Scaling-up Offshore Wind to 30 GW: Part 2

Leasing Expands into New Areas

The regulatory structure for authorizing and permitting offshore wind follows a basic framework which can span more than a decade. Even as early as the planning and analysis stage, the effort involves governments at all levels, from state bodies to local municipalities and federal agencies. As companies consider the development of offshore wind, proactive involvement must begin at the earliest stages as these federal offices craft analyses, request information and identify key areas for development.

One of the largest hurdles traditionally faced by offshore wind developers was the unavailability of offshore leases, due to politics, local pushback designating new developments as unwanted in the local area, or both. Projects in the United States have faced extreme opposition causing delays or in the case of Cape Wind, complete cancellation.[i] Even projects with a clear regulatory permitting road ahead of them are facing opposition via lawsuits. For example, Nantucket Residents Against Turbines are suing the developers of Vineyard Wind saying the project risks harming the endangered North Atlantic right whale.[ii]

The Biden Administration is working to expand available acreage for leases. In October 2021, Secretary of the Interior Deb Haaland announced plans for Bureau of Ocean Energy Management (BOEM) to issue seven new offshore lease sales by 2025 in the Gulf of Maine, New York Bight, Central Atlantic and Gulf of Mexico, as well as the Carolinas, California and Oregon.

States play a key role in the regulatory process, both by ensuring the need for and distribution of wind energy. Many of the states leading the way in offshore wind development have instituted renewable energy standards (RES), which mandate that utilities use a certain level of clean energy. For small coastal states or those with limited availability of solar and onshore wind, offshore is one of few viable paths to meet these standards.  

Another key factor in the development of offshore wind is ocean spatial planning. For example, in the development of Rhode Island’s Block Island Wind Farm, the state produced an Ocean Special Area Management Plan (SAMP), which is a comprehensive ocean plan for existing resources and uses of the ocean areas under the state’s jurisdiction. Companies have the opportunity to utilize the ocean spatial planning process and build off their existing stakeholder identification and planning when evaluating offshore wind opportunities. 

The last key regulatory structure is long-term renewable energy contracting—effectively power purchase agreements with clean energy developers. In recent years, these public-private partnerships have been seen in Connecticut, Maryland, Massachusetts, New Jersey, New York, Rhode Island and Virginia, as they expand offshore wind production by more than 14,000 megawatts.[iii]

While policy incentives may be in place up and down the East and West Coasts of the United States, the largest challenge to overcome will be the establishment of infrastructure to fully take advantage of offshore wind generation. Some states have taken to utilizing existing infrastructure in order to connect potential offshore wind development to the state’s grid. For example, California’s decommissioning of the Diablo Canyon Nuclear Power on the coast near San Luis Obispo is drawing attention from offshore wind advocates who say the significant grid infrastructure at the site could be an opportunity to link future offshore wind projects to the grid.[iv]

Looking ahead, the positive regulatory incentives in place to promote offshore wind are expected to be expanded. The Biden Administration announced record breaking offshore wind lease sales for 2022, showing their commitment to development. However, while the Biden Administration may incentivize development, there are many steps and hurdles between acquiring a lease and the successful completion of an offshore wind farm, including environmental impact statements and public consultations, all of which can slow even the most well-positioned project.

From Leasing to Permitting: Traditional Obstacles but Room for Federal Action

To accelerate federal approval of offshore wind projects and achieve the 30 GW goal, the Biden Administration has taken action through a coordinated, multi-agency approach that has identified additional wind energy areas (WEAs), enabled environmental reviews for projects and advanced research for offshore wind development.[v] To date, the Department of Interior BOEM has made headway to achieve the 30 GW goal.

BOEM has designated WEAs off the East Coast, West Coast (Morro Bay 399 Area and Humboldt Bay) and published a Request for Interest to identify development opportunities in the Gulf of Mexico. The most recent WEAs proposed lease sale notices will be off the coasts of New York (New York Bight) and North Carolina (Wilmington East Wind Energy Area), advancing development opportunities further south the Atlantic Coast from already designated areas in New England. These new WEAs could support up to 8.5 GW of wind power combined. As more WEAs are designated by BOEM, developers can work to secure leases to develop offshore wind projects and advance to the environmental review phase of the process.

The Biden Administration is already preparing the environmental assessments for multiple projects, primarily concentrated in New England, New York, and New Jersey. BOEM recently announced final approval for the Vineyard Vine (Massachusetts – 0.8 GW) and that it would prepare the environmental impact statements for the Ocean Wind (New Jersey – 1.1 GW), Revolution Wind (Rhode Island – 0.7 GW) and South Fork Wind Farm (Long Island – 0.132 GW). The Revolution Wind and South Fork projects’ reviews are expected to be completed in March 2023 and January 2022, respectively.

While the Biden Administration can advance the designation of new WEAs with little delay (due largely to federal jurisdiction over the outer continental shelf Submerged Lands Act of 1953), the environmental impact statements that need to be prepared in compliance with the National Environmental Protection Act (NEPA) can present the Biden Administration and developers with significant challenges. Opponents of development have used the process to challenge, delay and halt a project from even getting started. Navigating this process and streamlining NEPA will be critical for the Biden Administration to achieve its goal by 2030.[vi]

Each of the past four presidential administrations have attempted to streamline and shorten the NEPA environmental review process to achieve their policy goals. For offshore wind projects specifically, BOEM has indicated the environmental reviews will cover the cumulative impacts of all projects “that have announced state solicitations for lease areas, not just the impact associated with those projects that have already been approved or submitted for approval,” which resulted from BOEM’s review of the Vineyard Wind project.

In addition to complying with the NEPA process, other federal laws will need to be considered during the environmental review process, such as the Endangered Species Act, Marine Mammal Protection Act and Migratory Bird Treaty Act and many others. While the agencies that administer these statutes do not have authority of final leasing decisions, they add another layer of complexity and time delays in the review process for developers.[vii] When announcing the 30 GW offshore wind, the Biden Administration made clear that they were committed to protecting biodiversity and there is evidence to suggest that offshore wind farms protect and increase marine biodiversity by acting as artificial reefs.

Progress on Promises

Although 2021 did not end how the Biden Administration or the Democratic majority in Congress had perhaps hoped, there were great strides for the offshore wind industry – namely, the bipartisan Infrastructure Investment and Jobs Act (IIJA) passed Congress and was ultimately signed into law by President Biden.

IIJA provided both funding and regulatory changes that are chiefly important to the offshore wind sector. Department of Energy (DOE) can now support the construction of electric transmission issue loans, enter into a contract for the capacity to build out the market, and otherwise assist with the development, construction, operation, and maintenance of offshore transmission. The IIJA also includes revisions to DOE’s processes for National Interest Electric Transmission Corridor designations and the Federal Energy Regulatory Commission’s backstop authority, will be game changers for offshore transmission development. There are a host of other offshore wind-adjacent legislative changes that will improve the industry such as port improvements and permitting efficiencies.[viii]

More promises for the offshore industry lie in wait with the Build Back Better bill, from clean energy tax credits to domestic manufacturing loans. Yet today, the bill remains stalled in its current form after passing the House and the clock is running down in the Senate.  As offshore advocates cheer these legislative advances, others view these legislative tools as running roughshod over state’s rights in permitting electric transmission and navigating energy policy.  This battle that will surely gather more momentum if the Republicans are successful in taking back the majority in Congress after midterm elections this fall.

While we have outlined a few of the initial hurdles to developing a new energy industry in the United States, they certainly are not the only ones. In future pieces, we will examine issues like transmission and what we can learn from the European experience.

As this industry matures, so too will its opportunities and challenges – all things we are extremely familiar with here at FTI as we have been helping companies across the energy landscape navigate similar challenges for years.

References

[i] Power Engineering, “Controversial Cape Wind Offshore Project Cancelled,” Jan. 5, 2018, https://www.power-eng.com/renewables/wind/controversial-cape-wind-offshore-project-cancelled/#gref

[ii] WBUR, “In Federal Lawsuit, Nantucket Residents Say Offshore Wind Will Harm Endangered Whales,” Aug. 25, 2021, https://www.wbur.org/news/2021/08/25/nantucket-wind-turbine-federal-lawsuit-endangered-whales

[iii] Inside Clean Energy, Dan Gearino, “Inside Clean Energy: Offshore Wind Takes a Big Step Forward, but Remains Short of the Long-Awaited Boom,” July 8, 2021, https://insideclimatenews.org/news/08072021/inside-clean-energy-offshore-wind/

[iv] Center for Energy Efficiency and Renewable Technologies (CEERT), V. John White and Jim Caldwell, “Presentation – CEERT – August 11, 2021 Update – Transmission for Central Coast Offshore Wind,” Aug. 11, 2021, https://efiling.energy.ca.gov/GetDocument.aspx?tn=239256&DocumentContentId=72706

[v] Windpower Engineering & Development, Georgena Terry, “Five months into the Biden Administration: A whirlwind of federal action on offshore wind,” June 21, 2021, https://www.windpowerengineering.com/five-months-into-the-biden-administration-a-whirlwind-of-federal-action-on-offshore-wind/

[vi] Environmental and Energy Law Program, Harvard Law School, Martin Levy, “Offshore Wind Development: Federal Permitting Program Challenges,” March 24, 2020, https://eelp.law.harvard.edu/2020/03/offshore-wind-development-federal-permitting-program-challenges/

[vii] Congressional Research Service, “Wind Energy: Offshore Permitting,” March 8, 2021, https://sgp.fas.org/crs/misc/R40175.pdf

[viii] PerkinsCOIE, “How the Infrastructure Investment and Jobs Act and Build Back Better Bill Would Advance the Offshore Wind Sector,” Nov. 15, 2021, https://www.perkinscoie.com/print/content/1031264/how-the-infrastructure-investment-and-jobs-act-and-build-back-better-bill-would-advance-the-offshore-wind-sector.pdf