Offshore Wind Energy: Emerging Legal Challenges Navigating Legal - - PowerPoint PPT Presentation

Presenting a live 90‐minute webinar with interactive Q&A

Offshore Wind Energy: Emerging Legal Challenges

Navigating Legal Requirements, Obtaining New Government Funding, and Lessons From Successful UK Wind Projects

T d ’ f l f

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific TUESDAY, NOVEMBER 8, 2011

Today’s faculty features: Chris Hart, Offshore Wind Manager, United States Department of Energy, Washington, D.C. Kimberly Diamond, Counsel, Lowenstein Sandler, New Y

• rk

Maria S carlett, Irish S ea Zone Development Manager, Centrica Renewable Energy Chris Elkinton, S enior Engineer, Garrad Hassan America, Portland, Ore.

The audio portion of the conference may be accessed via the telephone or by using your computer's

• speakers. Please refer to the instructions emailed to registrants for additional information. If you

have any questions, please contact Customer Service at 1-800-926-7926 ext. 10.

Conference Materials

If you have not printed the conference materials for this program, please complete the following steps:

• Click on the + sign next to “ Conference Materials” in the middle of the left-

hand column on your screen hand column on your screen.

• Click on the tab labeled “ Handouts” that appears, and there you will see a

PDF of the slides for today's program.

• Double click on the PDF and a separate page will open.

Double click on the PDF and a separate page will open.

• Print the slides by clicking on the printer icon.

Continuing Education Credits

FOR LIVE EVENT ONLY

For CLE purposes, please let us know how many people are listening at your location by completing each of the following steps:

• Close the notification box
• In the chat box, type (1) your company name and (2) the number of

attendees at your location

• Click the S

END button beside the box

Tips for Optimal Quality

S d Q lit S

• und Quality

If you are listening via your computer speakers, please note that the quality of your sound will vary depending on the speed and quality of your internet connection. If the sound quality is not satisfactory and you are listening via your computer speakers, you may listen via the phone: dial 1-866-871-8924 and enter your PIN - when prompted Otherwise please send us a chat or e mail when prompted. Otherwise, please send us a chat or e-mail sound@straffordpub.com immediately so we can address the problem. If you dialed in and have any difficulties during the call, press *0 for assistance.

Viewing Qualit y

To maximize your screen, press the F11 key on your keyboard. To exit full screen, press the F11 key again press the F11 key again.

Offshore Wind R h d D l t

Christopher G. Hart, PhD, MBA Offshore Wind Manager

5 | Program Name or Ancillary Text eere.energy.gov

Research and Development

Wind and Water Power Program

October 19, 2011

Laying the Groundwork for an Emerging Industry

• The National Strategy is

a roadmap of our efforts a roadmap of our efforts and how DOE and DOI plan to advance a plan to advance a nascent offshore wind industry

• DOE’s 2011 funded

research is integral to securing a renewable f h

6 | Energy Efficiency & Renewable Energy eere.energy.gov

energy future in the US

DOE Offshore Wind History

June

RFI receives 113 responses

Large‐Scale Offshore Wind Power in the United States

2010

“Creating an Offshore Wind Energy Industry in the US” seminar series in Boston, Cleveland, and DC

DOE and DOI jointly announce A National

2011 Sept Feb March

DOE and DOI jointly announce A National Offshore Wind Strategy and three FOAs

“Rising Tide” US‐UK Symposium

2011

Statement of Intent with the Province of Ontario

June July

DOE reviews FOA applications

Sept

DOE awards $50.5M for FOAs

7 | Energy Efficiency & Renewable Energy eere.energy.gov

DOE hosts FOA Recipient Kickoff Meeting

Oct

DOE is a National Leader

• Inform citizens and decision makers
• Convene leaders and facilitate national and international

information exchange

• Support innovation partnerships to research, develop,

demonstrate, and deploy unique technology solutions to

• ffshore wind’s most challenging problems
• ffshore wind s most challenging problems

“DOE as a non regulatory agency is in a unique position to provide DOE, as a non-regulatory agency, is in a unique position to provide

national leadership through collaborative partnerships with other

federal agencies, the states, academia, and industry.” National Offshore Wind Strategy

8 | Energy Efficiency & Renewable Energy eere.energy.gov

• National Offshore Wind Strategy

Offshore Wind Innovation and Demonstration

54 GW at 7 c/kWh by 2030

/k h b 10 GW at 10 c/kWh by 2020

Reduce Cost of Energy Promote Responsible Deployment gy p y Develop Innovative Technologies Remove Market Barriers Demonstrate Next Generation Technology

9 | Energy Efficiency & Renewable Energy eere.energy.gov

Technologies Technology

Funding Aligned with National Strategy

Close data gaps needed for efficient permitting;

Tension Leg Platform Demonstration Next Generation

efficient permitting; develop cost- competitive O&M strategies;

Wind/Wave Hybrid Floating Platform Prototype Launch Deep Water Platform Designs

g transmission and interconnection planning

Modeling and Data Analysis Support g

Demonstration Modeling D t C ll ti Data Collection and Analysis

$15.5M

10 | Energy Efficiency & Renewable Energy eere.energy.gov

$

Funding Aligned with National Strategy

Close data gaps needed for efficient permitting;

Market and Economic Analysis

Remove Market

efficient permitting; develop cost- competitive O&M strategies;

Environmental Risk Reduction Manufacturing and Supply Chain Development

Barriers

Siting and Permitting

g transmission and interconnection planning

Manufacturing and Supply Chain Development Transmission Planning and Interconnection Studies Permitting Infrastructure Resource Planning Optimized Infrastructure and Operations

$16 5M

Planning Resource Characterization and Design Conditions Impact on Electronic Equipment

$16.5M 22 Awards 3 Years

11 | Energy Efficiency & Renewable Energy eere.energy.gov

Impact on Electronic Equipment

3 Years

MB 6.1 National Offshore Resource and Design Data Campaign MB 6 2 Resource and MB 2.2 Innovative Avian and Bat Monitoring Technologies MB 5.3 MB 6.2 Resource and Design Conditions Measurement and Modeling

M k t B i

Installation, Operation and Maintenance Strategies

Market Barrier Removal Projects

MB 4.2 Utility Interconnection & St ateg es MB 2.1 Mid‐Atlantic Ecological Baseline Studies & Modeling MB 4.1 National Off h Wi d G id Integration Case Studies MB 5.2 Optimized Vessels Assessment MB 7.0 Impact on Electronic Equipment in the Marine Environment Offshore Wind Grid Integration Study MB 3.0 Manufacturing and Supply MB 5.1 Optimized Ports MB 1.1 Annual Market Assessment MB 3.0 Manufacturing and Supply Chain Development Optimized Ports Assessment

Funding Aligned with National Strategy

Develop modeling tools, optimized system designs, and

Modeling and Analysis Design Tools Develop Innovative

y g , components necessary for long- term R&D to reduce cost of offshore wind

Innovative System Design Studies Technologies

Computational Tools cost of offshore wind energy

Innovative Component Development

Tools Turbine Design Marine Systems Engineering

$26 5M

Engineering

$26.5M 19 Awards 5 Y

13 | Energy Efficiency & Renewable Energy eere.energy.gov

5 Years

TD 3.0 TD 1.4 Coupled wind/wave simulation models TD 1.1 Floating platform dynamics model

Technology

TD 3.0 Advanced rotors and control systems TD 1.5 Offshore wind plant array simulation models

gy Development Projects

TD 1.2 Surface ice impact models TD 1.3 mooring

j

TD 2.0 Offshore System Designs and anchoring dynamics models

Hubs of Expertise: A National Investment

15 | Energy Efficiency & Renewable Energy eere.energy.gov

DOE’s RDD&D Portfolio

The Sum is Greater than its Parts

Commitment to National Strategy Efficient Research Investments Synergies Discovered Opportunities Executed

A National Mobilization of Resources to Accelerate the Industry

16 | Energy Efficiency & Renewable Energy eere.energy.gov

y

Industry in Action

Plant the seed with funding awards awards Facilitate research synergies Build hubs of expertise Capitalize on lessons learned in Europe Empower economic revitalization

54 GW by 2030

17 | Energy Efficiency & Renewable Energy eere.energy.gov

y

Thank you

Christopher G. Hart

Offshore Wind Manager Offshore Wind Manager Wind and Water Power Program

18 | Energy Efficiency & Renewable Energy eere.energy.gov

European Update and Lessons for the US Offshore wind m arket Offshore wind m arket

M A R I A S C A R L E T T 8 N O V E M B E R , 2 0 11

UK background information

• UK’s governm ent offshore wind target 11GW to 18 GW by 20 20 .

20

• Renewables Obligation (RO) legislation is the m ain m echanism for

incentivising deploym ent of large scale renewable electricity in the UK.

• The RO Requires electricity suppliers to subm it a num ber of renewable
• bligation certificates (ROC) in respect of each m egawatt hour of

g ( ) p g electricity they supply or pay a buy out price.

• Since 20 0 2, the RO has been successful in tripling the level of renewable

electricity in the UK from 1.8 % to 6.64%. h C li i G h i d

• The Coalition Governm ent say they are com m itted to support

m echanism s through the Electricity Market Reform .

• Market uncertainty till end of 20 12 and conclusions of the m arket

reform . Risk of dam age to investor confidence. g

• ROC banding review published recently (12 October, 20 11)
• Governm ent propose to establish an industry led task force to reduce

the costs (developm ent, construction and operations) of offshore wind to £ / MWh b £ 10 0 / MWh by 20 20 .

Europe background information



March 20 0 7 – 27 European U i H d f St t d 21 Union Heads of State agreed a binding target of 20 % renewable energy in 20 20 .



The 20 0 9 Renewable Energy Directive requires all Mem ber States to subm it National Renewable Energy Action Plans (NREAPs) to the European Com m ission by 30 June 20 10 .



By 4 January 20 11, all 27 NREAPs had been subm itted.

C t f EWEA Courtesy of EWEA Pure Power Wind energy targets for 2020 and 2030 A report by the European Wind Energy Association - 2011

Europe offshore wind power 2010

22

Table courtesy of Pure Power report - EWEA

Barriers to development

Europe



Project developers need to obtain perm its in order to install a wind farm and obtain

23

grid connection. Based on the European Wind European Association Wind Barriers survey, the average total lead tim e in the EU is 54.8 m onths for onshore and 32 m onths for offshore.



Reasons for the long lead tim es vary from country to country, but they are often related to Environm ental Im pact Assessm ent (EIA) restrictions and/ or grid connection constraints.



Six countries in the survey seem to have developed efficient and stream lined decision- m aking processes, including Maritim e Spatial Planning (MSP) which accounts for less

• delays. The UK is currently working on MSP.

UK



The Planning Act 20 0 8 . L li Bill i i i i i h l i



Localism Bill - m ore power to com m unities to participate in the planning process. Key m essage – Im prove Grid processes



An absence of clear inform ation on the available grid connection capacity, a lack of planning for future grid extension and reinforcem ents on behalf of system operators, p g g y p , insufficient grid capacity, and other aspects such as land ownership and the EIA result in delays. In the UK, National Grid are working to resolve these issues.

Obstacles to wind farm development

24

Courtesy of EWEA – WindBarriers report, July 2010

Administrative recommendations for the USA



Clear Governm ent targets for Renewable Energy.



Set deadlines for the adm inistrative process If the authority is not able to m eet the

25



Set deadlines for the adm inistrative process. If the authority is not able to m eet the deadline, the project autom atically goes to the next stage



Train and allocate the necessary civil servants to handle the expected applications



Lower the average adm inistrative costs to 1.5% of the total project costs Lower the average adm inistrative costs to 1.5% of the total project costs



Give incentives to com petent authorities to gather data and studies both externally collected and from the EIA process and m ake them public (sim ilar to COWRIE in the UK)



Learn from past projects in the UK and Europe



For offshore, m aritim e spatial planning – encourage and facilitate cross border cooperation



Develop synergies with other sea users & shipping and navigation guidance



Dissem inate transparent and unbiased inform ation to the authorities and decision m aking bodies at all levels on wind energy technology and developm ents, addressing the m yths associated with wind energy t e yt s assoc ated w t w d e e gy



Transferable consents

Transfer of knowledge



Strategic Energy Technology Plan 26 g gy gy



European Wind Energy Technology Platform



Several Member States have conducted comprehensive research programmes on offshore

• wind. Example – COWRIE (The Crown Estate)



http:/ / www.offshorewind.co.uk/ Pages/ COWRIE/ Partnerships – exam ple - The Carbon Trust (UK) h i l i d h l i hi i d i The Marine Energy Accelerator was aimed at helping achieve marine energy cost reduction through:

 Developing new device concepts that could significantly marine energy lower costs  Research into lowering costs of specific components in existing marine energy devices

g p p g gy

 Developing strategies on how to improve ways marine energy devices can be installed,

• perated and maintained at a lower cost.

G d P ti Wi d E U i / S tti h G t j t Good Practice Wind – European Union/ Scottish Governm ent project

Carbon Trust Offshore wind accelerator Carbon Trust Offshore wind accelerator

The research and developm ent program m e has four areas: 27 program m e has four areas:



Developing new turbine foundations and installation techniques.



Facilitating access to distant turbines for m aintenance.



Finding the best wind farm array



Finding the best wind farm array layouts to optim ise yield.



Researching ways to reduce electricity transm ission losses. y



These research areas were chosen as they represented the greatest potential for reducing the total cost of constructing the total cost of constructing,

• perating, and financing large
• ffshore wind farm s.

Pictures Courtesy of The Carbon Trust

PwC Outlook survey results



Risk and investm ent: 28 Am ong financial institutions, perceptions of offshore wind developm ent risk as a barrier to investm ent are im proving and becom ing positive.



Supply chain m anagem ent: pp y g Nearly all (91%) developers said supply chain capacity constraints are a significant problem for offshore wind construction and 55% think supply chain risks are likely to increase in the future. Key issue: Suitable Ports, absence of a local supply chain, long lead tim e for item s e.g. Strategic investm ent required.



Governm ent support and regulatory certainty: The survey highlights a gap between governm ent and industry expectations.

PwC’s Offshore Proof survey, 2011

Thank you

Additional inform ation

29



http:/ / www.bwea.com / pdf/ publications/ RebirthVol2.pdf



http:/ / www.ewea.org/ fileadm in/ ewea_ docum ents/ docum ents/ publications/ reports/ Offshore Grid_ _ report.pdf



http:/ / www.raeng.org.uk/ news/ publications/ list/ reports/ Offshore_ wind.pdf



http:/ / www.ewea.org/ fileadm in/ ewea_ docum ents/ im ages/ publications/ offshore_ report/ ewe a-offshore_ report.pdf htt / / b t t k/ i t h l i / t f / i



http:/ / www.carbontrust.co.uk/ em erging-technologies/ current-focus-areas/ m arine-energy- accelerator/ pages/ default.aspx



http:/ / www.project-gpwind.eu/

Contact inform ation



Maria.Scarlett@centrica.com

Any Questions?

30

Any Questions?

2010 European union wind summary 2010 European union wind summary

31

Table courtesy of Pure Power report - EWEA

2020 European union wind forecast 2020 European union wind forecast

32

Table courtesy of Pure Power report - EWEA

Offshore Wind Turbine Technology

Chris Elkinton, Strafford Webinar, 08 November 2011

E t i bl Experts in renewable energy

Onshore & Offshore Wind Wave & Tidal Solar PV & CSP

34

G hi l h Geographical reach

• 775 staff, in 43 locations, across 23 countries

Glasgow Heerenveen Sint Maarten Kaiser-Wilhelm- Koog Copenhagen Bristol Dublin Vancouver Ottawa Beijing Seoul Tokyo Paris Copenhagen Hinnerup Oldenburg Hamburg Warsaw Imola London Slough Portland San Diego Montreal Peterborough Shanghai Mumbai Bangalore Newcastle Izmir Cairo Lisbon Barcelona Zaragoza Madrid Austin Monterrey Porto Alegre Santiago Melbourne Wellington 35

A Key market drivers

ONTENT

B Overview of offshore wind turbine technology

CO

C Key technology trends and hurdles

36

M k t I ti Market Incentives

• Federal
• Production Tax Credit (PTC) – set to expire end 2012

Production Tax Credit (PTC) set to expire end 2012

• Investment Tax Credit (ITC) – must be in service by end 2012
• DOE research funding ($43m awarded Sept. 2011)
• Offshore-specific incentives in the works

Offshore specific incentives in the works – The Incentivizing Offshore Wind Power Act (H.R.3238) – 30% tax investment credit on first 3 GW offshore wind

St t

• State
• 36 states + DC have state-level incentives
• Of these, 29 states + DC have mandatory Renewable Portfolio Standards (RPS)
• Of these, 14 Coastal states + 7 on the Great Lakes
• Power purchase agreements (utilities / off-takers)
• Wind resource

37

• Wind resource

M k t B i Market Barriers

• Price certainty
• Competition with onshore wind, natural gas, hydro

Competition with onshore wind, natural gas, hydro

• Large construction costs
• PPAs – need secure off-takers
• First US projects paving the way

First US projects paving the way

• Permitting / consenting certainty
• Not streamlined (e g Cape Wind 17 state & federal agencies reviewing)
• Not streamlined (e.g. Cape Wind – 17 state & federal agencies reviewing)
• State, federal
• Numerous commenting agencies involved
• At least 5 years for BOEM from time proposal is submitted to final permit
• At least 5 years for BOEM from time proposal is submitted to final permit
• Unstable federal incentives environment

38

A Key market drivers

ONTENT

B Overview of offshore wind turbine technology

CO

C Key technology trends and hurdles

39

General O er ie

• f Wind T rbine Technolog

General Overview of Wind Turbine Technology

• Project anatomy

40

General O er ie

• f Wind T rbine Technolog

General Overview of Wind Turbine Technology

• Rotor-Nacelle Assembly: Siemens 3.6 MW wind turbine

1 Spinner 2 Spinner bracket 3 Blade 4 Pitch bearing 5 Rotor hub 6 Main bearing 7 Main shaft 8 Gearbox

41

9 Service crane 10 Brake disc 11 Coupling 12 Generator 13 Yaw gear 14 Tower 15 Yaw ring 16 Oil filter 17 Generator fan 18 Canopy

General O er ie

• f Wind T rbine Technolog

General Overview of Wind Turbine Technology

• Support Structure – current state of the art

Source: www.wind-energy-the-facts.org 42 Source: www.wind energy the facts.org

Ke Differences Offshore & Onshore Key Differences – Offshore & Onshore

• Generally same overall turbine design
• Rotor, nacelle, tower

Rotor, nacelle, tower

• …but “marinized”
• Different foundation concepts
• Size matters
• Size matters
• Reliability is especially critical to offshore
• Support infrastructure, e.g. access to turbines
• Cost
• Onshore: turbine ≈ 75-85% total Capex, foundation ≈ 5%
• Offshore: turbine ≈ 50% total Capex, foundation ≈ 20%
• COE: offshore wind approx. 2X onshore wind

43

A Key market drivers

ONTENT

B Overview of offshore wind turbine technology

CO

C Key technology trends and hurdles

44

Technolog Trends Technology Trends

• Growth of wind turbine systems

1960, 24m

→

45

2007, 126m diameter

Technolog Trends Technology Trends

• Larger machines
• Now: 5-6 MW with 120-126 m rotor diameters

126m 68m 164m Now: 5 6 MW with 120 126 m rotor diameters

• Short-term: 6-7 MW with 126-164 m rotor diameters
• Mid-term: 8-10 MW with 150+ m rotor diameters
• Long-term: ??

68m Long term: ??

Spruce Goose 97.5m span An-225 Mriya 88.4m span Airbus A380 79.8m span Boeing 747-8 68.5m span 46

Technolog Trends Technology Trends

• Deeper water
• Most projects installed to date are in waters 8-25 m deep

Most projects installed to date are in waters 8 25 m deep

• Current technology allows installation to approx. 50 m
• Future may include floating platforms – currently in prototype testing
• Alternative drive trains
• Alternative drive trains
• direct drive (no gearbox)
• split load path gearboxes with multiple generators
• hybrid gearbox generator
• hybrid gearbox-generator

47

Source: MTorres Source: Clipper

Technolog H rdles Technology Hurdles

• Lack of universally accepted design standards (especially in US)
• Supply chain constraints (large bearings monopiles)

Supply chain constraints (large bearings, monopiles)

• Reliability – tower access constraints
• Knowledge of offshore wind construction deployment and logistics in North America

15 25% f C

• 15-25% of Capex
• Limited room for OEM to reduce costs; more room within BoP
• Risks to financing:
• weather (access)
• technology / performance
• grid reliability

48

Thank you for listening Chris Elkinton chris.elkinton@gl-garradhassan.com www.gl-garradhassan.com

The State of the States: The State of the States: The Impact of Governors’ Support, Legislation and other Factors on U S Legislation, and other Factors on U.S. Offshore Wind Development By Kimberly E. Diamond

November 8, 2011 Strafford Webinar Offshore Wind: Emerging Legal Challenges Offshore Wind: Emerging Legal Challenges

State Renewable Portfolio Standards (RPS) State Renewable Portfolio Standards (RPS)

• Most states have an RPS
• Most states have an RPS,
• r an RPS‐like goal
• A state RPS generally

i i t t tiliti t requires in‐state utilities to purchase a certain percentage of energy i i f generation capacity from renewable energy sources by a certain future date

• Carve‐outs exist for

specific resources, such as wind

Graphic courtesy of the Pew Center on Global Climate Change, last Diamond 51 updated Oct. 12, 2011, http://www.pewclimate.org/what_s_being_done/in_the_states/rps.cfm

Who Controls the Seabed Differs B d h S Based on the State

• Important for Where Demo Projects are Sited
• Texas
• Coastal Public Lands Management Act of 1973

Coastal Public Lands Management Act of 1973

• Jurisdiction over submerged lands extends 10.35 miles out into the

Gulf of Mexico

• Same boundary as in 1845, when Texas was an independent nation
• Texas General Land Office (“GLO”)
• Issues Leases
• U.S. Army Corps of Engineers
• Issues Permits

Diamond 52

Texas – No Federal Permits Needed Texas No Federal Permits Needed

• Texas (continued)

Texas (continued)

• 1899 Rivers and Harbors Act
• U.S. Army Corps of Engineers administers re: course, condition,or

capacity of a port, harbor, or channel

• Federal Energy Regulatory Commission (“FERC”)
• FERC permit not necessary

FERC permit not necessary

• Bureau of Ocean Energy Management (“BOEM”)
• BOEM permit not necessary

Diamond 53

Example – Baryonyx Projects Example Baryonyx Projects

Photo courtesy of Baryonyx, “Projects” at http://baryonyxcorp.com/projects.html Photo courtesy of Baryonyx, “Rio Grande Project” at http://baryonyxcorp.com/rio_grande_project.html

• Rio Grande North and Rio Grande South Projects
• Texas state waters; 5 miles from TX coast; 160 turbines; 1.0 GW

j

• Mustang Project
• Texas state waters; 6 miles from TX coast; 200 turbines; 1.2 GW

Diamond 54

Example – Coastal Point Energy Example Coastal Point Energy

• Galveston Wind Project

Galveston Wind Project

• 8.5 miles from TX coast
• Projected 300 MW

capacity

• All necessary permits

have been received have been received

• Austin Energy PPA
• Four other proposed

Four other proposed projects

Diamond 55

Control of Seabed – Atlantic Coast Control of Seabed Atlantic Coast

• East Coast States –

St t t l th E t C t d diff tl th

• State waters along the East Coast are measured differently than

in Texas

• State Waters = Area between shoreline and 3 nautical miles out
• State Waters = Area between shoreline and 3 nautical miles out
• Federal Waters = Area from 3 – 200 nautical miles out

(this is the Outer Continental Shelf, or “OCS”) (this is the Outer Continental Shelf, or OCS )

• Important from the perspective of where demonstration

projects are being sited

• State waters, rather than federal waters, are preferable
• Fewer permits are required
• Less administrative wait‐time

Diamond 56

• More expedited process for getting steel in the water

Example – Fishermen’s Energy Demo Project in N J New Jersey

• 6‐turbine, 24 MW project
• In state waters, 2.5 miles of NJ

coast, near Atlantic City, NJ

• NJ Board of Public Utilities

(“BPU”) is reviewing

• Precursor to a Fishermens’

Energy project 10 times as large gy p j g in federal waters

• Fishermens’ Energy and 10 other

developers applied for federal p pp leases in June 2011 to build in federal waters of NJ’s coast

Photo courtesy of Atlantic CVB Diamond 57

Legislative Constructs – OREC R h h PPA ORECs, Rather than PPAs

• NJ’s Offshore Wind Economic Development Act (“OWEDA”)

p ( )

• Enacted on August 19, 2010
• Intended to support the development of 1,100 MW
• ffshore wind generation
• ffshore wind generation
• OWEDA directs the NJ Board of Public Utilities (“BPU”) to

establish an OREC (Offshore Renewable Energy Credit) program

• NJ is the only state that has ORECs
• ORECs can be used to meet NJ’s state RPS
• ORECs may be used during the energy year they are

issued, and for two years thereafter

• All other states use PPAs (Power Purchase Agreements)

Diamond 58

• All other states use PPAs (Power Purchase Agreements)

Utilities – What Role Should They Play Utilities What Role Should They Play

• Utilities Overseas – Serve

as a partner or parent p p

• Skin in the Game
• Utility shares the

substation development costs

• There is an element of
• There is an element of

cost structure control

• The utility’s balance

Photo from Michael Hanibal, Siemens Wind Power A/S, presentation at AWEA’s Offshore WINDPOWER 2011

Example Garden State Offshore Wind in NJ

y sheet assists in the project’s financial risk mitigation

Example – Garden State Offshore Wind in NJ Joint venture partnership between

• Public Service Enterprise Group (PSE&G)
• Deepwater Wind

mitigation

Diamond 59

Example – Deepwater Wind’s Block Island P j i Rh d I l d Project in Rhode Island

• Rhode Island’s Law relating to

Public Utilities and Carriers – Contracting Standard for Renewable Energy (formerly gy ( y H 8083 Substitute A & S 2819 Substitute A)

• This law is geared specifically
• This law is geared specifically

toward the 28.8 MW Block Island offshore wind project D E Sh Fi i l b k

• D.E. Shaw – Financial backer
• f the Block Island Project

Diamond 60 Picture courtesy of Daily Kos, located at http://www.dailykos.com/storyonly/2010/3/8/844165/-Offshore-wind-farm- constructionmore-pictures

Rhode Island’s Law re: D Wi d’ Bl k I l d P j Deepwater Wind’s Block Island Project

• General Assembly’s Original Intent
• Enco rage and promote clean rene able energ thro gh a
• Encourage and promote clean, renewable energy through a

demonstration‐sized offshore project

• Have the additional benefit of attracting jobs and investment

dollars of offshore wind turbine manufacturers blade dollars of offshore wind turbine manufacturers, blade manufacturers and related businesses

• PPA between Deepwater Wind and National Grid (a Utility)
• Filed with the RI Public Utilities Commission (PUC)

Filed with the RI Public Utilities Commission (PUC)

• Requires the RI Economic Development Corporation and the RI

Department of Environmental Management to offer testimony before the PUC on the economic development and environmental p benefits of the project

• Lawsuit Challenging PPA Defeated
• In July 2011, RI Supreme Court upheld the PPA, stating that the PUC

Diamond 61

y , p p , g acted in accordance with state law when it approved such PPA

Managing Public Opinion by Community Engagement

• Engage Local Community Early in the Process
• Gain Public Buy‐In
• First Mover Advantage –
• Most people believe what they hear first

Most people believe what they hear first

• Being the first to get the word out is better than

running damage control

• Transparency

Inform the immediately impacted

• Transparency – Inform the immediately impacted

community of the following:

• Federal and state agencies involved
• Any local community governmental entities involved
• Manage public expectations
• Public benefits – jobs, helping state meet RPS

Diamond 62

Public benefits jobs, helping state meet RPS

Example – Lack of Substantial Public Buy‐In C Wi d P j i MA Cape Wind Project in MA

• 420 MW project in Horseshoe

h l k d Shoal, Nantucket Sound, MA

• Has all necessary permits
• Siemens, its turbine supplier,

pp expressed interest in financing the project

• Still need a buyer for 50% of

G hi t f Wiki di

energy

Graphic courtesy of Wikipedia, http://en.wikipedia.org/wiki/Cape_Wind

• Significant legal appeals by multiple parties

Alli t P t t N t k t S d

• Alliance to Protect Nantucket Sound
• Associated Industries of MA
• Martha’s Vineyard/Dukes County Fishermen’s Association
• New England Power Generators

Diamond 63

• New England Power Generators
• Wampanoag Tribe of Gayhead/ Aquinnah
• Town of Barnstable

Example – Benefits of Extensive Public Outreach NRG Bl t Wi d’ Mid Atl ti Wi d P k DE NRG Bluewater Wind’s Mid‐Atlantic Wind Park, DE

• Law Signed in April 2006, Amending Electric Restructuring Act of 1999
• Includes provisions designed to stabilize electricity pricing for

Includes provisions designed to stabilize electricity pricing for consumers during the long and short terms

• The Act provides for contracting with Delmarva Power through a

request for proposals (“RFP”) process to build cost‐effective energy generation

• Delmarva Power Issued an RFP for New Power Plant, November 2006
• Bluewater Wind submits a proposal
• Four (4) state agencies evaluate the proposal
• Delaware Public Service Commission (“PSC”)
• Delaware Energy Office
• Office of Management and Budget
• Office of Management and Budget
• Controller General’s Office
• Bluewater Wind is directed to negotiate a PPA with Delmarva

Power by the PSC and other state agencies

Diamond 64

Power by the PSC and other state agencies

• PPA is signed; approval received from PSC in June and July 2008

NRG Bluewater’s Mid‐Atlantic Wind Park in D l Delaware

• Massive Amounts of Public Outreach

R l d i i bli

• Resulted in unanimous public support
• Location and Size
• 13 miles off the Delaware coast
• Will initially generate 200MW
• Will have a potential expanded size of 450 MW

Will have a potential expanded size of 450 MW

• Secured the nation’s first offshore PPA in August 2010

Diamond 65

Wind Energy Areas (“WEAs”)

S t f th I t i K

• Secretary of the Interior, Ken

Salazar, Identified Wind Energy Areas (“WEAs”) on the Outer Continental Shelf along the Atlantic Continental Shelf, along the Atlantic Coast, stretching from New Jersey to Virginia

• Theses designations are part of

Theses designations are part of The Department of Interior’s Smart from the Start plan announced in November 2010. For the designated areas, coordinated environmental studies, large‐scale planning and expedited approval processes will be used to speed

• ffshore wind energy development.
• The areas are of the coasts of NJ (417

ti l il ) DE (122) MD

Diamond 66 Map courtesy of the Department of Interior, http://www.doi.gov/news/pressreleases/upload/mid_atl_wea_02‐03‐11.pdf

square nautical miles), DE (122), MD (207), and VA (165)

Maryland – On the Cusp of Passing Offshore Wi d L i l i Wind Legislation

• Governor Martin O’Malley
• Governor Martin O Malley
• Staunch supporter of offshore wind development
• Has challenged the federal government to work

with him to build over 1 GW of offshore wind in the Mid‐Atlantic Region

• Strong proponent of MD’s H.B. 1054 and S.B. 861

Picture courtesy of Wikipedia, http://en.wikipedia.org/wiki/File:Flag_of_ Maryland.svg

• MD H.B. 1054 and S.B. 861 – Maryland Offshore Wind Energy Act
• Introduced in February 2011
• Would require the development of 400 MW – 600 MW of offshore wind capacity

l M l d’

y g

along Maryland’s coast

• Would require the Maryland Public Service Commission to order certain MD

utilities to enter into long‐term PPAs

• In October 2011, Maryland General Assembly’s house Economic Matters

Diamond 67

, y y Committee discussed how to kick‐start the development of a wind farm off of Maryland’s coast (500 MW project would power 80% of Eastern Shore homes)

Virginia – Where Legislation Will Follow the S l Ch i f Off h Wi d D l Supply Chain for Offshore Wind Development

• Offshore Wind Progress in Advance of Law

b h l l b l d

• Feb. 2011 ‐ Gamesa Technology Corp., a global wind

energy leader, and the shipbuilding operations of Northrop Grumman Corp., the largest U.S. shipbuilder launched the National Offshore Wind Technology launched the National Offshore Wind Technology Center in Hampton Roads, VA to jointly develop

• ffshore wind systems to be deployed in the United

States and around the world.

Graphic courtesy of WorldAtlas.com, http://www.worldatlas.com/webimage/count rys/namerica/usstates/lgcolor/hamptonroads.

• Gamesa/Northrop Grumman Project Supported by
• Virginia Governor Bob McDonnell
• Commonwealth of Virginia

rys/namerica/usstates/lgcolor/hamptonroads. htm

g

• Goal to be Energy Capital of the East Coast for the

Offshore Wind Industry

Diamond 68

Virginia – Passage of Several Laws Supporting Off h Wi d D l Offshore Wind Development

• Law Creating Virginia Offshore Wind Development Authority
• Virginia House and Senate vote unanimously to pass HB 389 and SB 577

g y p

• April 2011 ‐ Governor Bob McDonnell signs the bills into law
• The Authority has the Ability to:
• Create public/private partnerships for data collection and

infrastructure upgrades infrastructure upgrades

• Apply for federal loan guarantees
• Take state‐level actions to facilitate the offshore wind industry’s

growth

• Law Increasing Weight of Offshore Wind Energy Renewable Energy Credit
• Virginia House and Senate vote unanimously to pass HB 1022
• April 2011 ‐ Governor Bob McDonnell signs this bill into law
• Main Feature of this Law:
• Main Feature of this Law:
• Increases the renewable energy credit for offshore wind energy to

meet Virginia’s RPS

• Credits for offshore wind are worth triple the standard

Diamond 69

amount; previously, all solar and wind credits were worth double the amount of credits as other renewables

Conclusions Conclusions

• Offshore wind demonstration projects along the upper East Coast and

actual large wind farm projects in the Gulf of Mexico are being sited in state, rather than federal, waters to expedite the permitting process and get steel in the water.

• Certain states (such as RI NJ and VA) have enacted laws specifically
• Certain states (such as RI, NJ, and VA) have enacted laws specifically

geared to promote the development of an offshore wind industry.

• Having the support of the Governor from a particular state is a key factor

in the implementation of legislative and other measures in that state that support offshore wind power development.

• Consensus building and public buy in at an early stage is crucial for
• Consensus building and public buy‐in at an early stage is crucial for

proactively minimizing opposition to offshore wind farm development.

Diamond 70

Thank You Thank You

Kim Diamond

kdi d@l i kdiamond@lowenstein.com (646) 414‐6980 (646) 414 6980

Diamond 71