Offshore Wind Wire: As the Massachusetts Energy and Environment Secretary, you saw first hand the difficulties that Cape Wind experienced while navigating the permitting process. Do you think that the “Smart from the Start” initiative will be effective in streamlining the permitting process for future projects?

Ian Bowles: I think Interior Secretary Ken Salazar is an impressive proponent of offshore wind. The permit reforms he launched are an important improvement.  I think they will make a difference in cutting down the long permitting timelines, but we still need to see a deeper federal commitment to offshore wind — not just on permitting, but on making sure that offshore wind reaches its full potential. Because it is close to major load centers on the Atlantic Coast and the Great Lakes, offshore wind is far and away the largest resource available to meet our renewable energy needs. Federal leadership can accelerate the private sector’s ability to bring this resource to market at reduced costs by spurring supply chain development and putting in place reliable incentives and power purchase commitments. Once initial projects succeed, less federal support will be needed as offshore wind takes off.

OWW: The political landscape in Washington has caused some uncertainty in the offshore wind industry, most recently with Bluewater Wind delaying its Delaware project. Do you think that uncertainty regarding government subsidies and regulation could have a chilling effect on the industry as a whole?

Bowles: Never has Congress seemed more out of step with the rest of the world on clean energy. The Conservative Cameron government in the United Kingdom is making massive commitments to offshore wind, China is outstripping U.S. investment in clean energy, Japan is talking about mandating solar on every building, and the list goes on. The lack of commitment from Congress is a sorry story for the United States and it puts us ever further behind in the clean energy race that may dominate the coming decades of economic growth worldwide. So, yes, I think the message from Washington is hurting the offshore wind industry.

OWW: What role should state governments play in supporting responsible offshore wind development?

Bowles: State governments are, by their very nature, parochial and they should be. That said, energy policy is largely set at the state level by governors, legislatures and public utility commissions. On a bipartisan basis, governors like Gov. Patrick of MA and Gov. Christie of NJ are championing offshore wind, but there are limits to the capacity of states to get more than a handful of projects off the ground. The bipartisan consensus at the gubernatorial level hasn’t translated to the Congressional level.

OWW: Where will the first US offshore wind project be, and when do you think it will happen?

Bowles: Cape Wind will be first. Exact timeline remains a bit unclear as the project goes through federal court appeals (all the state permits have been issued and all judicial appeals completed). No other major project will happen for at least six years, so folks in Washington, in the industry and in the financial community should close ranks and get it done — more delay sends a bad signal for the United States.

The event, “Offshore Wind in New England: Lessons Learned, the Way Forward,” will be moderated by former Massachusetts Energy and Environment Secretary Ian Bowles.

The panel will include representatives from offshore wind construction company EEW, development and financing organization Anbaric Holding, offshore wind investor D.E. Shaw Group and regional utility National Grid.

Neptune Wind Proposes New Jersey Project

Massachusetts-based developer Neptune Wind will propose a project near New Jersey, the company announced yesterday in a statement.

Neptune Wind has already proposed three projects near Massachusetts and Rhode Island.

“This geographic expansion enables us to diversify our power markets and to take advantage of more aggressive policies around offshore wind development,” the statement read.

The federal government yesterday released a request for interest for offshore wind projects in federal waters near Massachusetts — officially launching that leasing process.

While the Bureau of Ocean Energy Management, Regulation and Enforcement has been dutifully drafting this RFI, they have also been accepting and evaluating unsolicited lease applications for the immediately adjacent “Area of Mutual Interest” — a block of federal water situated between Massachusetts and Rhode Island. To date, the agency has received at least two applications in the Area of Mutual Interest — from Deepwater Wind and from Neptune Wind.

Massachusetts officials touted yesterday’s release as a success for the state and a strong step forward for the offshore wind industry.

“The Request for Interest issued by the Obama administration today begins a process that will lead to up to 4,000 megawatts of wind energy installed far off our shores … and take this new US industry from infancy to maturity,” said Massachusetts Energy and Environmental Affairs Secretary Ian Bowles. “Let there be no question that Massachusetts is, and will be, the nation’s offshore wind leader – spurring technological innovation and technology to reduce costs and improve performance.”

The RFI seeks to gauge the industry’s interest in developing wind farms in a 3,000 square mile area south of the islands of Martha’s Vineyard and Nantucket. Responses are due by February 28, 2011.

Developers responding to the RFI are required to include specific blocks of interest in the RFI area, project goals, a time line for development, available wind resource and environmental data for the relevant area and proof that the developer is “legally, technically and financially qualified … capable of constructing, operating, maintaining, and decommissioning the facilities.”

The RFI described financial qualification as proof that the developer has “access to sufficient capital to carry out development.”

Massachusetts officials simultaneously released a supplement to the RFI called “Goals for Offshore Renewable Energy and Request for Additional Information.” That document sets a goal of 4,000 megawatts of offshore wind capacity and seeks information from the industry on system design, engineering, construction, ownership, transmission and electric grid configuration.

The RFI can be accessed here:  www.ofr.gov/OFRUpload/OFRData/2010-32853_PI.pdf

(Ed. Note: This article has been corrected to clarify that the new leasing process is taking place immediately adjacent to the “Area of Mutual Interest,” the area where unsolicited proposals have been received.)

The White House protest alleges that a Chinese domestic subsidy program is illegal because it requires wind turbine manufacturers to use parts made in China, according to the Times report.  China’s Ministry of Commerce issued a short statement saying that its policy is “consistent with W.T.O. rules.”  The protest was well received by the United Steelworkers, a labor union, as well as members of Congress.

“The United States cannot replace its dependence on foreign oil with a dependence on clean energy technology made in China,” said Ohio Democratic Sen. Sherrod Brown.  “American manufacturing must lead the way — and to do this, they need a level playing field.”

Newspaper Says MA Pressures Utilities to Buy Cape Wind Electricity

The Boston Herald reported today that Massachusetts Gov. Deval Patrick’s administration is threatening to derail a proposed utility merger unless one of those participants — NStar — buys Cape Wind’s electricity.

NStar, which has not expressed interest in buying the remaining 50 percent of Cape Wind’s electricity, has proposed a $4.3 billion merger with Northeast Utilities.  That merger is being reviewed by the state’s Public Utilities Commission.  The Herald article did not include any quotes in which the Patrick administration directly tied the purchase of Cape Wind’s electricity to the proposed merger.

Ian Bowles, the administration’s outgoing environmental and energy secretary, said regulators should ask if a merger will “help advance the development of the commonwealth’s solar and offshore wind resources.”

Deepwater Project Will Use New Platform Technology

Deepwater Wind’s proposed 1,000 megawatt project in Rhode Island Sound will use innovative four-legged steel platforms, MIT’s Technology Review reported on Monday.

The four-legged platforms will allow the project to be built in water twice as deep as could be done with traditional monopole foundations, according to the report.

The platform design is already used for offshore oil and gas rigs and was adapted in 2007 for a pilot offshore wind project in the North Sea.  That project mounted two 5 megawatt turbines on four-legged towers in 45 meters (about 147 feet) of water.

Deepwater announced yesterday that it had applied to federal regulators for permission to build a 200-turbine wind farm in Rhode Island Sound.  In July, Rhode Island Gov. Don Carcieri and Massachusetts Gov. Deval Patrick signed an agreement to cooperate in developing an area of mutual interest in federal waters between the states.  The Deepwater Project falls within the designated area.

“No project will go forward without the agreement of both governors, and the states sharing economic benefits equitably,” Bowles said.

Virginia Utility Says It Can Accommodate 4,500 MW Offshore Wind Farm

During a presentation to the Virginia Offshore Wind Development Authority, officials from the Dominion Virginia Power utility said they can handle a 4,500 megawatt offshore wind farm that would connect to the grid near Virginia Beach, the Richmond Times Dispatch reported yesterday.

The Development Authority, intended to boost offshore wind development in the state, met for the first time yesterday.

“Our transmission system today is robust enough to handle a 4,500-megawatt wind farm off the coast of Virginia,” utility spokesman Jim Norvelle said.

According to the report, the legislation did not make it out of the house energy committee on Tuesday.  Lawmakers, meanwhile, are expected to conclude their lame-duck session this week.  None of the legislators who worked on the proposal will be in office for the next session, the report said.

“It would take all the ducks lining up, all the things breaking our way” for the legislation to reach be approved this year, said State Rep. Dan Scripps.

MA Energy Secretary Steps Down

Massachusetts Energy and Environmental Affairs Secretary Ian Bowles — who was an instrumental figure in the long-running Cape Wind debate — will step down from his post at the end of the year, the Associated Press reported.

Gov. Deval Patrick appointed Bowles four years ago and referred to him as “a star in this administration.”

He will be replaced by Rick Sullivan, who was formerly the head of the state’s Department of Conservation and Recreation.

Similar task forces are in place in Delaware, Maine, Maryland, Massachusetts, Rhode Island, New Jersey and Virginia.

“BOEMRE created this task force to facilitate the efficient and effective review of proposed renewable energy projects on the OCS offshore New York,” said Bureau of Ocean Management, Regulation and Enforcement Director Michael Bromwich.  “We will continue to work together to initiate the commercial leasing process that will enable New York to meet its renewable energy development goals and expand our nation’s energy resource portfolio.”

MA Officials Hope Cape Wind Will Draw Other Offshore Wind Business

Massachusetts state officials are that the groundbreaking Cape Wind project will help attract other wind energy companies to the Bay State, the Associated Press reported.

Ian Bowles, the state’s secretary of Energy and Environmental Affairs, also pointed to the almost-complete blade testing facility in Charlestown, MA.

“We’ve been aggressive in looking to grow the wind energy cluster in Massachusetts,” Bowles said, citing the attraction of Cape Wind.  “Add to that a testing facility that has the largest capacity in the world for testing the largest blades in the world and you are going to see a lot of large wind blades coming into Boston.”

In a filing on the Cape Wind PPA case, the company complained that the bidding process favors in-state producers.  TransCanada filed a similar complaint in Rhode Island.  Bowles said that Massachusetts has dropped quotas for in-state renewable energy and that the state’s bidding process would survive the TransCanada argument.

“They’ll have an opportunity to bid,” Bowles told the Herald.

Delaware Extension Pushes Escape Clauses Back

The two-year extension of the delivery deadline for the NRG Bluewater Wind offshore wind farm in Delaware has also extended the escape clauses for the developer and Delmarva Power, the purchasing utility, The News Journal of Delaware reported.

Under the original contract, NRG Bluewater Wind had until June 23, 2010, to abandon the project without financial penalty.  Under the new contract,  the developer will forfeit one third of its deposit — $2 million — if it abandons the project before June 23, 2011 and all of its deposit after that date.  Delmarva Power’s escape clause was pushed back to June 23, 2012, The News Journal reported.

The paper also quoted Matt DaPrato, a wind analyst with IHS Emerging Energy Research, saying the extended deadlines are “a much more realistic assessment” given the slow pace of government permitting.

Secretary of the Interior Ken Salazar gave his official approval to Cape Wind today, clearing the way for the nation’s first wind farm to be built on federal submerged lands in Nantucket Sound.

During a noon press conference with Massachusetts Governor Deval Patrick at the Massachusetts State House, Salazar approved the Cape Wind project, conditioned upon the developer agreeing to minimize some potential adverse impacts of the construction and operation of the wind farm.

“After careful consideration of all the concerns expressed during the lengthy review and consultation process and thorough analyses of the many factors involved, I find that the public benefits weigh in favor of approving the Cape Wind project at the Horseshoe Shoal location,” Salazar said. “With this decision we are beginning a new direction in our nation’s energy future, ushering in America’s first offshore wind energy facility and opening a new chapter in the history of this region.”

The Cape Wind project will be the first offshore wind farm in the United States, and could create up to 1,000 construction jobs, according to the Interior Department press office.  The project also has the potential to cut carbon dioxide emissions from conventional power plants by 700,000 tons annually, the press office said.

Salazar made note of the long journey that the Cape Wind project has taken, and gave assurances that the permitting process for future projects would not take ten years to complete.

“There is no reason why an offshore wind project should take a decade to review and approve. Future projects will face a quicker, more streamlined process,” Salazar said. “This will be the first of many projects up and down the Atlantic coast.”

To mitigate the impact on the view from Cape Cod shores and specifically the Kennedy Compound Historic Landmark, Salazar said that he will require the developer to change the design and configuration of the wind turbine farm.  Salazar also said he would require the project to be reduced from 170 turbines to 130 turbines, although Cape Wind officials have long said that they planned to build a 130-turbine wind farm.  The company will also have to conduct additional seabed surveys to ensure that any submerged archaeological resources are protected prior to bottom disturbing activities.

The final hurdle to the project was posed by local tribes, which claimed the wind farm would infringe on their cultural and religious beliefs.  Salazar said he understood and respected the views of the Aquinnah and Mashpee Wampanoag Tribes and the Advisory Council on Historic Preservation, but noted that as Secretary of the Interior, he must balance broad, national public interest priorities in his decisions.

“The need to preserve the environmental resources and rich cultural heritage of Nantucket Sound must be weighed in the balance with the importance of developing new renewable energy sources and strengthening our Nation’s energy security while battling climate change and creating jobs,” Salazar said.

Governor Patrick, who has supported Cape Wind since his 2006 gubernatorial campaign, embraced the Interior’s decision.

“America needs offshore wind power, and with this project Massachusetts will lead the nation.” said Patrick.  “If we get clean energy right then the whole world will be our customer.”

Cape Wind President Tom Gordon said that he expects to begin construction before the end of 2010, which would allow the company to take advantage of federal incentives.

“Secretary Salazar’s decision today to approve Cape Wind has launched the American offshore wind industry.  It allows our nation to harness an abundant and inexhaustible clean energy source for greater energy independence, a healthier environment and green jobs,” Gordon said.  “We also appreciate Governor Deval Patrick’s support, vision and leadership to make Massachusetts a global leader in offshore renewables and the clean energy economy.”

Offshore wind developer Cape Wind and electricity distributor and generator National Grid received a stern warning last week from Massachusetts’ top energy official regarding the power purchase agreement being negotiated by the two entities.

In a Feb. 17, letter addressed to Cape Wind President Jim Gordon and Thomas King, head of Electricity Distribution and Generation for National Grid, MA Secretary of Energy and Environmental Affairs Ian Bowles cautioned the two parties to keep ratepayers in mind during PPA negotiations.

Cape Wind, the proposed 130-turbine wind farm in Nantucket Sound, is in negotiations with National Grid for the purchase and sale of the resulting power. A power-purchase agreement with National Grid would be a crucial step forward for Cape Wind, which has been seeking approval and fighting detractors for over nine years. National Grid provides electricity to much of the Northeastern United States, and an agreed-upon PPA would make Cape Wind more palatable to investors.

However, any PPA would require the approval of Massachusetts officials, and Bowles’ letter gave the clearest indication to date of where these officials expect the price to be.  Bowles made specific reference to a PPA executed recently between National Grid and Deepwater Wind for the power generated by an eight turbine project off of Block Island, R.I. Under that agreement, National Grid will pay 24.4 cents per kilowatt hour for electricity from the turbines with the price increasing 3.5 percent a year.  The cost of an undersea cable between Block Island and the mainland could drive that purchase price even higher.

“Let me be clear,” Bowles wrote. “Our expectation is that the Cape Wind project must produce electricity at a substantial discount to the Rhode Island offshore wind project.”

In the letter, Bowles did not set a price point that the State would require for approval, but the comparison to the Rhode Island PPA was a clear indication of what costs will not pass muster.

The letter was not completely negative, however, as Bowles made a point to recognize the recent Charles River Associates study that claimed that a wholesale power market price reduction would result from the introduction of a new zero-fuel cost source. Bowles’ acknowledgement lent credence to the study, which has come under fire because it was funded by Cape Wind.

Despite affirming the potential benefits to the energy market and the environment, Bowles remained adamant that any PPA must first consider consumers.

“Notwithstanding these significant potential fossil fuel hedging and wholesale price reduction benefits, our priority remains cost effectiveness, including contract provisions to minimize impacts on Massachusetts ratepayers.”,  wrote Bowles.

Bowles also suggested including a provision in the PPA that would allow other Massachusetts utilities to buy into any contract between the entities.  Under Massachusetts’ Green Communities Act, passed by the Legislature in 2008, the state’s renewable portfolio standard requires utilities and other electricity suppliers to obtain 4% of their power sales from new renewable sources by 2009, rising to 15% in 2020 and 25% in 2025.

“The Green Communities Act set out a requirement as well as incentives for the four electric distribution utilities to enter into long term contracts to facilitate the development of costs effective renewable power in Massachusetts,” wrote Bowles, “We favor contract provisions that would allow the other utilities to meet this obligation by buying into the Cape Wind-National Grid contract.”

Bowles also hinted that the State would look more favorably on a PPA that made provisions for job creation within the state.

“We would like to see such economic benefits – including wind blade manufacture, component assembly, staging and shoreside services activities – accrue to Massachusetts” wrote Bowles.