DOI announced this week it will hold America’s second-ever
competitive lease sale for offshore wind on the US Outer Continental Shelf
(OCS) September 4th, for 112,800 acres in a prime development zone 23.5 miles
from Virginia Beach.
The announcement comes one week before DOI’s first
competitive offshore wind lease auction is held for 164,750 acres for
development off the coasts of Massachusetts and Rhode Island on July 31st, an
event Interior Secretary Jewell has said could set the pace for future
auctions.
2 GW Offshore Wind Potential Up For Auction
Unlike the New England auction, the Virginia offshore wind
area will be offered as a single lease, to eight qualified bidders. DOI
predicts the area, composed of 19 full- and 13 sub-OCS blocks, has the
potential to generate more than 2,000 megawatts (MW) of renewable electricity –
enough to power 700,000 homes.
“The competitive lease sale offshore Virginia will mark an
important transition from planning to action when it comes to capturing the
enormous clean energy potential offered by Atlantic wind,” said Secretary
Jewell. “Responsible commercial wind energy development has the potential to
create jobs, increase our energy security, and strengthen our nation’s
competitiveness.”
America’s coastal waters hold enormous wind energy potential – roughly 1,300
gigawatts (GW), according to a 2012 estimate. Even harnessing a realistic
fraction of this potential could generate 52GW of clean electricity, while
creating 300,000 green jobs and $200 billion in economic activity.
“Smart From The Start” Approach May Speed Development But while the potential
for offshore wind is massive, development has been held back by concerns over
local aesthetics, environmental impacts, and economic realities.
DOI’s newest push, however, could finally calm the rough waters that have
swamped proposed projects like Cape Wind. DOI’s efforts are part of President
Barack Obama’s challenge to the agency to approve an additional 10,000MW of
renewable energy production on public lands and waters by 2020. Using this
“Smart from the Start” approach to stakeholder involvement, DOI hopes to
expedite responsible development of commercial-scale wind energy off America’s
coastline.
This auction block was selected through a coordinated
process with Virginia’s government and environmental stakeholders to minimize
ecological and local concerns. Consultations included multiple federal laws
like the Endangered Species Act and Coastal Zone Management Act.
As a result, the 112,800 acres avoid sensitive habitat along the Chesapeake
Bay, military training areas, marine vessel traffic, a dredge disposal site,
and areas of concern specified by NASA’s Goddard Space Flight Center.
Business Concerns Still Loom Large Anticipating environmental and local
concerns is great and all, but the journey from DOI’s auction to generating
clean electricity will be driven by business concerns – and those concerns are
real.
Eight companies have expressed interest in the auction, and been deemed
eligible to participate, including some of the world’s biggest and most
experiences wind developers like Iberdrola and EDF Renewables. But potential
development could be swamped if Virginia’s state utility, Dominion Virginia
Power, wins the auction.
Environmentalists have raised concerns that if Dominion is awarded the lease
rights, it might “drag its feet” to develop the area in light of existing
investments in natural gas generation and nuclear power (full disclosure – I am
a Dominion residential electricity customer).
In addition, because Virginia does not maintain a competitive electricity
market, other developers may face difficulties in securing power purchase
agreements for their Virginia offshore wind turbines. Without access to the
local market, developers may have to look for customers in electricity markets
in other states or wait until the Atlantic Wind Connection is complete.
Can America Keep Up In The Offshore Wind Race?
Regardless of Dominion’s involvement, the larger message is clear – DOI is
setting sail for the future of America’s offshore wind industry and joining
other US efforts to go from potential to reality.
There are approximately zero utility-scale offshore wind projects being built
in the US, and we’re rapidly losing the opportunity to lead in a market
estimated to be worth around $170 million by 2020.
If DOI’s first two lease auctions go well, we may see many more approved in the
near future, and America might finally be on its way to catching up to our
European competitors and keeping pace with the growing Asian market.
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