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 deal was reached as part of an agreement that allowed NSTAR to merge with Northeast Utilities. Two years ago, Massachusetts regulators approved Cape Wind’s contract to sell 50 percent of its power to National Grid. According to the company, these combined power purchase agreements are sufficient for construction to begin.

The three hearings will be held in Natick, MA, on May 22, Barnstable, MA, on May 23 and Boston on May 30.

Delaware Official Backs Transmission Backbone

Delaware Natural Resourcs Secretary Collin O’Mara said the Atlantic Wind Connection offshore wind transmission backbone could be a boon to the region even without a local offshore wind project, the Wilmington News-Journal reported today.

Bluewater Wind had planned a project off the Delaware coast, but that project was scuttled late last year.

According to the report, O’Mara said the project could bring down electricity rates. He also cautioned, however, that more negotiation was needed with regional grid operator PJM Interconnection.

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.

The federal Bureau of Ocean Energy Management is considering a proposal to develop an offshore wind project on the outer continental shelf off New York’s Long Island.  Proposed by a collaborative composed of three New York City-area utilities, the Long Island – New York City Offshore Wind Project would be located in federal waters about 13 nautical miles south of Long Island and east of New Jersey.

The collaborative promoting the project involves a “public-private partnership”, a trendy catchphrase that connotes a mix of public interest and private money.  The collaborative includes two public power authorities – the New York Power Authority and the Long Island Power Authority – as well as investor-owned utility Consolidated Edison of New York.

Created in 1931, the New York Power Authority is a political subdivision of the State of New York.  NYPA generates, transmits, and sells about 25% of the electric power and energy consumed in New York, making it the Empire State’s largest public power organization.  Overall, NYPA controls electric generation facilities with a total installed capacity of 6,054 megawatts; in 2010, NYPA generated 24.4 billion kWh of electricity, primarily from hydropower projects.  NYPA had previously pursued an offshore wind project in New York’s piece of the Great Lakes, but its Great Lakes Offshore Wind project was scrapped in the fall of 2011 amid a leadership change and concerns that high costs would make it unfeasible.

Like NYPA, the Long Island Power Authority is also a political subdivision of the State of New York.  A non-profit municipal electric utility formed in 1985 to take over the assets of former investor-owned utility Long Island Lighting Company, LIPA owns the electric grid in most of Long Island.  LIPA does not own electric generation assets on the island but serves 1.1 million customers with electricity generated off-island.

Consolidated Edison Company of New York, Inc. is a subsidiary of Consolidated Edison, Inc., one of the nation’s largest investor-owned energy companies.  At the parent level, ConEd generates about $13 billion in annual revenues off an asset base of $39 billion.  Consolidated Edison Company of New York is the regulated investor-owned utility providing electric service to almost all of New York City and most of New York’s Westchester County.

Together, these entities represent the three largest electric utility providers in the Long Island – New York City region.  Their plans for an offshore wind project currently rest on an unsolicited lease request NYPA submitted to the BOEM in September 2011.  Because BOEM regulations required the lease to be held in the name of one entity, and because New York law restricts LIPA from holding a lease in federal waters, the collaborative members chose NYPA to be the lead applicant on behalf of the collaborative.

The collaborative’s proposal identified a cone-shaped project area constrained by two of the many marine navigational routes, or traffic separation schemes, leading to New York City.  The project area is thus narrowest at its northwest corner, closest to the city, and widens as it extends to the southeast.  The initial project area would cover about 81,500 acres of sea space, and would start with a 350 MW capacity, expandable to 700 MW.  For the full 700 MW buildout, the collaborative expects up to 194 turbines each rated at 3.6 MW, or 140 turbines each rated at 5 MW.  Because water depths range from 60 to 120 feet, turbines are expected to be mounted on towers attached to the sea floor (using monopile, gravity, or tripod technology).  If BOEM awards the requested lease to NYPA, the collaborative’s members plan to seek proposals from private development firms to build the project, turn the lease over to the winning bidder, and enter into agreements to purchase the project’s output.

BOEM is currently reviewing the proposal, and has determined that NYPA is legally, technically, and financially qualified to hold a lease.  Under BOEM’s leasing process, when presented with an unsolicited lease request, BOEM will issue a Request for Competitive Interest.  That step could occur as soon as the summer of 2012.  If, after reviewing the responses to that request, BOEM determines that there is no competitive interest in the area sought by NYPA, the collaborative would move forward with the development of a plan to assess the site and BOEM would begin to prepare an environmental analysis for lease issuance and site characterization studies.

If all goes according to the collaborative’s plan, a lease could issue as early as 2013, with construction possible in 2017 and commercial operation targeted for 2018.  These projections depend on a number of contingencies, including a lack of competition for the site, regulatory approvals, and financing.  The project also depends on continued public and political support for the project, which failed to materialize for NYPA’s earlier Great Lakes offshore wind project.  Nevertheless, if successful, the Long Island – New York City Offshore Wind Project could represent one of the first public-private partnerships to achieve the development of offshore wind in United States waters.

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 malfunctioning gearboxes are expected to cost Vestas over 40 million euros, which it will attempt to recoup from the gearbox supplier.

Additionally, in order to align the development of the massive 7 MW turbine to the company’s new offshore wind production outlook, Vestas has delayed the proposed installation of the 7 MW prototype in Denmark to 2014 at the earliest.

Trump Claims Scottish Wind Farm Will Destroy Tourism

Noted American businessman and bankruptcy enthusiast Donald Trump recently wrote a letter to Scottish First Minister Alex Salmond in which Trump warned that the First Minister was “single-handedly destroying the economic well-being of a great country” by supporting an offshore wind farm near Trump’s proposed luxury golf resort in Aberdeenshire.

In his letter, Trump encouraged First Minister Salmond to “stop your mad march into oblivion with these very expensive and highly inefficient (and extremely ugly) industrial turbines”.

Last 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.

Stakeholder reaction at the time of the announcement was mixed, and apparently doubters remain on the Maine Public Utilities Commission (PUC). According to the Aftenbladet report, Statoil officials recently met with the PUC and determined that support at the state level was insufficient to begin construction on the test project.

However, a Statoil executive interviewed by Aftenbladet seemed optimistic about a 2016 production goal for the test project, as well as floating technology in general in the United States.

“The US is more interested in floating windmills than fixed. Statoil will be making a decision in 2014 should the framework conditions be in place. We are now in the process of conducting environmental studies, we have been in contact with an interest association for local organizations, and we know that local industry in the U.S. has the capacity to deliver,” Ståle Tungesvik, Statoil senior vice president for reserves and business development, told Aftenbladet.

The lack of certainty over Production Tax Credits (PTC) and Investment Tax Credits (ITC) may also be delaying the project. According to the Aftenbladet report, Mr. Tungesvik has been in touch with authorities in Washington, D.C., to lobby for the financial support the project needs to progress.

The announcement comes in advance of a meeting of the Clean Energy Ministerial in London on April 25 and 26, which will be co-chaired by U.S. Secretary of Energy Steven Chu and UK Secretary of State for Energy and Climate Change Edward Davey.

Floating turbines have been proposed but not yet deployed in the United States. The most notable project is off the coast of Maine. In Europe, meanwhile, a full-scale demonstration project has been deployed off of Norway and one has been scheduled for testing off of Portugal.

Great Lakes Collaborative Looks Toward Floating Turbines

In other floating-turbine-collaboration news, Grand Valley State University and Michigan Technological University, both located in Michigan, are partnering with a Seattle-based business to explore the idea of floating turbines on the Great Lakes.

The Great Lakes Research Center at Michigan Technological University is the lead applicant on a Federal DOE grant application to fund the proposed project. The firm, The Glosten Associates, hopes to collaborate with the universities and other partners to deploy a PelaStar floating tension-leg turbine platform far enough out on one of the Great Lakes so as not to be visible from shore.

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.

The SouthPoint lawsuit follows on the heels of a similar lawsuit filed in September by Trillium Power.

The Ontario government declared the moratorium in early 2011 in the face of well-funded public resistance and an upcoming election. The Government has announced it will fight both lawsuits.

North Carolina Offshore Wind Forum Taking Place Tonight

Meredith College will host a slate of industry leaders at an offshore wind forum tonight in Raleigh.

Marcilynn Burke, assistant secretary at the Department of the Interior, will be the keynote speaker, with members of Offshore Wind NC and the NC Sierra Club and scheduled to attend. The event starts at 7PM in Kresge Auditorium.

Nordex Discontinues Offshore Wind Business; Doosan Reconsiders Scotland

Turbine manufacturer Nordex has announced that it is discontinuing its offshore wind business in order to focus on onshore turbines after a proposed joint venture fell through.

The news of Nordex’ announcement comes as Korean engineering giant Doosan announced that it was delaying plans to enter the UK offshore wind market with four demonstration projects in the water by 2014.

The company, in a statement, cited the economic uncertainty plaguing Europe.

“The uncertain economic situation in Europe has created general liquidity issues, as well as sapped market confidence – putting a question mark over the future development of the offshore wind market,” Doosan said in its announcement.

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.