready,’” Gallagher said. The decision in March “will allow us to put steel in the water next summer (2013), with turbines installed in August and power being generated by Labor Day 2013.”

Maryland Rallies For Offshore Wind

Over 100 protesters rallied at the Maryland statehouse this week to urge state lawmakers to support Gov. Martin O’Malley’s offshore wind plan, the Huffington Post reported.

NRG Energy announced this week that it is “putting active development of offshore wind projects on hold for the near term.” This is a significant shift for NRG’s subsidiary Bluewater Wind and the projects it has been developing, and may have broader implications for the US offshore wind market. NRG Energy is a Fortune 250 wholesale power generation company, owning a diverse portfolio of nearly 26 gigawatts of electric generating capacity. NRG’s assets include major holdings of generating plants fueled by natural gas, coal, oil, and nuclear power, along with some terrestrial wind. NRG also has a growing solar business, owning the 21-megawtt Blythe project (California’s largest solar photovoltaic project since 2009) and investing in other projects like the Ivanpah Solar Electric Generating System along with Google and BrightSource Energy.

Bluewater Wind, which NRG acquired in 2009, has been pursuing at least four offshore wind projects.  Of these, the Mid-Atlantic Wind Park off Delaware made the most progress.  This 450-megawatt commercial-scale project would have been located in federal waters over 13 statute miles offshore Delaware.  Bluewater also won rights to develop a New Jersey offshore wind project, and proposed additional projects off Maryland and Massachusetts.

Since its inception in 2006, Bluewater Wind’s Delaware project achieved key milestones, such as signing power purchase agreements to sell part of the project’s output to utilities. Bluewater Wind signed a 25-year contract with utility Delmarva Power for up to 200 megawatts of power from the project.  That deal was approved by the Delaware Public Service Commission in 2008, and provided a base energy price of 9.9 cents per kilowatt-hour; combined with a statutory bonus for offshore wind renewable energy credits, the effective price per kWh in 2012 might have been closer to 14 cents.  While this price is at the low end of recent offshore wind pricing, having a contract meant a greater level of certainty about project revenues after startup.

With this week’s announcement, Bluewater Wind is putting its active development of offshore wind projects on hold, and plans to terminate its power purchase agreement with Delmarva.  In announcing this reversal, NRG described a shift in the outlook for offshore wind between NRG’s 2009 acquisition of Bluewater Wind and the present.  Two years ago, NRG believed the Delaware project would receive a loan guarantee from the Department of Energy.

Now, NRG points to a different outlook.  According to NRG’s press release, the end of funding for the loan guarantee program coupled with the incipient end of the renewable energy production tax credit and investment tax credits “have rendered the Delaware project both unfinanceable and financially untenable for the present.”

NRG also pointed to its inability to secure an investment partner for the project.  NRG described how it approached more than two dozen prospective investors, but was unable to find a partner “despite the attractiveness of the PPA”.

Several other events in recent months may also have affected Bluewater’s decision.  The town of Bethany Beach, Delaware, rejected NRG Bluewater’s plan to bring undersea cables from the project ashore in town. Bluewater Wind faced repeated deadlines 2011 under the Delmarva power purchase agreement, requiring Bluewater to put up project security if it wished to continue with the project.  Those deadlines were extended for reasons including uncertainty over federal incentive programs, but likely placed the Bluewater project under increased internal scrutiny by NRG.

Other entities had expressed skepticism about the project’s viability.  For example, the Delaware Municipal Electric Corporation had agreed to buy part of the output of the Bluewater Delaware offshore wind project, but in September 2011 DEMEC entered into a contract with Duke Energy Renewables to purchase power from a Pennsylvania terrestrial wind project.  To explain this hedge, DEMEC noted “the increasingly unlikely chances the Bluewater Wind project will be built anytime soon”, and pointed to “increasing federal uncertainty about offshore wind subsidies”.  DEMEC’s choice now appears prescient.

Beyond what this week’s announcement means for Bluewater and its projects, NRG’s decision may be a sign of how uncertainty impacts the entire United States offshore wind industry.  NRG may have had other factors in mind, such as a need to focus on its growing solar play or another element of its portfolio, but uncertainty was the principal explanation offered for the decision to suspend offshore wind operations.  If so, other offshore wind projects may find themselves in a similar position to Bluewater, with the siting process well underway and power purchase agreements in place for part of the project’s output – but with financing difficult to complete given the uncertainty.

The challenges posed by the end of the Department of Energy loan guarantee program and the impending end of the renewable tax credits are not unique to Bluewater, nor to its Delaware project.  Uncertainty surrounding the future of incentives and support for offshore wind is likely to affect other projects as well. How these forces impact each project may vary, but most currently-proposed projects rely on one or more incentives facing uncertain futures.

Meanwhile, interest is rising in deepwater floating offshore wind in waters off Maine. A subsidiary of Norwegian energy company Statoil has asked the federal Bureau of Ocean Energy Management for a lease for a site over 12 miles off Maine, near the midcoast town of Boothbay Harbor and Monhegan Island. If granted the lease, Statoil intends to develop a pilot project using its Hywind floating turbine model. Statoil also hopes to benefit from a competitive process run by the Maine Public Utilities Commission to select and fund one or more deepwater floating pilot projects.

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.

In late November the Bureau of Ocean Energy Management (BOEM) announced that it had received an unsolicited application for a deepwater test project from Norwegian energy giant Statoil. The proposed project would consist of four three-megawatt floating turbines located roughly 12 nautical miles south of Boothbay Harbor in the Gulf of Maine.

While the initial reaction among stakeholders has been mixed, the Statoil proposal confirms what many in Maine have been saying for years: the Pine Tree State is poised to become the leader in deepwater offshore wind in North America.

Last year, the Maine Public Utilities Commission issued an RFP for a deepwater floating pilot project off of Monhegan Island that would consist of eight three-megawatt turbines. The PUC is actively considering proposals and hopes to decide on a developer by early 2012, with a prototype in the water by the summer of 2013.

To help provide a blueprint for the industry, Maine released a comprehensive offshore wind report that was widely lauded by analysts and developers and may have been a key component in attracting a developer of Statoil’s stature to the state.

Proponents have long touted Maine’s deepwater offshore wind potential due to the state’s superb wind energy resource. According to Habib Dagher, UMaine Professor and head of the DeepCWind Consortium, there are 149 gigawatts of wind energy within 15 miles of the Maine coast. Depending on the map, and the source, Maine may have the greatest offshore wind resource in the United States.

BOEM has indicated that they will not rule on Statoil’s recent application until 2014, by which point the Monhegan Island prototype should be in the water.

Last week, when the U.S. Court of Appeals for the District of Columbia Circuit overturned a ruling that Cape Wind’s turbines would pose no hazard to aviation, many assumed that the decision would be the latest setback to the project.

The Federal Aviation Administration decision that was overturned had only a 24-month shelf life, which is why Cape Wind has already received three of these “No Hazard” determinations over the course of the project.  In fact, the one that the Appeals Court vacated last week was set to expire in 90 days, at which time Cape Wind would have had to go back to the FAA so they could review the file again and write a new Determination.

As reported by the Offshore Wind Wire, the proposed Cape Wind offshore wind project hit a legal snag last week.  The U.S. Court of Appeals for the District of Columbia Circuit issued an order overturning a finding by the Federal Aviation Administration (FAA) that the Cape Wind project’s wind turbines would pose no hazard to aviation.

While this ruling may be a setback for the project, it reveals the complex interplay between federal agencies in permitting offshore wind in the U.S.

Federal regulation of offshore wind projects spans a broad range of activities, from site leasing on the outer continental shelf to marine mammal protection and fisheries to impacts on historic sites.  These regulatory functions are carried out by an “alphabet soup” of administrative agencies from the universe of federal bureaucracy.  FAA is charged with maintaining the safety of air navigation, so the Department of Interior consults FAA before granting a project developer a site lease.

If FAA decides that constructing an offshore wind tower would result in either an “obstruction of the navigable airspace” or “interference with air navigation facilities” like radar systems, FAA has the authority to study the proposed project in more detail and recommend strategies to mitigate the project’s impacts.  On their own, FAA’s recommendations are technically advisory, but the Interior Department can issue site leases contingent upon compliance with any FAA mitigation measures.  This gives FAA’s findings increased importance.

In Cape Wind’s case, after the developer notified FAA of the project, FAA initially issued a Notice of Presumed Hazard, requested public comment, and performed aeronautical studies. FAA analyzed the project for 8 years, ultimately concluding that Cape Wind’s 130 turbines “would have no substantial adverse effect on the safe and efficient utilization of the navigable airspace by aircraft or on the operation of air navigation facilities.”  FAA issued 130 identical Determinations of No Hazard for the project, one for each proposed turbine.

In the meantime, the Department of Interior granted Cape Wind a site lease, contingent on compliance with aviation impact mitigation requirements in the lease as well as any FAA recommendations; once the FAA found no hazard, no such recommendations applied beyond the mitigation measures required in the lease itself.

The Cape Cod town of Barnstable, Massachusetts and the Alliance to Protect Nantucket Sound challenged FAA’s No Hazard determinations by filing a petition for review by the D.C. Circuit Court of Appeals.  Petitioners argued that FAA had violated its governing statute, misread its own regulations, and failed to calculate the project’s safety impacts on aviation.

The D.C. Circuit agreed with the petitioners, finding that “FAA did misread its regulations, leaving the challenged determinations inadequately justified.”  The court noted that the record contained evidence of safety risks from the project, such as avoiding the towers in foggy weather and increased traffic density if planes must divert around the project’s airspace.  By contrast, the court found that the record did not contain sufficient countervailing evidence:

While of course the wind farm may be one of those projects with such overwhelming policy benefits (and political support) as to trump all other considerations, even as they relate to safety, the record expresses no such proposition.

The court also found that while the Department of Interior technically could have ignored an FAA determination of hazard, it was likely that the “Interior Department would rethink the project if faced with an FAA determination that the project posed an unmitigable hazard.”

The court found that FAA improperly applied its own handbook in evaluating whether the project would have an “adverse aeronautical effect.”  In the D.C. Circuit’s view, FAA interpreted its handbook too narrowly, and “catapulted over the real issues and the analytical work required by its handbook.”  As a result,

FAA may ultimately find the risk of these dangers to be modest, but we cannot meaningfully review any such prediction because the FAA cut the process short in reliance on a misreading of its handbook and thus, as far as we can tell, never calculated the risks in the first place.

The court noted that it could not tell whether FAA will find the project to be a hazard when it applies the handbook guidelines correctly, but that it would hold FAA to the “standard requirement of reasoned decision-making, i.e. to require the FAA to address the issues and explain its conclusion.”  As a result, the court vacated FAA’s No Hazard determinations, sending the question back to FAA for further analysis and a renewed determination process.

FAA will now reconsider whether the Cape Wind project would pose any adverse effects on air navigation.  The D.C. Circuit did not rule that FAA reached the wrong conclusion in finding the project would pose no hazard, but rather that FAA did not properly document (and it appears properly consider) how it reached that conclusion.

FAA now has guidance from the court as to how to conduct this determination.  FAA’s new look at the project could result in the agency reaching a different conclusion, but could equally well result in a stronger order affirming its previous finding the Cape Wind project would pose no hazard to aviation.  Either way, Cape Wind’s signed lease with the Department of Interior remains in effect, yet the D.C. Circuit’s ruling reveals the complexity of navigating the multiple layers of federal regulation of offshore wind projects.

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.

Welcome to the November edition, where we ask our experts which state will host the country’s first offshore wind turbines. And oh my, how the playing field has changed since we last checked in.

After holding the top spot for the first four rankings — and really, for the past decade — Massachusetts is no longer the favorite to build the first US offshore wind farm. Thanks to strong political backing, a project in state waters and an apparent absence of local opposition, New Jersey has taken the lead. Fishermen’s Energy has an outside chance to begin construction before the end of this calendar year.

Rhode Island also surged in the vote totals to take second place. Deepwater Wind cleared a huge hurdle when the state’s Supreme Court rejected a challenge to the company’s power purchase agreement with National Grid. Deepwater is now pushing forward to secure the remaining permits and plans to begin construction of its Block Island offshore wind farm in 2013 or 2014.

Cape Wind, meanwhile, suffered a potential setback last week when a federal court vacated its FAA “no hazard” ruling. That challenge, difficulty selling the project’s remaining power and the continued opposition of William Koch’s Alliance to Protect Nantucket Sound caused Massachusetts to slide all the way to the third slot in the rankings.

1) New Jersey: “I don’t like to say we’re going to be first, but we have a good shot,’’ said Rhonda Jackson of Fishermen’s Energy, discussing the Atlantic City project.

2) Rhode Island: Deepwater Wind announced last month that they are buying Siemens’ 6 megawatt turbines for their Block Island project.

3) Massachusetts: Cape Wind continues to face well-funded opposition and must obtain another “no hazard” determination from the FAA. But don’t forget, this is the only project that has a signed federal lease.

4) Texas: The Lone Star State has built in advantages, but we’ve been saying that for two years now.

5) Maryland: In his opening address to AWEA’s annual offshore wind conference last month, Gov. Martin O’Malley promised to push his offshore wind plan.

According to the Associated Press report, the court “vacated” the FAA decision and ordered a new review.

“The FAA did misread its regulations, leaving the challenged determinations inadequately justified,” the ruling read.

Cape Wind spokesman Mark Rodgers said the ruling would not be an obstacle to the project’s development.

“The FAA has reviewed Cape Wind for eight years and repeatedly determined that Cape Wind did not pose a hazard to air navigation. The essence of today’s court ruling is that the FAA needs to better explain its Determination of No Hazard,” Rodgers said in a press release. “We are confident that after the FAA does this, that their decision will stand and we do not foresee any impact on the project’s schedule in moving forward.  Really, today’s court decision doesn’t change things very much because our existing Determination of No Hazard (the 3rd we have received since we started with this project) was set to expire in just 90 days and we were going to have to re-apply at that time anyway, this lets us begin that process sooner.”

The Alliance to Protect Nantucket Sound — a group funded by the oil and gas tycoon Koch brothers — exulted in the decision, according to the AP.

“It’s a key step toward Cape Wind’s ultimate failure,” said the organization’s director, Audra Parker.

The Alliance has shown a willingness to profess deep concern over any issue that could potentially derail the offshore wind project. One of the brothers, William Koch, owns a beachside estate that would look out at the Cape Wind project.