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Soaring Costs Threaten U.S. Offshore-Wind Buildout

January 3, 2023 — Offshore wind developers are facing financial challenges that threaten to derail several East Coast projects critical to reaching the Biden administration’s near-term clean-energy targets.

Supply-chain snarls, rising interest rates and inflationary pressures are making projects far more expensive to build. Now, some developers are looking to renegotiate financing agreements to keep their projects under way.

The Biden administration has set a target for the U.S. to develop 30 gigawatts of offshore wind power by 2030—enough to supply electricity to roughly 10 million homes. Analysts say that target will be difficult, if not impossible, to achieve if cost and supply issues persist.

“We’re seeing unexpected and unprecedented macroeconomic challenges,” said David Hardy, chief executive of the Americas for Danish power company Ørsted A/S, which is developing about five gigawatts of offshore wind projects off the coast between Rhode Island and Maryland.

Avangrid, a subsidiary of Spanish power company Iberdrola SA, is developing a 1.2-gigawatt project called Commonwealth Wind off the coast of Massachusetts. The company in December asked the Massachusetts Department of Public Utilities to terminate its review of contracts the company negotiated with utilities serving the state. The company said it now intends to scrap the contracts and rebid the project next year to account for higher costs. 

Read the full story at the Wall Street Journal

US Ignored Own Scientists’ Warning in Backing Atlantic Wind Farm

December 30, 2022 — US government scientists warned federal regulators the South Fork offshore wind farm near the Rhode Island coast threatened the Southern New England Cod, a species so ingrained in regional lore that a wooden carving of it hangs in the Massachusetts state house.

The Interior Department approved the project anyway.

The warnings were delivered in unpublished correspondence weeks before Interior’s Bureau of Ocean Energy Management authorized the 12-turbine South Fork plan in November 2021. And they serve to underscore the potential ecological consequences and environmental tradeoff of a coming offshore wind boom along the US East Coast. President Joe Biden wants the US to deploy 30 gigawatts of offshore wind by the end of the decade.

Concerns about South Fork, the 132-megawatt project being developed by Orsted AS and Eversource Energy, focused on its overlap with Cox Ledge, a major spawning ground for cod and “sensitive ecological area that provides valuable habitat for a number of federally managed fish species,” a National Oceanic and Atmospheric Administration assistant regional administrator said in an October 2021 letter to Interior Department officials. Based on in-house expertise and peer-reviewed science, the agency said “this project has a high risk of population-level impacts on Southern New England Atlantic cod.”

The Interior Department took some steps to blunt impacts on Atlantic cod, including by carving out some areas of Cox Ledge from leasing. Developers, who are required to monitor cod activity at the site from November through the end of March, plan to adjust work plans to avoid any spotted spawning areas. And the final South Fork plan was scaled down from 15 turbines to 12 after warnings from NOAA.

Still, the oceanic agency faulted the Interior Department for shrugging off other recommendations to protect cod, saying the bureau had based some decisions on flawed assumptions not supported by science. That includes a decision to not block pile driving at the very start of the spawning season in November, even though NOAA said the noise could deter the activity and force some cod to abandon the area.

Read the full story at Yahoo Finance

Offshore wind in 2022: Billions in bids and new confidence

December 28, 2022 — Offshore wind advanced at a dizzying pace in 2022, from billion-dollar bids in New York to turbine installation vessels arriving in New England waters.

The landmark year buoyed confidence in investment in the U.S. market and saw the expansion of federal tax benefits — along with an increased government workforce — to support wind growth. Insiders continued to express confidence in the industry despite looming economic headwinds that threaten to slow the pace of President Joe Biden’s wind boom in the years ahead.

The White House’s commitment to raising turbines in the ocean, to reach a 30-gigawatt target by 2030, enough to power 10 million homes, fueled much of the growth seen over the last 12 months.

In February, energy companies pledged $4.4 billion for wind leases off the coasts of New York and New Jersey, the largest offshore energy sale in U.S. history.

The Biden administration would go on to hold its first auction in the Pacific Ocean and commit to raising 15 GW of floating offshore wind, a developing technology that’s needed to build wind farms in deep water.

“The momentum continues for the offshore wind sector,” said Erik Milito, president of the National Ocean Industries Association. “The government has done a good job of keeping things moving at a reasonable pace.”

New financial certainty also came from Congress, which expanded incentives to underwrite offshore wind investments and provided benefits for manufacturers of components like turbines and blades, and turbine installation vessels. As the year neared its close, turbine installation vessels arrived in northern waters to begin construction on the first large-scale projects in the country off the coast of Rhode Island and Massachusetts.

It’s a growth story only dampened by the specter of inflationary costs from the Covid-19 pandemic and the Russian war against Ukraine that have begun to bleed into development forecasts. The high price of steel and supply chain problems could pose threats as companies scramble to quickly launch projects.

Inflationary costs are not a unique problem for offshore wind. They are mirrored across the energy industries, noted Michelle Solomon, who tracks electricity trends for Energy Innovation Policy & Technology LLC, a nonpartisan think tank that supports the energy transition.

But there is a “concerning” possibility that inflation and supply chain issues can slow down the offshore wind build-out in the United States at a time when climate targets demand an even faster pace of renewable deployment, she said.

This month an offshore wind developer asked Massachusetts if it could bow out of contracts with utilities, citing higher costs that have put the project underwater without a different deal, while other large developers like Ørsted A/S and the Public Service Enterprise Group Inc. have been frank about their concerns about prices undermining project timelines (Energywire, Nov. 15).

The pressure is also at an all-time high for the Biden administration’s offshore wind bureau, the Bureau of Ocean Energy Management, to meet lofty clean energy targets. Despite a breakneck speed, the bureau needs to approve more than a dozen offshore wind arrays in under two years (Energywire, Dec. 1).

Still, these pressing challenges follow a pivotal year in offshore wind that’s increased confidence that the industry has cemented its position in the U.S. Here are four takeaways of how the sector shifted in 2022 that shed light on where it’s going.

Read the full article at E&E News

US lawmakers pursuing national compensation plan for offshore wind impacts

December 23, 2022 — Two federal lawmakers from the U.S. state of Massachusetts have announced an effort to create a national policy that ensures fishermen are compensated for the impact offshore wind developments will have on their livelihoods.

U.S. Senator Ed Markey and U.S. Representative Seth Moulton, both Democrats, said Thursday, 22 December, they’re working on a discussion draft of legislation that would ensure just compensation for fishermen, with funding distributed based on wind farm projects in their regions. In doing this, they plan to bring together officials from NOAA, the U.S. Bureau of Ocean Energy Management, and stakeholders from involved industries and academia to determine the best process to determine and distribute funding.

Read the full article at SeafoodSource

Markey, Moulton push for national fund to compensate fishermen for losses due to offshore wind

December 22, 2022 — With both offshore wind development and dissent from fishing groups ramping up along the East Coast, Senator Ed Markey and Congressman Seth Moulton announced a plan Wednesday to establish a national fund to compensate potential economic loss suffered by the fishing industry.

Currently there is no federal framework that requires offshore wind developers to compensate fishermen for potential damages. Those include gear loss, habitat degradation, loss of historic fishing grounds and new fishing restrictions in areas leased for wind farms — all of which compound, fishermen say, to spell serious economic challenges to their industry.

In the absence of such compensation requirements, some developers have established their own funds, with their own oversight panels. Other developers have not yet established a compensation plan. Fishing groups have been critical of this approach, saying the government’s lack of clear requirements gives the offshore wind industry the upper hand in compensation negotiations, leaving it up to the fishermen to prove the impact on their livelihoods and up to developers to decide the extent to which they are responsible.

“Any ability left to the wind developers to choose their own procedures will always result in their taking the least expensive path most favorable to them, not commercial fishing,” the New Bedford Port Authority wrote in a letter to the director of the Bureau of Ocean Energy Management (BOEM) in August.

Read the full article at the New Bedford Light

Wind industry group says turbine restrictions for whales could threaten commercial viability of projects

December 21, 2022 — An organization that represents and lobbies for the wind industry has warned that a recommendation from federal scientists to limit turbines in offshore lease areas to protect the endangered North Atlantic right whale could threaten the commercial viability, efficiency and utilities contracts for some projects.

Climate change is affecting the whale and its prey, according to researchers. And offshore wind, which the Biden administration has called on to address the climate crisis, might add to existing stressors from the noise created during construction and operation, to the turbine impacts on currents and prey distribution.

In a letter first published by The Light last month, NOAA scientist Sean Hayes proposed establishing a “conservation buffer” zone or turbine-free area overlapping with wind development planned in Southern New England. But the American Clean Power Association (ACP), which represents the wind industry, said such a buffer would cause the removal of a “significant number” of turbines from several projects.

Read the full article at the New Bedford Light

VIRGINIA: Regulators grant critical approval for Dominion wind farm off Virginia Beach coast

December 16, 2022 — Virginia regulators granted a critical approval Thursday for Dominion Energy’s plans to construct and operate a 176-turbine wind farm in the Atlantic Ocean.

The State Corporation Commission effectively signed off on an agreement Dominion reached this fall with the Virginia attorney general and other parties, in which the company agreed to implement several consumer protections in connection with the Coastal Virginia Offshore Wind project.

“We thank the Commission for its approval and appreciate the collaboration of the parties involved to reach an agreement that advances offshore wind and the clean energy transition in Virginia,” the Richmond-based company said in a statement. “Coastal Virginia Offshore Wind has many benefits for our customers. It is fuel free, emissions free, diversifies our energy mix and is a transformative economic development opportunity for Hampton Roads and Virginia.”

Read the full article at WAVY

BOEM Releases Draft Environmental Statements for Next Two Wind Farms

December 15, 2022 — Progress continues to be made on the development of several of the first large-scale offshore wind projects in the United States. On December 16, the Bureau of Ocean Energy Management (BOEM) will publish the draft Environmental Impact Statements (EISs) for two projects, Dominion’s Coastal Virginia Wind and Sunrise Wind being jointly developed by Ørsted and Eversource, as one of the final steps in the permitting process.

The release of the two EIS statements begins a 60-day comment period. BOEM will use the findings to inform its decision on whether to approve the Construction and Operating Plan (COP) submitted by each of the developers. BOEM will also determine which mitigation measures it would require at each of the sites. As part of the process, BOEM will be conducting virtual public meetings to hear comments on the plans.

“This important federal permitting milestone puts Sunrise Wind one significant step closer to advancing New York’s ambitious climate goals. As we review the draft findings we want to thank the Bureau of Ocean Energy Management for its comprehensive and diligent review,” Sunrise said in a statement in response to the news of the release of its EIS.

Read the full story at The Maritime Executive

 

Northeast states want regional fund to pay fishermen for offshore wind damage

December 15, 2022 — Amid an absence of a federal framework or authority, nine Northeast states have set out to develop a regional fund to compensate the fishing industry for impacts and economic losses caused by offshore wind development. After more than a year of discussion, they are now seeking feedback from both the wind and fishing industries.

Fishermen worry about gear loss and damage, loss of historic fishing grounds, negative impacts to fish habitats, increased insurance costs, and longer trips (and thus increased fuel expenses) as a result of wind development. They want the farms to avoid fishing grounds entirely, but when that’s not possible, regulations first call for minimization and mitigation. Compensation comes in when the conflicts cannot be avoided or minimized.

Due to a lack of a federal, standardized system, compensation up to this point has been decided on a project-by-project and state-by-state basis, including for Vineyard Wind south of Martha’s Vineyard, which allocated about $21 million for Massachusetts fishermen over the lifespan of the project.

“This has resulted in inconsistencies in estimating impacts to fisheries and the agreed-upon funds used to compensate for such impacts,” wrote the nine states to Amanda Lefton, director of the Bureau of Ocean Energy Management (BOEM), in a November of 2021 letter, adding the current approach may create inequities for the fishing and wind industries.

To address this, the states have been working to establish a “fund administrator” — which they say they assume will be funded by wind developers — that would, in a consistent way, collect funds, review claims and dispense funds to fishermen across the region for economic losses caused by offshore wind projects.

Read the full story at the New Bedford Light

 

Atlantic states look to regional fisheries mitigation for offshore wind

December 14, 2022 — Nine East Coast states put out a call for potentially creating a regional administrator for fisheries compensation and mitigation from offshore wind development, with fishing industry advocates calling for “an equitable and appropriate compensation strategy” from Maine to Virginia.

“Recognizing the importance of sustaining a vibrant fishing community that can coexist and thrive alongside offshore wind energy development, the states have released a Request for Information (RFI) aimed at receiving input from impacted members of the fishing industry, offshore wind developers, corporate and financial management entities, as well as interested members of the public, to inform efforts to establish a regional fisheries compensatory mitigation fund administrator,” according to a joint Dec. 12 announcement.

The RFI from Maine, New Hampshire, Massachusetts, Rhode Island, Connecticut, New York, New Jersey, Maryland and Virginia follows on the federal Bureau of Ocean Energy Management issuing its June 2022 draft framework for mitigating impacts to commercial and recreational fisheries.

Read the full article at the National Fisherman