Oil and gas companies blocking the wind

The Natural Resources Committee says the Federal government issued only a few dozen permits to develop wind and solar-energy projects on public land last year compared with more than 1,300 oil and gas permits for the same real estate. The low number needs attention fast, say members of the Committee

The culprit, according to many wind and solar industry officials testifying at the recent Natural Resources Committee hearing, is a bureaucratic process that can be used by project opponents to stall plans until they become economically unfeasible.

“I’m shocked at the constant problem of permitting and uncertainty,” said Rep. Jeff Landry, Republican of Louisiana. Also, James Gordon, president of Cape Wind Associates, detailed the permitting process during his experience with what could become the nation’s first offshore wind generation project. The wind project has been clearing hurtles set up by opposing special-interest groups for the last 11 years.

With no legal requirement for the duration of a permit review period, “opponents can use regulatory stalling and delay tactics” to “financially cripple” projects that may meet the necessary standards, he said. “A small group can tie you in knots for years,” said Gordon, referring to a special interest group that he said “has sought to delay the [permit] review process at every turn.”

The Natural Resources Committee has been trying to identify roadblocks to wind and solar energy projects. At its first hearing on May 13, the committee asked directors of the Bureau for Land Management and the Bureau for Ocean Energy Management, Regulation and Enforcement to explain the alleged permitting delays. Those officials said they were working to eliminate redundant steps.

The wind energy industry employs about 75,000 people in the U.S., and the generating capacity has grown annually by 35% over the past five years, “second only to natural gas and more than nuclear and coal combined,” said American Wind Energy Association spokesman Roby Roberts. But despite industry growth, presentors agreed that the major roadblocks of policy uncertainty and a lengthy permitting process remain.

Although federal incentives, such as production tax credits and investment tax credits, have helped the wind and solar industries, current credits are set to expire by end of 2011.

In addition, a $7 billion grant program in the 2009 stimulus bill provided for 2,601 renewable energy projects, “leveraging about $22 billion in private sector investment,” according to Stanford University energy expert Dan Reicher. But if projects have not started construction by the end of 2011, they will lose the money.

Natural Resources Committee
www.naturalresources.house.gov/

AWEA
www.awea.org

The Trickle-Down Effect Of Cape Wind

In an article in the Worcester Business Journal, Mark Rodgers, communications director at Cape Wind, wrote that 2010 will be remembered as the year that Massachusetts became the first in the nation to move forward with offshore wind power. Attaining first mover advantage in offshore wind will give Massachusetts a leg up in the significant job creation that is going to come from this important new energy sector.

He explains that in October, Secretary of the Interior Ken Salazar issued Cape Wind the nation’s first offshore wind power lease and in November, the Massachusetts Department of Public Utilities approved the long-term power purchase contract between Cape Wind and National Grid.

The Project’s Perks

For National Grid, Cape Wind provides a bundle of products including energy, renewable energy credits, capacity, and a stable priced hedge against the volatility of fossil fuel energy prices. Under the terms of the contract, National Grid also receives any future environmental attributes of Cape Wind — including carbon credits — as national and state energy policies continue to push in a greener direction. National Grid also has the option of extending the contract with Cape Wind on a cost-plus basis, which may be significantly below market at that point in time.

For National Grid’s customers, if fossil fuel energy prices stay fairly stable over the next few years, the bill impact from Cape Wind in 2013 is forecast to be an increase of about 1.5% for residential customers and 2 percent for commercial customers. For comparison, these same customers saw their electric bills increase 300% between the years 2001 and 2008 from rising fossil fuel prices.

Two Massachusetts energy boards found that Cape Wind would exert downward pressure on wholesale electric prices through price suppression. Cape Wind commissioned Charles River Associates to study this price suppression effect and they concluded it would result in $4.6 billion dollars in reduced energy prices over the life of the project.

Clean renewable energy also doesn’t impose the external costs of traditional energy sources such as polluted air and environmental degradation.

Economic Impact

The U.S. Department of Energy (DOE) estimates that over the next 20 years the United States can build 100 Cape Wind-sized offshore wind projects that will help the country attain a goal of meeting 20 percent of its electricity needs from wind power (offshore and onshore) by 2030. According to the DOE, such a buildout of offshore wind power would create more than 40,000 American jobs.

The construction and operations of Cape Wind will create the first thousand of these jobs. Massachusetts Gov. Deval Patrick has announced the creation of a new Marine Commerce Terminal in the port of New Bedford that will be the first site in North America specifically designed for the staging and assembly of offshore wind turbines. Cape Wind will be the site’s first customer.

Cape Wind has also signed a letter of intent with Mass Tank, a Massachusetts-based steel company that is partnering with Germany-based EEW to open a new facility to manufacture some of Cape Wind’s components.

Massachusetts has the right mix of strong offshore clean energy resources, visionary political leadership, a skilled workforce, rich maritime tradition and the nation’s first offshore wind project to become a global leader in this important new energy sector that will create jobs, increase our energy independence and contribute to a cleaner and more hopeful energy future.

-www.wbjournal.com

Study says New England would get 24% of power from wind

New England’s land and ocean winds blow strong enough to supply nearly a quarter of the region’s electricity within a decade, though major upgrades are needed to handle that much more wind power, according to a new study.

Wind has the potential to supply up to 24% of the region’s total annual electricity needs by 2020, according to research by GE Energy Applications & Systems Engineering, which conducted the study for regional grid manager ISO New England.

The figure would require a more than 44-fold increase over the amount of wind power now generated in the region. There aren’t nearly enough wind farms even proposed yet to capture that much power, and delivering it would require spending $19 billion to $25 billion for new transmission lines, said the ISO’s president and chief executive, Gordon van Welie.

Reaching 24% wind power “would a pretty lofty goal to get to by 2020,” John Norden, the ISO’s director of operations, said in an interview.

But he said his agency must think ahead, in case public policymakers require dramatically higher reliance on wind power. The question is, Norden said, “If (policymakers) headed in that direction, and they headed in that direction quickly, would we have a problem in terms of operating the system?”

The two-year New England Wind Integration Study measured wind potential and aimed to determine exactly what’s needed to link future wind power producers to the grid. GE Energy Applications & Systems Engineering is part of General Electric, a leading wind turbine maker. The report’s data and results were examined by an independent “technical review committee” made up of six industry experts who don’t work for GE or the ISO. The study found the best offshore winds in southern New England waters and off the coast of Maine. Onshore winds were particularly potent in the mountainous areas of northern Vermont and Maine. Most of those breezes are a long way from being tapped.

Right now, New England produces 270 MW of wind power. There are about 2,800 MW more of offshore and onshore wind proposed in the region, with the 468-MW Cape Wind project in Nantucket Sound among the largest and most well known. But to get 24% of its power from wind, the region would have to install up to 12,000 MW worth of turbines.

The GE Energy study recommended more research to see if it’s even possible to make the massive and costly upgrades to the transmission system that would be required. It also highlighted the need for adequate and flexible power generators that can be ramped up and down quickly to ensure the regional power supply stays steady and reliable as winds speeds vary. The study emphasized improved wind forecasting so grid operators can avoid committing too much, or too little, power generation to the system as they try to smooth out wind’s ups and downs.

More wind power would improve the mix of fuels the region relies on for energy, and can be a reliable source of renewable energy at a stable price, Van Welie said. It can also help the region reach mandates to increase renewable energy and efficiency. Taken together, the six New England states have a collective goal to meet 30% of their power needs from renewable sources and better energy efficiency by 2020.

The ISO is “agnostic” about which renewable resources — such as hydropower, wind, solar, wood energy – states use to meet renewable energy goals, said spokeswoman Ellen Foley. The study is clear, though, that wind can be a key part of the New England mix. ”The potential is there, but it depends on public policy,” Foley said.

-boston.com

Cape Wind contract for offshore wind power approved

The Department of Public Utilities (DPU) has approved the 15-year power purchase agreement between National Grid and Cape Wind Associates, as amended by a settlement agreement, following a five-month-long adjudicatory proceeding involving 17 intervenors and five limited participants.

The DPU concluded that the contract is cost-effective because its benefits well exceed its costs. It found as well that approving it is in the public interest, because no other renewable resource in the region matches Cape Wind in terms of size, proximity to large electricity load, capacity factor, and advanced stage of permitting; and because its bill impacts are in the range of 1 to 2%.

“This contract fulfills a statutory mandate under the Green Communities Act to facilitate the development of renewable energy generation, and it does so with strong protections for ratepayers,” said DPU Chair Ann Berwick. “It is clear that the Cape Wind facility offers significant benefits that are not currently available from any other renewable resource, and that these benefits outweigh the costs of the project. Not only does the contract support the largest renewable energy project proposed in New England, it provides protection for consumers against the volatility of fossil fuel prices for a portion of electricity purchases. We are fully persuaded that if Massachusetts is to meet its statutory renewables and greenhouse gas emissions reduction requirements, offshore wind, and Cape Wind in particular, will have to be part of the mix.”

The contract, which is for 50% of the output of the Cape Wind offshore wind facility, sets the initial price – for electricity, capacity, and renewable energy attributes – at 18.7 cents/kWh in 2013, and rising 3.5% annually for 15 years. After that, National Grid would have the right to a one-time extension of the contract for another 10 years on terms that could be below market rates.

The contract allows for upward and downward price adjustments based on a variety of contingencies. If Cape Wind is unable to tap certain federal subsidies, the price would go up, but under other circumstances the prices could go down, to the benefit of ratepayers. Specifically, should debt financing costs be reduced as a result of a U.S. Department of Energy loan guarantee, 75% of the savings would be passed along to customers in lower rates. Similarly, if actual project costs, as verified by an independent audit, fall to such an extent that the developer’s rate of return on debt and equity exceeds 10.75%, the contract price of electricity will be reduced to give ratepayers 60% of the benefit of the lower costs; if actual project costs are higher than anticipated and reduce this rate of return, the developer absorbs those losses without impact on rates paid by consumers. This mechanism in the contract assures that the developers of the project will not reap windfall profits.

The 300-plus page order approving the contract was issued recently, following three public hearings in the National Grid service territory held in June and 13 days of evidentiary testimony in September. The evidentiary record consists of 838 exhibits, 20 responses to record requests, and a 2,800-page transcript.

The order concluded that the contract met the DPU’s standard for long-term contracts under Section 83 of the Green Communities Act, as well as the Department’s standard for the public interest.

In terms of cost-effectiveness, the Department concluded that the costs would be outweighed by the benefits provided by the contract, namely assisting National Grid and the Commonwealth to comply with the state’s renewable energy and greenhouse gas emissions reduction requirements; providing National Grid the option to extend the contract beyond 15 years at a price that covers the remaining costs of operating the facility plus a reasonable rate of return; enhancing electricity reliability in the state; moderating system peak load; and creating additional employment.

Notably, the DPU found that the contract and the Cape Wind project will moderate electricity peak load in the region. In that regard, the DPU observed that wind data show that Cape Wind’s capacity factor would have averaged an impressive 76% during the region’s top ten historic peak hours. It concluded further that the project will create an average of 162 jobs per year for the 15 years of the contract—but many more than that during the two-plus year construction period.

In terms of the public interest, the DPU found that the Cape Wind project offers “unique benefits relative to the other renewable resources available.” In addition, the DPU found that the contract price was reasonable for offshore wind, which the Department determined to be needed to meet state renewable energy and greenhouse gas requirements. The DPU also found that the bill impacts that could occur as a result of the contract “are small relative to the volatility that electric customers regularly experience due to the fluctuations in wholesale electricity prices, and that the contract will mitigate that volatility.”

A second power purchase contract for the other half of Cape Wind’s power output, which did not specify a contracting party, was rejected by the DPU, but Chair Berwick said that any contract between other regulated utilities and Cape Wind on the same terms could be reviewed on a more expedited basis.

“The issues underlying this contract have been fully adjudicated in this proceeding,” said Chair Berwick. “If an identical contract comes before us, not all of the issues would require the same level of review.”

-www.mass.gov

Cape wind www.capewind.org

America launches offshore wind farm: Cape Wind

Offshore wind has been given the go-ahead for construction in Cape Cod. The nation’s first lease for commercial offshore wind energy development was signed at the American Wind Energy Association’s (AWEA) North American Offshore Wind Conference in Atlantic City. On stage in front of an eager group of photographers and applauding crowd, U.S. Interior Sec. Ken Salazar signed the lease with Cape Wind Associates President Jim Gordon. “Our feeling is that America needs all the renewable energy we can get,” Gordon says. “We believed ten years ago that offshore wind could become a major component of America’s energy future. We put our money where our mouth was and with have moved the project forward. In the process we have helped evolved the regulatory framework for offshore wind in America.”

The lease authorizes Cape Wind to construct an offshore wind farm with 130, 3.6-MW Siemens turbines on Horseshoe Shoal in Nantucket Sound, and to operate the facility for a period of 25 years. Gordon says the area is well-suited for the wind farm, with its shallow water, low wave regime, and reasonable proximity to transmit power by under-sea cables, which will run underground to a land fall and the existing grid in Barnstable, Massachusetts. The company expects the project to have a maximum capacity of about 468 MW, and on average produce about 182 MW. On average, the farm will supply 75% of electricity for Cape and islands, meaning Martha’s Vineyard, Nantucket, and Cape Cod.

Since the project’s inception, there’s been quite a shift in public opinion, according to Gordon. “When we started ten years ago, I think there was a visceral reaction,” he says. “There were those who rushed out trying to define the project through misinformation and fear-mongering because of competitive business interest or fears about property values.” However, over the ensuing years and particularly after the draft environmental impact statements came out, Gordon says national environmental organizations like NRDC, The Union of Concerned Scientists, Greenpeace, and The Sierra Club started to support the Cape Wind project, along with organized labor and health and consumer advocates. Independent public opinion polls now show more than 86% of Massachusetts citizens and almost 60% of those on the Cape and islands want Cape Wind built. “We enjoy strong support and favorable public opinion. We’re at a position where we’re ready to start construction.” Gordon says an opposition group funded by coal and oil interests has also tried to stop the project, but the company has overcome their barriers and delaying tactics. Cape Wind’s goal is to start construction during the third quarter of 2011 and complete by the end of 2012.

Gordon explains the next step is for the Massachusetts Department of Public Utilities to approve the Cape Wind national grid power agreement. “We just completed three weeks of hearings last month, where every aspect of the contract is scrutinized,” he says. “We believe we built a solid evidentiary record for approval.”

Although the company doesn’t see an expansion opportunity within Horseshoe Shoal, Gordon says they will look for other opportunities for more projects in Massachusetts and across the country. And with a U.S. Department of Energy draft plan that calls for the installation of 54,000 MW of offshore wind power capacity by the year 2030 (which would require more than 100 Cape Wind-sized projects) Cape Wind won’t be the only one searching. Gordon wishes other developers the best. “I hope that Cape Wind makes it easier for other developers that come after us,” he says. “I’m sure the federal government will incorporate lessons learned from the long regulatory process. My best wishes go out to all the others now looking up and down the East coast to build offshore wind farms.”

Cape Wind Associates LLC www.capewind.org

First offshore wind conference blows through Atlantic City

The first North American Offshore Wind Conference & Exhibition was held this week in Atlantic City, N.J.  Hosted by the American Wind Energy Association (AWEA), in collaboration with the Canadian Wind Energy Association (CanWEA), the three-day conference and expo brought more than 1,500 wind industry leaders, government officials, and business executives to Atlantic City.

The conference highlighted what’s happening in the emerging offshore wind energy industry: development opportunities throughout the coastal and lake regions of North America, potential rewards of becoming a player in the offshore space, financing options and challenges, and even project design and siting options. The expo show floor featured more than 120 exhibiting companies from the offshore wind market.

“Offshore wind energy is the new frontier for our industry,” says Denise Bode, CEO of AWEA. “While offshore wind is steadily gaining momentum in the U.S., the reality is that other countries are expanding their lead in this sector.  It is essential to send this exciting market a clear signal, through long-term and stable policy, that the U.S. is committed to making offshore wind a reality. Only through such a signal can the U.S. attract the manufacturing facilities and associated jobs needed to support the industry.”

The event began with an opening session featuring Interior Secretary Ken Salazar’s keynote speech. “Our nation’s energy policy is at the forefront of the Department’s agenda,” he said. “Now, more than ever, we must embrace the energy potential our lands and oceans hold.  With the help of AWEA’s initiatives and continued support, we can make the transition to a clean-energy economy a reality.”

Salazar made a huge step in this transition when after his speech he signed a lease with Cape Wind authorizing construction of the first U.S. offshore wind farm in Massachusetts. Cape Wind President Jim Gordon is glad to see offshore construction launch for the nation. “Our feeling is that America needs all the renewable energy we can get,” he says. “My best wishes go out to all the others now looking up and down the East coast to build offshore wind farms.”

Conferences featured discussions of offshore wind development issues such as resource assessment, supply chain issues, government involvement, metocean measurement, project planning, and transmission considerations. Attendees were also offered tours of the existing Jersey-Atlantic wind farm, the first coastal wind farm in the U.S.

Atlantic City was selected as the venue for the conference in light of New Jersey’s offshore wind potential and the strong policy signals the state has already given the industry.  New Jersey Governor Chris Christie signed the Offshore Wind Economic Development Act into law on July 19, 2010.  The Act will provide $100 million in tax credits for offshore wind developments in the Atlantic Ocean that connect to the New Jersey grid.

As Sec. Salazar noted in his speech, with 1.75 billion acres of oceans U.S. offshore wind resources are vast. Offshore wind farms therefore offer something that is extremely valuable for the economy, environment, and energy security: a source of clean, domestic, inexhaustible energy to meet fast-growing electricity demand. The U.S. Department of Energy estimates that 54 GW of offshore wind will be included in the 300 GW required to meet 20% of the U.S. electricity needs in 2030.

Companies exhibiting at the show shared their ideas and products developed to be part of that energy production.

For one, Gamesa will launch their G11X, a 5-MW offshore turbine in 2013, a progression of their G10X onshore turbine. REpower is also planning to lunch their MM100, 1.8-MW offshore turbine exclusively for the North American market. The company also shows off their 6M offshore turbine of 6.15-MW.

The show signifies that offshore development is indeed the next step toward clean energy in North America, and those in all aspects of the market are making plans to utilize the wind resources available. It is likely that by next year’s conference, offshore farms will be generating energy and the industry will be learning fast and looking to expand even further.

Massachusetts Supreme Court grants Cape Wind all state and local permits

First off-shore U.S. wind farm moves ahead, will bring 1,000 green jobs to Massachusetts

The Massachusetts Supreme Judicial Court upheld the ruling of a state energy board that had granted all state and local permits to Cape Wind, clearing the way for America’s first off-shore wind farm to proceed on Nantucket Sound and create an estimated 1,000 green construction jobs.

The Court’s decision affirmed a May 2009 decision of the State Energy Facility Siting Board, which had granted Cape Wind the first-ever “composite certificate.” Cape Wind had been denied a local permit from the Cape Cod Commission and thus applied to the Siting Board for a single permit that would consist of all state and local permits for the Cape Wind project. Non-profit group Clean Power Now had intervened in the Siting Board case and strenuously argued that Cape Wind was entitled to a composite certificate so that the state permitting process could come to a close. In all, 17 federal and state agencies reviewed Cape Wind.

The state high court agreed with Clean Power Now that the Siting Board had not only the authority but the legal duty to grant all state and local permits to Cape Wind. In so doing, the Court recognized that the wind farm, including its in-state impacts, “has undergone extensive scrutiny by Federal and State agencies.” The Court rejected the opponents’ claims that the siting board did not properly consider the environmental impacts of the transmission project and found the board’s decision on that point to be “supported by substantial evidence in the record.” Cape Wind now has in hand all federal and state permits needed to construct the wind farm.

Barbara Hill, Executive Director of Clean Power Now, which supported Cape Wind in the case before the Supreme Judicial Court, said, “Today’s Supreme Judicial Court ruling, affirming the Energy Facilities Siting Board decision to issue a composite certificate to Cape Wind, is a victory for the people in the Commonwealth. This decision paves the way to building a real, viable and sustainable clean energy industry here in Massachusetts.”

Matthew Pawa, an attorney representing Clean Power Now, said, “Today’s decision by the state high court is the latest in a long series of legal decisions rejecting the arguments of an opposition group, funded largely by donors who have made their fortunes in the coal and oil industries,that has sought to kill this vital clean energy project. It is time for the opponents of this project to stop filing frivolous legal challenges and for construction to commence.” He added: “Today’s Supreme Judicial Court decision approving Cape Wind is a major step toward reducing America’s greenhouse gas pollution and helping to meet the goal of 20 percent renewable energy by 2030.  The decision comes, appropriately, in the midst of a historic heat wave in New England and in a year in which New England – and the world – have felt the frightening signs of overheating.”

Projected output from the 420 MW wind farm will be enough to meet the yearly demand from about 223,776 households, save New England more than $800 million in energy costs over the next two decades, and avoid the emission of 734,000 tons of global warming emissions a year.