Baltimore – Interior Secretary Ken Salazar announced today that leases for offshore wind development off of Maryland, Virginia, New Jersey and Delaware would be issued by the end of 2012 after an environmental review resulted in a finding of no significant environmental impact. The announcement follows President Obama’s call for additional clean energy development in his State of the Union address last week.

“When it comes to powering our nation’s homes, businesses and economy, we need to take an all-of-the-above approach to safely and responsibly developing our domestic energy resources,” Secretary Salazar said. “Offshore wind holds incredible potential for our country, and we’re moving full-steam ahead to accelerate the siting, leasing and construction of new projects.”

Under the National Environmental Policy Act (NEPA), the Bureau of Ocean Energy Management (BOEM) first had to conduct an environmental assessment of the proposed lease sites. This recently completed assessment found that there would be no significant environmental and socioeconomic impacts from issuing wind energy leases in the previously designated Outer Continental Shelf (OCS) lease areas off the mid-Atlantic Coast.

According to OWW contributor and wind energy expert Todd Griset, the finding of no significant impact (FONSI) will allow BOEM to move forward with the leasing process without preparing a more intensive and time consuming environmental impact statement. However, the assessment does not permit construction or cover any specific projects.

BOEM has received several responses to a Request for Interest issued in 2010 for lease areas off of Maryland, New Jersey and Virginia, and lease blocks in these areas will be awarded based on an auction held sometime this year. BOEM received only one response to the RFI for the lease blocks off of Delaware, and will issue a non-competitive lease to that developer sometime this year, presuming that the developer is still interested.

Overall, the announcement was met with excitement by industry observers.

“Today’s announcement gives us hope that the United States will now be able to develop our enormous offshore wind resources more quickly – and deliver the enormous economic, environmental and public health benefits that come with them.” said Kit Kennedy, Clean Energy Counsel for the NRDC.

“This is a critical step in the establishment of the U.S. offshore wind industry, which will create thousands of high skilled jobs and allow for billions of dollars in investment.” added Jim Lanard, President of the Offshore Wind Development Coalition.

This week Gov. Martin O’Malley unveiled his revised plan for offshore wind development off Maryland.

Previous efforts to promote economic development through offshore wind have failed to gain legislative approval.  Gov. O’Malley is back with the Maryland Offshore Wind Energy Act of 2012 (Senate Bill 237) a retooled proposal that he touts as both empowering economic development and necessary to meet Maryland’s statutory renewable electricity requirements.

Maryland possesses an abundant offshore wind resource.  A 2010 report by the University of Delaware’s Center for Carbon-free Power Integration, College of Earth, Ocean, and Environment found that even after excluding areas where electricity generation would conflict with shipping, Maryland waters could host over 39 gigawatts of nameplate capacity and could produce over 117 terawatt-hours per year.  To put this in context, all electricity customers in Maryland consume only 65 terawatt-hours per year.

Full build-out of this projected offshore wind generation could produce up to 179 percent of Maryland’s electricity needs.  (Gov. O’Malley’s current vision appears to be more modest, with offshore wind providing up to about a third of Maryland’s needs.)

Maryland is also favorably postured towards renewable energy from a policy perspective.  Under Maryland’s renewable energy portfolio standard, utilities must source increasing amounts of electricity from renewable generators.  By 2022, 20 percent of electric load must be served by renewable resources. 

O’Malley has stated that Maryland will need a substantial investment in offshore wind to satisfy that standard.  To facilitate that investment, last year O’Malley introduced House Bill 1054, the Maryland Offshore Wind Energy Act (of 2011).  That proposal would have required developers to compete before the Maryland Public Service Commission for long-term contracts with the state’s four investor-owned electric companies.

The vision for this first phase encompassed between 400 and 600 MW of offshore wind capacity, located at least 10 nautical miles offshore Maryland or within the federal waters adjoining another state within the mid-Atlantic electric grid run by PJM.  Contracts would likely have been more costly than for traditional resources, especially in early years, so customers would pay a special charge to divide costs equitably.

Ultimately, the 2011 proposal did not meet with legislative approval.  Costs were a key concern, with estimates of between $2.16 and $8.70 in increased monthly costs for the average ratepayer.  Legislators also raised questions about how much Maryland would actually experience economic development benefits through the program.

This year’s Maryland offshore wind bill was presented as a resolution of some of these challenges.  Proponents compare the Maryland Offshore Wind Energy Act of 2012 to New Jersey’s 2010 Offshore Wind Economic Development Act, which managed to win broad support from both legislators and Gov. Chris Christie.

Mandated long-term contracting is gone from Maryland’s 2012 offshore wind bill.  Instead, O’Malley’s 2012 bill features a specific renewable portfolio standard for offshore wind – 2.5 percent, starting in 2017. Utilities would comply with this standard by acquiring ORECs or offshore wind renewable energy credits. This offshore wind carve-out would not automatically increase, unlike the overall renewable mandate or an existing carve-out for solar energy.  Utilities could make their own arrangements to satisfy this standard, buying ORECs or developing qualifying projects, subject to state regulatory review.

The 2012 bill also comes with a lower price tag than last year’s proposal, along with stronger cost-containment.  Official estimates suggest the measure would add an estimated $1.50 to $2 to average residential consumers’ monthly bills.  Customers would feel this increase in the form of increased utility supply costs, but would not see a specific offshore wine line item on their bills.  If the Public Service Commission projects cost increases of more than $2 a month, the program will be suspended.

Will O’Malley’s 2012 offshore wind bill meet more support than his previous efforts?   If it is passed, will it lead to offshore wind development off Maryland?

Maryland can point to program improvements and lessons learned from other states such as New Jersey, although as of today no commercial offshore wind projects operate in US waters.  Whether Maryland’s offshore wind resource is developed in the near term may depend in part on how the Maryland legislature reacts to the revised pitch.

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

The project 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.

The plan would compel utilities to buy power from offshore wind farms.

“The situation has gotten worse — not better — for offshore wind since the last time it was up for debate,” said Del. Dereck Davis, chairman of a committee whose support is crucial to to O’Malley’s plan.

The Chesapeake Bay Journal, meanwhile, reported on Friday that offshore wind support is increasing in mid-Atlantic states.

The Annapolis Capital reported that Maryland clean energy activists believe that New Jersey’s offshore wind legislation would provide a good model for their state.

The Bureau of Ocean Energy Management (BOEM) announced today that it is taking the next steps in its review of the Atlantic Wind Connection, the proposed transmission line that would connect offshore wind farms with the mid-Atlantic electricity grid. According to a press release accompanying the announcement, BOEM is asking whether other developers are interested in constructing transmission facilities in this area while also seeking comments on the potential environmental consequences of the project. To submit a statement of competitive interest or a public comment electronically, follow this link.

Offshore Wind Talks to Continue in Maryland

Lawmakers are planning to resume talks on Governor Martin O’Malley’s offshore wind energy bill, which could eventually lead to an AWC-connected wind farm off of the coast of Maryland. The bill stalled in the legislature last session, but with Governor O’Malley fresh off of a clean energy victory in a utility merger, many are optimistic that the initiative will fare better this time around.

“Many large U.S. cities are located on or near the East Coast, giving them close access to the power generated by offshore wind farms,” said Willett Kempton, a professor at the school. “But if we begin to seriously exploit the offshore resource, transmission upgrades may be needed.  And even before that point, new transmission systems may be desirable to help make the most of the offshore wind resource.”

Environmental Voters Focus on Offshore WInd

The Maryland League of Conservation Voters will focus on supporting Gov. Martin O’Malley’s offshore wind development plan, the Washington Post reported last week.

Maryland state legislators are expected to reconsider Gov. Martin O’Malley’s ambitious plan to require utilities to buy offshore wind electricity.

“We’re tired of seeing us lose jobs to China,” said panel member Jim Strong, of the United Steelworkers of Maryland. “We’re supporting this legislation because we think it will put people back to work.”

County Commission Attacks Offshore Wind

Months after the issue was apparently settled, the Oceana (Mich.) County Planning Commission released a report this week denouncing a defunct offshore wind proposal for Lake Michigan, the Muskegon Chronicle reported.

Planning Commission Chairwoman Anne Soles released a press release declaring Scandia Wind’s proposal — abandoned last year — had “major flaws” and was “not feasible.”

Soles is reportedly concerned that Scandia might appeal directly to state regulators.

“We need to put a punctuation point on this issue … not in Lake Michigan,” Soles told the Chronicle.

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.

The request — for lease areas near New Jersey, Delaware, Maryland and Virginia — is mandated by the National Historic Preservation Act.

We “are taking care to ensure that our nation’s historical and cultural resources are protected,” BOEM Director Tommy Beaudreau said in a press release issued by the agency. “It is important to collect information and hear concerns early in the planning process, and so we encourage stakeholders to provide us with information necessary to ensure that offshore wind development is done the right way, in the right places.”

Maryland Residents Back Offshore Wind

In a poll released last week, Maryland residents strongly supported offshore wind development near the state’s Ocean City resort area, the Ocean City Dispatch reported.

Statewide, 62 percent of respondents agreed with the statement that “I would be willing to pay $2 more per month on my electric bill if a greater percentage of my electricity came from clean, local offshore wind farms instead of coming from coal, oil and gas.”