At the top of the offshore wind industry’s wish list has long been shortening a permitting timeline that threatened to drive away investors and run out the clock on temporary tax incentives.
But with promises late last month from the Obama administration to change federal rules, NRG Bluewater Wind officials say they can foresee blazing through the permitting phase in two to three years, rather than the seven to nine expected under the old process.
On Nov. 25, Interior Secretary Ken Salazar announced a joint initiative with East Coast states to cut through red tape and get wind turbines in the water.
The Bureau of Ocean Energy Management, Regulation and Enforcement would change its regulations to ask once, instead of twice, for interest from developers, unless competition develops for a particular ocean tract. The changes would also allow developers to combine two time-consuming environmental reviews into one, without worrying about losing a lease on their ocean tracts.
And the federal government would work with states to collect environmental information, which would identify which areas of the ocean are best suited to wind development.
The moves may make it easier for other offshore wind projects to get to the starting line, said Collin O’Mara, natural resources secretary. That would cut into Delaware’s head start, but “it’s a price we’re willing to pay” for a more healthy industry, O’Mara said.
The federal government issued a request for interest for ocean tracts off Delaware in April, the first such request off any state. Bluewater answered, as well as a little-known New Jersey company, Occidental Development & Equities LLC.
The Bureau of Ocean Energy Management is determining whether Occidental has the standing to formally challenge Bluewater, which, if the answer is yes, would lead to an extended lease competition process.
Bluewater President Peter Mandelstam said if the answer is no, “we believe we can close this project in two, three years from today.”
A request for interest has also been issued in Maryland, and Bluewater has announced plans to apply. Requests off more states are coming soon, the Department of the Interior reported.
The federal government will launch an environmental review of ocean tracts off numerous states where wind farms are likely to be built.
But Bluewater won’t wait for that work, Mandelstam said. It’s conducting some of its own reviews right now, including marine mammal and bird studies, he said.
“We’re paying for it ourselves,” Mandelstam said. “We don’t want to delay.”
Gary Stockbridge, regional president for Delmarva Power, said he thinks the federal announcement will bring more investment dollars to the Bluewater project. His utility has a long-term power purchase contract with Bluewater.
“We applaud any effort, federally, to accelerate the process,” Stockbridge said, noting that after the announcement, he was “more optimistic the project will come to fruition.”
The announcement helps, “but it can only do so much,” said Matt DaPrato, an analyst with the Massachusetts-based IHS Emerging Energy Research.
“What’s holding offshore wind back is not the lack of potential; it’s both the process and the market for it once it’s built,” DaPrato said.
Utilities, and regulators, will need to decide whether they will authorize a purchase of the power, he said. They’ll need to choose whether they’re willing to pay the higher prices that come with the environmental and economic development benefits of offshore wind, he said.
“It’s a very difficult question, but it’s one that will have to be answered for these projects to get built,” DaPrato said.
Another important issue for offshore wind, observers say, is the renewal of federal tax credits. These subsidies help both onshore and offshore wind power compete with less expensive traditional fuels.
A Treasury grant program is scheduled to expire at the end of this year, and two tax credit programs for wind power will expire at the end of 2012.
DaPrato said his company is forecasting that the credits will get renewed, although he’s not sure whether it will be this year.
Mandelstam said he expects government supports, in some form, to be extended. He noted that these programs have been endorsed by presidents and Congresses of both parties.
It’s not necessarily accurate to believe it’s a partisan issue, DaPrato said.
“A lot of these high-wind states are also some Republican states,” DaPrato said, noting that wind is popular in the West.
Coastal regions will gravitate toward offshore wind rather than importing clean power from land-based wind farms farther way, DaPrato said.
But inland areas, including those along the Great Lakes, will find onshore wind is less expensive because it’s close by, he said.
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