Biden Government Focus on Offshore Wind Power: DOI’s Plan and Other Recent Developments | Holland & Knight LLP

US Secretary of the Interior Deb Haaland announced in October that the Biden administration would open up the US coast to large-scale offshore wind farms. At a wind industry conference in Boston, Haaland outlined a plan under which her agency’s Bureau of Ocean Energy Management (BOEM) would potentially sponsor up to seven offshore lease sales in the Gulf of Maine, Gulf of Mexico, New York Bight by 2025. as well as off the coasts of the mid-Atlantic states of Carolinas, California and Oregon.

The announcement followed the Biden government’s earlier pledge to build 30 gigawatts (GW) of offshore wind power by 2030, which is critical to the government’s plan to increase the country’s fossil fuel emissions by 50 percent by 2030 from 2005 levels reduce. May 2021, BOEM approved Vineyard Wind, the country’s first large commercial offshore wind farm to be constructed off the coast of Martha’s Vineyard, Massachusetts. In addition, in late November, the DOI approved the construction and operation of the 132-megawatt (MW) South Fork wind project off the coast of Rhode Island and Long Island, New York. Earlier this year, DOI announced a planned lease auction for offshore wind development on the Outer Continental Shelf in New York Bight, the waterfront between Long Island and the New Jersey coast. BOEM has also considered other wind projects, including off the coast of California.

Geographic considerations

California

Although California’s offshore wind planning processes have stalled compared to some east coast states (e.g., Massachusetts), this is changing rapidly. BOEM’s announcement fits in with recent developments in California aimed at encouraging the use of offshore wind projects. For example, state lawmakers recently enacted a Milestone Act (AB 525) that obliges state authorities to develop offshore wind megawatts (MW) targets for 2030 and 2045. At the same time, BOEM is active in the leasing process for two “Call Areas” off the Californian coast: 1) the Humboldt Call Area (north coast) and 2) the Morro Bay Call Area (Central Coast). (For further analysis, see the previous warning from Holland & Knight, “California Legislature Passes Landmark Legislation to Bolster Offshore Wind Energy, “September 14, 2021In fact, on November 12, 2021, the BOEM announced the designation of the Morro Bay Wind Energy Area, triggering an environmental review and related public comment under the National Environmental Policy Act (NEPA).

To achieve full implementation of the state and federal strategy, agencies and stakeholders must address a number of technological, infrastructural, and regulatory issues that are California specific. For example, offshore wind development in California is expected to consist primarily of floating wind turbines, as the vast majority of the West Coast Outer Continental Shelf (OCS) reaches depths of more than 60 meters – the limits of seabed-mounted foundations. Floating wind projects, unlike their seabed-mounted counterparts, are not yet widespread. However, there are at least two floating projects in operation in Europe that herald the potential of the technology (the 30 MW Hywind project in Scotland and the 24 MW WindFloat Atlantic project in Portugal).

Assuming that the technological challenge has been mastered, neither the Humboldt nor the Morro Bay Call Area are in the immediate vicinity of large metropolitan areas. The Humboldt Call area has an estimated generation potential to supply more than 1 million households with electricity, but the entire Humboldt County has only about 60,000 households. (See 2019 US Census Bureau data). It should be examined to what extent the existing transmission and distribution infrastructure can transport electricity from these call areas to more densely populated areas, which are considerable distances for both areas. The Humboldt Call Area is approximately 280 miles from the nearest major metropolitan area (the San Francisco Bay Area), while Morro Bay is approximately 240 miles from the nearest metropolitan area (Ventura County). It is also unclear whether the port areas, due to their nature as small, rural coastal communities, have sufficient port resources to accommodate the entry and exit of project components.

Future California offshore wind projects must meet the state-level environmental assessment requirements of the California Environmental Quality Act (CEQA) in addition to the federal NEPA review required for all offshore projects. Even projects that are exclusive to the OCS are likely to have implications for state and local jurisdictions (e.g., onshore infrastructure such as port upgrades, nautical and automated transportation, transmission lines, and power grid upgrades). CEQA requires the lead agencies, including the municipalities, to analyze, adopt and implement feasible mitigation measures to a practicable extent in order to avoid or reduce significant impacts. This requirement, which is a cornerstone of California’s environmental law, can make project approval and implementation time-consuming and costly.

Texas and Gulf of Mexico

Texas has long been committed to wind power. In 2005 and 2008, the Texas Legislature and Public Utility Commission of Texas created Competitive Renewable Energy Zones (CREZ) to facilitate the development of wind resources in resource-rich areas such as the Panhandle and West Texas, and then transfer that energy to high-energy areas such as cities in central and east Texas. However, after the winter storm Uri in February 2021, renewable resources – including wind resources – came under scrutiny due to their intermittent operating behavior. In addition, offshore wind power has different operational characteristics than inland CREZ wind resources and would be in a warmer climatic zone, thereby providing potential reliability advantages over CREZ wind resources.

Regarding the Gulf of Mexico in a broader sense, DOI and BOEM published two studies in 2020 that show the Gulf is an attractive location for offshore wind development. (See previous warning from Holland & Knight, “Studies Find Gulf of Mexico Has Untapped Potential for Offshore Wind Development,” May 21, 2020.) The studies found that there is more than 500 GW of potential offshore wind development in the Gulf, such Developments will be economically competitive in the market without subsidies by 2030.

Accordingly, the DOI announced on October 28, 2021 that it would publish a “Call for Information and Nominations” to raise commercial interest in wind energy leasing in an area in the Gulf of Mexico with 30 million acres west of. continue to examine the Mississippi River to the Texas / Mexican border. The call was made in. released Federal Register on November 1st, triggering a 45-day comment period ending December 16, 2021. BOEM will then conduct an environmental review and obtain public feedback. According to the agency’s published schedule, all rental sales from the solicitation are expected to occur approximately a year later.

The way forward

DOI’s recent announcement is a promising move to catalyze the development of offshore wind energy. Despite this important move, however, developers looking to build offshore wind projects on the OCS will face a number of significant challenges. On November 19, 2021, Vineyard Wind LLC announced that construction began on the Vineyard Wind 1 project off the coast of Massachusetts. In order to reach this point, the project developer had to successfully achieve the following milestones:

  • $ 2.3 billion of senior secured debt financing from a consortium of nine banks
  • Contracts to supply and install approximately 130 miles of 66 kilovolt inter-array cables
  • a contract with a large US company for 62 wind turbines with an output of 13 MW each
  • Contracts for a foreign heavy lift installation vessel and feeder vessels compliant with the Federal Jones Act for on-site installation from the port of New Bedford
  • the recent announcement of a partnership with another company to develop a new deep-sea offshore wind marine terminal, presumably for use with an as-yet-built Jones Act-Compliant Turbine Installation Vessel (TIV).

These highlights show that the scope of financing and contracting activities required to launch a first-scale project for offshore wind development is extensive but can be resolved with sufficient planning and resources. Successful expansion of leasing and development requires a concerted effort from regulators, developers, states and relevant stakeholders to develop projects on the scale required to meet the ambitious and important renewable energy goals.

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