The federal Bureau of Ocean Energy Management is reviewing expressions of interest by eight potential offshore wind developers in leasing sites on the outer continental shelf off Virginia.

These eight companies responded to BOEM’s February 2012 Call for Information and Nominations for Virginia, a formal request for comments and expressions of interest in developing offshore wind facilities in federal waters off Virginia. The eight respondents range from well-established international utilities and major domestic energy players to at least one relatively young startup, showing the broad-based interest in developing Virginia’s offshore wind resources.

BOEM’s Call for Information and Nominations identified an area of federal waters roughly 10 nautical miles by 13 nautical miles, located about 23.5 nautical miles offshore Virginia Beach. In the Call, BOEM asked the public to comment on the area and how its existing and potential uses might be affected by offshore wind development. BOEM also invited potential developers to express interest in leasing part or all of the identified area for developing offshore wind electric generation facilities, with responses due last month.

BOEM has now released some information about the eight companies expressing commercial interest in the area. These entities include:

• Apex Virginia Offshore Wind, LLC: Apex has experience with onshore wind, and recently partnered with global maritime firm Maersk Line, Limited to support the development, financing and construction of utility-scale offshore wind energy facilities in North America. Apex is planning its Hampton Roads project off Virginia, and submitted a formal request for a lease area to BOEM’s predecessor Bureau of Ocean Energy Management Regulation & Enforcement (BOEMRE) in August 2009.
• Arcadia Offshore Virginia, LLC: Arcadia Windpower was founded by Peter Mandelstam in 1997, and developed the first onshore wind project in Montana. Mandelstam went on to found Bluewater Wind, which was sold to NRG Energy Inc. in 2009. Although NRG appears to have put Bluewater’s Delaware offshore wind development on hold, Arcadia’s principals had succeeded in winning a competitive power purchase agreement for the Delaware project.
• Cirrus Wind Energy, Inc. Cirrus may be less well-known than some other applicants, but appears to be the successor to a small-scale wind turbine manufacturer in Nevada. Cirrus expressed interest in three out of the twenty blocks available, whereas other companies generally expressed interest in leasing a larger number of blocks. Nevertheless, Cirrus’ expression of interest puts it at the table with the bigger players.
• Dominion Resources, Inc.: A Dominion subsidiary is the dominant electric utility in Virginia and a major player in U.S. energy markets. Dominion operates generation facilities today (with a portfolio of 28,000 MW in capacity resources) as well as the mainland transmission grid in much of Virginia. As previously noted on the Offshore Wind Wire, Dominion had previously expressed concerns over the cost of offshore wind, but now seems interested in developing one or more projects off Virginia.
• enXco Development Corporation: enXco is a developer of renewable energy projects. enXco’s portfolio includes over 47 renewable energy projects in 15 states, with additional development activity in Mexico, and Canada. enXco is also the largest North American provider of third party O&M for wind turbines. enXco is affiliated with EDF Energie Nouvelles, itself a subsidiary of French utility Électricité de France S.A.
• Fishermen’s Energy, LLC: Fishermen’s Energy describes itself as a “fishermen owned offshore wind company”. Fishermen’s, which shares some of its leadership with vertically-integrated fishing company Atlantic Capes Fisheries, Inc., is pursuing offshore wind farms off of New Jersey and elsewhere along the East Coast.
• Iberdrola Renewables Inc.: Iberdrola Renewables, LLC is the U.S. division of parent company IBERDROLA, S.A., Spain’s largest energy group and the fourth largest utility company in the world by market cap. IBERDROLA, S.A. employs over 33,000 people in more than 40 countries, and claims to have largest renewable asset base of any company in the world. Iberdrola’s renewables arm now has over 40 projects generating power in the U.S.
• Orisol Energy US, Inc.: Orisol Energy US, Inc. was established in 2009 as a subsidiary of Spanish company Orisol Corporacion Energetica S.A. Orisol itself is a subsidiary of Synergy Industry and Technology, S.A. and Spanish energy giant Repsol Nuevas Energías, S.A., one of the largest energy companies in the world. Orisol and its subsidiaries have over 2,500 MW of wind and solar projects under development in Spain, Italy, Bulgaria, Romania and the U.S.

BOEM is now reviewing these parties’ submissions. BOEM’s review is broad, including an assessment of whether each applicant’s filing is compete, and whether each applicant is legally, technically, and financially qualified to hold a renewable energy commercial lease on the outer continental shelf. BOEM will also determine whether “competitive interest” exists.

Based on the number of responses, and the fact that most applicants have expressed interest in nearly the entire available field, it seems likely that BOEM will find competitive interest exists for at least some of the blocks. If BOEM reaches that conclusion, it will launch a competitive leasing process among those developers it deems qualified.

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.

Earlier this week, Virginia Gov. Bob McDonnell announced that the state’s Marine Resources Commission had approved a single five-megawatt offshore wind turbine for the lower section of the Chesapeake Bay.

One year ago this week, the same commission had approved scientific studies to examine the feasibility of such a project.

The move is being hailed by the governor as a game-changer that will upend the decade-long race for the first U.S. offshore wind project. Construction on the turbine is scheduled to be completed before the end of 2013.

In an official announcement, McDonnell’s office noted that the target date “would be before other offshore wind energy projects are slated to be built in other parts of the country. “

The turbine is being developed by Gamesa Energy USA and Huntingon Ingalls Newport News Shipbuilding and will be connected to the grid. The project could be a significant boost for the prospects of an offshore wind manufacturing center in the Newport News area of Virginia.

So, where is the excitement?

“I don’t think it really signals anything,” said Beth Kemler, Virginia State Director for the decidedly pro-offshore wind Chesapeake Climate Action Network. “This turbine has been in the works for years, this is just the announcement that a state agency approved construction at the site.”

Kemler suggested that McDonnell might be more excited about developing an offshore wind manufacturing base than about developing large-scale projects.

“We would hope to see this much enthusiasm for deploying utility scale offshore wind,” she said.

The lack of enthusiasm was not limited to Kemler. Congressman Rob Wittman represents Newport News and his district runs along the Chesapeake Bay. He has been a supporter of offshore wind development, telling Offshore Wind Wire last year that it is an “important component” of the country’s energy future. His office, however, declined several opportunities to comment on the new turbine.

The project might be seen as too small to generate much excitement. Offshore wind industry observers might have heard too many promises of construction next year, whichever year that happens to be.

But this project looks different. Gamesa has the resources to make the project a reality. The turbine has backing from a Republican governor, removing the possibility that this becomes a partisan point of contention.

Importantly, no anti-offshore wind group has emerged in southern Virginia. Perhaps because of the size of the project, but more likely because of the economic opportunity that this industry represents.

“This wind turbine prototype will bring jobs, jobs and more jobs, and it positions Virginia to be a leader in clean energy technology,” said Doug Domenech, Virginia’s Secretary of Natural Resources.

For a decade the offshore wind industry has labored under the fact that there are no projects in U.S. waters. After the first project is in the water, it will be easier to build the second. And what if that first project is a single turbine? Kemler, who is yearning for utility scale offshore wind near Virginia, acknowledged that a single turbine is a step in the right direction.

“Anything that helps move the momentum forward for offshore wind in U.S. waters is a good thing,” she said. “Anything that helps make this more real for Americans – the public or legislators – is a good thing.”

Virginia electric utility Dominion Virginia Power has told the federal Bureau of Ocean Energy Management that it is interested in a lease to site offshore wind energy generation and transmission facilities on the outer continental shelf.  The request represents an apparent shift in Dominion’s position on offshore wind; as recently as a year ago, Dominion announced that it would not include offshore wind in its energy generation mix until that electricity is cost competitive with traditional forms of generation.

What does Dominion’s lease request mean?

In February, BOEM issued its Call for Information and Nominations for Virginia, a formal request for comments and expressions of interest in developing offshore wind facilities in an area of federal waters roughly 10 nautical miles by 13 nautical miles, located about 23.5 nautical miles offshore Virginia Beach.  As reported earlier this week by the Offshore Wind Wire, Dominion has responded to the Call by expressing interest in the entire 113,000 available acres.

Dominion has now expressed interest in the entire Virginia Call area.  Some observers question Dominion’s sincerity, noting that offshore wind does not appear anywhere in Dominion’s Integrated Resource Plan, the company’s detailed 15 year plan to ensure adequate electricity supply for its customers.  Skeptics also note that Dominion’s previously-stated concerns about the cost of producing electricity from offshore wind resources may be at odds with its expression of interest in developing its own offshore wind projects.

Nevertheless, Dominion operates generation facilities today (with a portfolio of 28,000 MW in capacity resources) as well as the mainland transmission grid in much of Virginia.  From this perspective, Dominion may be a credible player in the offshore wind market.  Indeed, while Dominion’s request represents the utility’s most forward step towards developing offshore wind, several recent events have hinted at a future Dominion entry into the offshore wind business.

In September 2011, Dominion won a $500,000 grant from the U.S. Department of Energy to work with partners and find ways to reduce the costs of offshore wind generation.  Under this grant, Dominion is analyzing performance and cost-of-energy estimates of a hypothetical 600 megawatt offshore wind project for a variety of sites on the U.S. Atlantic coastline in water depths up to 60 meters.

Last week, utility analysis firm ABB Power Systems Consulting released a study prepared at Dominion’s request of what transmission upgrades would be needed if offshore wind becomes a reality off Virginia.  That study suggested that each 500-700 megawatts of wind-generated electricity will need its own offshore substation platform, connected to shore by two 230,000 volt lines.  Assuming that about 2,000 megawatts of offshore wind capacity will be developed, ABB recommended four substation platforms connected to two land-based interconnection points.  According to the report, the price tag for each offshore service platform, associated equipment and submarine transmission cables will be about $652 million.

Another sign appeared earlier this month, when Dominion submitted comments to the BOEM asking it not to move forward with a request by Atlantic Grid Holdings for the right to develop the Atlantic Wind Connection offshore transmission system.  In those comments, Dominion noted that BOEM was simultaneously holding its Virginia Call while evaluating the Atlantic Wind Connection request, and that successful respondents to the Call would have certain rights to install their own transmission facilities.  Dominion asked BOEM to hold the Atlantic Wind Connection request pending completion of the Virginia Call process.

Yet another sign manifested last week, when the Chesapeake Climate Action Network and the Virginia Chapter of the Sierra Club collected over 10,000 signatures from Virginians asking Dominion to make a commitment by 2013 to invest in a utility-scale offshore wind farm.  As noted by the Offshore Wind Wire, proponents asked Dominion to develop its own offshore wind farm or invest in offshore wind through a power purchase agreement.

Given these signs, it may not be surprising that Dominion has expressed interest in developing offshore wind in federal waters off Virginia.  Now that the Call’s deadline has passed, BOEM will process the materials it received in response to the Call.  If any other developers have expressed interest in sites offered through the Call process, BOEM may hold a competitive process to select a developer.

BOEM has already issued its environmental assessment for mid-Atlantic offshore wind leasing, smoothing the regulatory seas for one or more Virginia projects.  Will offshore wind come to Virginia?  What role will Dominion play in its future?

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.

As part of the move, which was widely expected, Dominion expressed interest in the entire 113,000 acres that are available under the Call for Information and Nominations that was issued by the Bureau of Ocean Energy Management on Feb. 3.

“Offshore wind generation holds great promise in the long term as a scalable source of emissions-free renewable electricity,” said Mary Doswell, Dominion’s executive vice president for Alternative Energy Solutions. “Virginia is well positioned to accommodate offshore wind with the existing electric grid and world-class port facilities in Hampton Roads. The challenge remains the high cost of building this generation and bringing it to customers.”

Offshore wind advocates such as the Sierra Club and the Chesapeake Climate Action Network have publicly questioned Dominion’s intentions regarding the lease blocks, asserting that the company may actually be planning to prevent offshore wind development rather than encourage it.

In a March 19 letter to BOEM, the director of the Virginia Chapter of the Sierra Club said that “Dominion has expressed interest in securing the Virginia WEA lease blocks, but signs suggest that it may be more interested in preventing others from developing these lease blocks than in doing so itself in a timely manner.”

The director, Glen Besa, noted that Dominion did not include offshore wind in its Integrated Resource Plan (IRP) which details the company’s 15 year electricity generation plan. He also said that the company consistently overstates the costs associated with offshore wind.

Besa’s letter further encouraged BOEM to “issue leases to more than a single developer in the Virginia WEA and ensure adherence to its leasing and development timelines, with meaningful disincentives for not proceeding with development in a timely manner.”

Study Details Wildlife Habitats in Projected New York Offshore Wind Zone

The Center for Coastal Monitoring and Assessment today released a new study titled “A Biogeographic Assessment of Seabirds, Deep Sea Corals and Ocean Habitats of the New York Bight: Science to Support Offshore Spatial Planning”.

According to the New York Times, the report resulted from a two-year joint effort between the State and the National Oceanic and Atmospheric Administration (NOAA). NOAA looked at how bird, fish and coral biodiversity, habitats, resources and ecology may be affected by proposed offshore wind development in the area.

If well received, the study could help streamline development and serve as a model for future studies on the East Coast.

 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.”

The report determined that North Carolina has the strongest resource on the Atlantic Coast and called the ocean off the North Carolina coast “a prime area for offshore wind development.”

The report also determined that most offshore wind near North Carolina will be developed in federal water — more than three miles off the coast.

Gov. Bev Perdue praised the panel for “critical thinking and sound advice so North Carolina can move ahead, in a responsible way, to look at developing offshore energy resources.”

The panel encouraged state leaders to engage with industry to develop the necessary supply chain to build and service offshore wind farms.

Will Morgan, director of Government Relations for the NC Sierra Club, said that the report echoes earlier findings from university and think tank research.

“We look forward to working with the legislature to make the possibility of thousands of jobs and the clean, renewable energy the offshore wind industry would bring to our state a reality,” Morgan said. “It’s becoming clear that offshore wind is a better option than drilling off our coast.”

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.’’

Combining famously big geography with a culture supportive of energy development, Texas offers attractive locations for offshore wind projects.  Several developers have proposed Texas offshore wind projects, including projects off south Texas proposed by the Baryonyx Corporation.  The regulatory structure applied to these projects may give Texas unique advantages in pursuing offshore wind.

Named for a genus of fish-eating dinosaur known from fossil records, Baryonyx was founded by the veteran developers of the now-operating Ormonde Offshore Wind Farm in the Irish Sea.  Baryonyx has proposed two offshore wind projects located entirely within Texas-jurisdictional waters in the Gulf of Mexico.

The Mustang Project would be located off Nueces County, about 25 miles from Corpus Christi.  Baryonyx suggests that the site has the potential to accommodate about 200 turbines; using 6 megawatt turbines, the Mustang Project could have an installed capacity of up to 1.2 gigawatts.  Baryonyx leased about 26,210 acres 5 to 10 miles from land from the Texas General Land Office, in water depths ranging from 55 to 75 feet.

The Rio Grande Project would be split across two sites (Rio Grande North and Rio Grande South) off South Padre Island.  These sites are about 34 miles northeast of Brownsville, and range from 5 to 10 miles offshore.  Baryonyx suggests that each site has the potential to accommodate about 160 turbines, resulting in an installed capacity of about 1 gigawatt for each half of the Rio Grande Project.  Baryonyx leased about 40,000 more acres from the Texas General Land Office for the Rio Grande sites, in water depths ranging from 55 to 88 feet. 

These two offshore wind projects will complement two terrestrial wind projects under development in Texas by Baryonyx.  The company’s business model also includes supplying data centers with 100% renewable power from Baryonyx-owned assets under long-term contracts at fixed prices.  Data centers are significant consumers of electricity, and represent a growing sector of electricity consumption as the demand for data storage and processing increases.

Thanks to the way Texas broke from Mexico in 1836, Texas controls far more of the continental shelf than do most other states.  Texas has jurisdiction over its offshore resources up to three marine leagues (about 10 miles) from shore, while other coastal states (all but Florida, and the territory of Puerto Rico) only have jurisdiction over the first three nautical miles out from shore.  As a result, developers must lease submerged land sites from the Texas General Land Office instead of the federal Bureau of Ocean Energy Management.  Some observers believe that this localized control of the offshore resource will lead to choices that are more favorable to project developers.  For example, concerns of neighboring states may be less likely to play a role in the Texas agency’s decision to lease sites than if a federal agency controlled the leasing process.

Even though the projects are proposed in state waters, some federal regulatory approvals are needed.  For example, the U.S. Army Corp of Engineers has jurisdiction over obstructions to the navigable capacity of waters pursuant to Section 10 of the Rivers and Harbors Act of 1899, as well as authority over dredging and filling of navigable waters under Section 404 of the Clean Water Act.  Baryonyx has applied to the Army Corp for these permits for its Texas projects.

The Army Corps recently decided to conduct a full Environmental Impact Statement analysis of Baryonyx’s proposal.  Under the National Environmental Policy Act (NEPA), the Army Corps and other federal agencies must perform an environmental impact study before taking actions “significantly affecting the quality of the human environment”.  An EIS represents the most stringent and thorough federal analysis of environmental impacts of an offshore wind project.

Despite a June 2011 public notice by the Army Corps suggesting that “preliminary review of this application indicates that an Environmental Impact Statement (EIS) is not required”, environmental groups and Baryonyx itself expressed interest in having a full environmental study performed given the project’s magnitude and its potentially first-in-Texas status.  As a result, the Army Corps has decided to move forward with the full EIS, a decision Baryonyx appears to have welcomed.

The study will be prepared by third-party contractors selected by the Army Corps over the next two years.  After the EIS is complete, construction on the projects could start as early as 2015.

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.