The Emergence of Commercial Scale Offshore Wind: Progress Made and Challenges Ahead

Author(s)

Joseph B. Nelson & David P. Yaffe

Details

Faculty editor: Tim Duane
Publication: Journal of Climate & Energy Law
Volume: 10
Issue:
Start Page: 25
Month: August
Year: 2019
Type: Article
Subject Area: Environmental Law
Instititional Repository (IR) location of full article: https://digital.sandiego.edu/jcel/vol10/iss1/

Abstract

This Article examines the offshore wind development process from leasing and permitting to electric power supply and interconnection. Willing developers may divide the process into three discrete, but not necessarily sequential, endeavors. First, the developer must secure a viable purchaser or market for the output. “Offshore wind energy” is a more complex commercial product than one might envision—it includes the actual electric energy produced, the electric generating capacity that is available to serve load, and both the environmental and clean energy attributes of wind energy. The environmental and clean energy attributes may have an economic and regulatory value separate from, or in addition to, the value of the electric energy itself. These separate complexities give rise to several questions: What are the available markets for actual offshore wind energy? How does a developer find a buyer (off-taker) for the offshore wind electric output? How are the markets for the actual energy and the environmental attributes, normally embodied in a “renewable energy certificate” (REC), combined or otherwise related? How much control can individual states exercise over the decisions of an individual utility or other purchasers of offshore wind energy and RECs (or each of them separately)? If the average cost to the developer of electric energy generation from offshore wind per kilowatt-hour (kWh) is substantially higher than the average cost of energy in the onshore markets, what features of state regulation or policy facilitate the sale? Second, the developer must secure, or acquire by sale or assignment, appropriate offshore sites for development of the physical resource. Most available offshore wind resources are located in the OCS and will be under federal control for leasing. Developers must secure OCS leases either through successful bids in the initial offering or through a later acquisition or assignment from winning bidders. Offshore wind development requires large areas within which to erect the number of turbines needed, as well as a gathering system of cables and substations, to collect and deliver the output of all the turbines via transmission lines to interconnections with the existing mainland grid. The developer also must obtain rights-of-way to lay cable for its gathering and transmission facilities—on the OCS and across state submerged lands and coastal areas. In the alternative, a new offshore wind transmission system may be built by a third party to connect with multiple wind farms and deliver energy to an onshore point of interconnection. These leasing and project configuration scenarios present many questions. If the offshore wind developer and the transmission facility developer are separate entities, how much coordination is required? What is the appropriate scope of environmental impact studies needed in connection with the OCS leasing process? What are the mechanics for acquiring the necessary property rights and leases between winning bidders and other interested developers? Third, the offshore wind developer, alone or with a third-party transmission developer, must be concerned about the interconnection of the offshore cable to the onshore transmission grid. Most onshore transmission and distribution grids were planned, constructed and operated on the assumption that electricity consumers on the coast are the end of the delivery line. While transmission grids are somewhat more robust at these isolated coastal locations—particularly when large nuclear and fossil generation exists at water’s edge—these more robust coastal grid systems are limited and may be neither geographically nor electrically proximate to offshore wind generation locations. With advances in turbine technology and the overall economics of offshore wind farm development most proposed commercial-scale projects are likely to have generation capacity in the hundreds of megawatts (MWs). Typically, interconnection of offshore wind and related transmission delivery facilities require not only reconfiguration and enlargement of the receiving onshore transmission grid to accept the input of such electric capacity at water’s edge, but also delivery to load centers that may be located a substantial distance inland. Owners of the onshore grid may not be the same as the utility purchaser or other off-taker of the offshore electric energy. The complexities of onshore interconnection raise vexing questions, such as: (i) how to reconfigure and enlarge the grid to interconnect with offshore generation, accept the energy output, and deliver to load centers; and (ii) who should bear the costs of that reconfiguration and enlargement. This Article is intended to provide a helpful roadmap or guidance for major issues in three principal areas—securing a viable purchaser, siting the offshore development farm, and onshore interconnection of the offshore cable. To date, most offshore wind development efforts in the United States occur off the Northeast and Mid-Atlantic coast. This Article highlights the emerging federal-state dynamic in the development of offshore wind generation and illuminates several key uncertainties developers face today.