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BEST MANAGEMENT PRACTICES FOR DEVELOPING OFFSHORE WIND ENERGY:
A Guide for U.S. Policy Makers
Prepared by: Hannah Derrick Imani Dorsey Jeannie McKinney Leah Louis-Prescott Genevieve Valladao Nikila Vasudevan Faculty Advisors: Dr. Lori Bennear Dr. Jay Golden April 2017
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HOW TO CITE THIS REPORT
Derrick, H., Dorsey, I., McKinney, J., Louis-Prescott, L., Valladao, G., Vasudevan, N., Bennear,
L. and J.S. Golden (2017). Best Management Practices for Developing Offshore Wind Energy:
A Guide for U.S. Policy Makers. A Report of Duke University. Durham, North Carolina, USA.
To Contact Authors:
[email protected] ABOUT THE AUTHORS
Hannah Derrick is a senior at Duke University studying Environmental Science. She is interested in
energy policy and corporate sustainability. Upon graduation in May 2017, she plans on pursuing a career
in environmental policy.
Imani Dorsey is a junior at Duke University studying Environmental Science and Policy with a
concentration in marine science and conservation and a certificate in Energy and the Environment. After
she graduates, she plans to attend law school and pursue environmental law.
Jeannie McKinney is a second-year Masters of Public Policy candidate at Duke University's Sanford
School of Public Policy. She is working on energy and climate change policy as part of her MPP degree,
and she will also earn a certificate in international development policy upon graduation in May 2017.
Prior to attending Duke University, Jeannie worked on U.S. energy and utility policy as the
Communications Manager for the Southern Alliance for Clean Energy.
Leah Louis-Prescott is a first-year Master of Environmental Management candidate at Duke
University’s Nicholas School of the Environment. She studies Energy & Environment and is passionate
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about securing a low-carbon future through clean energy solutions. When she graduates in May 2018, she
will pursue a career in renewable energy development.
Genevieve Valladao is a third-year undergraduate studying Biology and Earth & Ocean Science. She
plans to pursue a career in conservation biology following graduation.
Nikila Vasudevan is a junior at Duke University studying Biomedical Engineering with a Linguistics
minor. She is interested in intersections of policy and engineering and plans to pursue a Master’s in
Engineering Management, pursuing a career within the biotechnology industry.
Dr. Lori Bennear is an Associate Professor of Environmental Economics and Policy at the Nicholas
School of the Environment, Duke University and is the Associate Director of Energy Education and
Faculty Lead in Bass Connections in Energy for the Duke University Energy Initiative.
Dr. Jay Golden is the faculty chair of the Business and Environment Program at Duke University. He is
an Associate Professor of the Practice for Sustainable Systems Analysis with a primary appointment in
the Division of Earth and Ocean Sciences at the Nicholas School of the Environment and a secondary
appointment in Civil and Environmental Engineering at Duke University. Dr. Golden is the Director of
the Duke Center for Sustainability and Commerce.
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EXECUTIVE SUMMARY
According to the National Offshore Wind Strategy Report published by the U.S.
Department of Energy (DOE) in September of last year, offshore wind potential is almost double
the nation’s current electricity consumption (2016). Even though U.S. experience with offshore
wind has been limited thus far, the climate for offshore wind in the United States is changing and
becoming increasingly favorable (DOE, 2016). While the Bureau of Ocean Energy Management
(BOEM) oversees permits and regulations regarding offshore wind in federal waters, states have
a critical role in promoting and facilitating offshore wind projects. Under various policy
incentives including the Renewable Portfolio Standard (RPS), states have the power to actively
pursue offshore wind as a viable energy source and market. However, offshore wind
implementation is incredibly intricate, complex, and time-consuming.
In this report we outline the major components of the offshore implementation process
and highlight the subsequent management practices that could diminish potential barriers while
producing timely results. We begin by outlining the process for assessing offshore wind potential
at the state level. Economic viability, policy incentives, public interest, and environmental
impacts are discussed. In Section 2 we outline stakeholder concerns and ways to involve and
engage representatives from various interest groups. The third section lays out the permitting
process and the final legal and regulatory steps that must be taken before construction can begin.
We conclude this report with a case study on North Carolina, highlighting the issues a state
might face and applying our recommended best management practices.
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TABLE OF CONTENTS
EXECUTIVE SUMMARY .......................................................................................................... 4
TABLE OF CONTENTS ............................................................................................................. 5 LIST OF TABLES ........................................................................................................................ 6
LIST OF FIGURES ...................................................................................................................... 6 LIST OF APPENDICES .............................................................................................................. 6
LIST OF ACRONYMS ................................................................................................................ 7 INTRODUCTION ........................................................................................................................ 9
1. ASSESSING OFFSHORE WIND POTENTIAL IN EACH STATE ................................ 15 Is it financially achievable? ...................................................................................................................16 Are there policy incentives in place? ...................................................................................................20 Does it have the support of the public? ...............................................................................................24 Is it environmentally achievable? .........................................................................................................30
2. CREATING A COMMISSION OF STAKEHOLDERS .................................................... 34 Federal Government .............................................................................................................................35 State Government ..................................................................................................................................38 Financial Investors ................................................................................................................................40 Manufacturers .......................................................................................................................................43 Utilities ....................................................................................................................................................44 Local Economy .......................................................................................................................................45 Other Stakeholders ................................................................................................................................48 Public Opinion .......................................................................................................................................50 Case Study: The Maryland Offshore Energy Act (MOEA) ..............................................................50
3. PERMITTING AND IMPLEMENTATION ....................................................................... 52 4. POSSIBILITIES IN NORTH CAROLINA ......................................................................... 55
CONCLUSION AND FUTURE STEPS ................................................................................... 58 REFERENCES ............................................................................................................................ 61
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LIST OF TABLES
Table 1 .......................................................................................................................................... 20
Table 2 .......................................................................................................................................... 24 Table 3 .......................................................................................................................................... 29
Table 4 .......................................................................................................................................... 33 Table 5 .......................................................................................................................................... 52
LIST OF FIGURES
Figure 1 ........................................................................................................................................ 10 Figure 2 ........................................................................................................................................ 15
Figure 3 ........................................................................................................................................ 34 Figure 4 ........................................................................................................................................ 35
Figure 5 ........................................................................................................................................ 37
LIST OF APPENDICES
Appendix A .................................................................................................................................. 73
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LIST OF ACRONYMS
AWEA American Wind Energy Association
BOEM Bureau of Ocean Management
DOD Department of Defense
DOE Department of Energy
DOI Department of the Interior
EIS Environmental Impact Statement
EPA Environmental Protection Agency
EPAct Energy Policy Act
FERC Federal Energy Regulatory Commission
GW Gigawatt
GWEC Global Wind Energy Council
IMPLAN Economic Impact Analysis for Planning
IRENA International Renewable Energy Agency
ITC Investment Tax Credit
kW Kilowatt
LCOE Levelized Cost of Electricity
MOEA Maryland Offshore Energy Act
MW Megawatt
NEPA National Environmental Policy Act
NIMBY "Not in my backyard"
NOAA National Oceanic and Atmospheric Administration
NOWS National Offshore Wind Strategy
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NREL National Renewable Energy Laboratory
O&M Operations and maintenance
OCS Outer Continental Shelf
OREC Offshore Renewable Energy Credit
PPA Power Purchase Agreement
PTC Production Tax Credit
REC Renewable Energy Certificate
RPS Renewable Portfolio Standard
TSA Turbine Supply Agreement
WEA Wind Energy Area
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INTRODUCTION
According to the Department of Energy (DOE), the United States has significant offshore
wind resources. The technology already exists today for the U.S. to access a technical potential
of 2,058 gigawatts (GW) of offshore wind in national waters, and the interest in investing in and
developing this energy source is growing, both in the public and private sectors. (DOE, 2016).
Offshore wind could provide almost twice the total electricity generation that the U.S. needed in
2015. Development of these resources is also on the rise, largely financed by the private sector.
In 2015, the Department of the Interior awarded eleven commercial leases to various developers
around the country for offshore wind energy projects (DOE, 2016). In 2016, the nation's first
offshore wind farm, with 30 MW of generation capacity, became commercially active off the
coast of Block Island, Rhode Island (Deepwater Wind, 2017).
To capitalize on the increased interest in offshore wind energy, several states including
Maryland, New York, and Rhode Island, have passed legislation that requires the addition of
offshore wind to their respective energy portfolios (DOE, 2016). Encouraged by these policies,
many companies are eager to join the market. For instance, while North Carolina has not
developed specific policies to support offshore wind, there are large areas for potential offshore
energy development designated by the Bureau of Ocean Management (BOEM), as seen in Figure
1 below. This past March, nine developers, including Outer Banks Ocean Energy, LLC and
Statoil, bid for a DOI commercial lease of over 122,000 acres off the coast of North Carolina,
which Avangrid Renewables, LLC successfully won (Moriarty, 2017).
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Figure 1. Map depicting potential areas off the coast of North Carolina for offshore wind
development. Source: BOEM
America has increased its onshore wind capacity more than sevenfold in the past decade
(AWEA, 2017). However, the nation is only just beginning tap into its offshore wind potential.
Because of the nature of their location, offshore wind turbines can be comparatively more
efficient than onshore wind turbines. Higher wind speeds, larger amounts of ocean space, and
more favorable sediment allow offshore wind turbines to be much bigger than onshore ones. An
offshore wind turbine has the potential to be nearly 600 feet tall with 240 feet long blades, while
an onshore wind turbine is 260 to 390 feet tall on average (Evans, 2015). With a larger size,
Nags Head
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offshore wind turbines can generate more power. For instance, each of the five General Electric
turbines off the coast of Block Island have the potential to generate up to 30 MW of electricity,
compared to about 1.5 MW for a typical onshore wind turbine (Deepwater Wind, 2017). In 2016,
the U.S. had an installed onshore wind capacity of 82,183 MW of electric generation (AWEA,
2017). In comparison, with the eleven development projects alone, offshore wind has the
potential to generate 14,500 MW (14.5 GW) of electricity (DOE, 2016).
Notably, offshore wind farms are much closer to densely populated areas in comparison
to onshore wind farms. According to the National Oceanic and Atmospheric Administration
(NOAA), 39% of the American population resides in counties immediately on the shore (2013).
Furthermore, the 2016 National Offshore Wind Strategy reports that approximately 80% of the
country's electricity is allocated to population centers near the coast (DOE, 2016). The Census
Bureau also believes coastal populations and their subsequent energy demands will only increase
in the coming years; 134 million Americans are expected to inhabit coastal towns by 2020, an
increase of 11 million from the 2013 coastal population (NOAA, 2013). As power plants in these
locations begin to retire, offshore wind provides a renewable alternative with abundant technical
potential to serve this increasing demand. Because onshore wind speeds are incongruent with the
locations of large populations, they require long transmission lines and more infrastructure to
reach the customers they intend to serve. While offshore wind will require new infrastructure to
connect to the national grid, offshore wind's congruency with the locations of densely populated
coastal areas will help decrease transmission lines and corresponding transmission losses as well
as infrastructure costs.
Europe’s progress is in offshore wind develop continues to far surpass the rest of the
world. Under the Renewable Energy Directive, the European Union requires 20% of all energy
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generated to come from renewable sources by 2020 (Wind Europe, 2017). The implementation
of several region-wide policies to promote the use and development of renewable energy
resources, including offshore wind, proves the region’s dedication to harnessing renewable
energy’s technical potential. Offshore wind currently generates approximately 8.2% of Europe's
electricity (Wind Europe, 2017). In 2016, Europe's total installed capacity for offshore wind was
12,631 MW, originating from 3,589 grid-connected turbines in ten countries (Wind Europe,
2017). The European Wind Association (now known as Wind Europe) believes wind will also
account for 15% to 18% of electricity consumption by 2020 (Wind Europe, 2017). The European
Union's policies to promote clean energy, and wind energy in particular, have allowed the
offshore wind market to flourish.
However, the United States has a more limited history with offshore wind. The first
proposed offshore wind project in the U.S. was the Cape Wind Project, a 130 turbine offshore
wind farm to be located in the Nantucket Sound. The facility was proposed in 2001, but was
never successfully executed (FAQs: Cape Wind Basics, n.d.). When the proposal for the Cape
Wind project was announced, opponents immediately came together to form the Alliance to
Protect Nantucket Sound. The Alliance consisted of fishermen, wealthy home owners,
environmentalists, native tribes, area merchants, and more. The opposition did not approve of a
private developer constructing such a facility in a public space that would obstruct the view of
Nantucket Sound's horizon. They raised $2 million in the first fourteen months following the
proposal of the project (Lazer, 2012). In addition to the Alliance, many influential public figures
with ties to the Nantucket Sound voiced their opposition, including the late Massachusetts
senator Ted Kennedy and his nephew Robert F. Kennedy Jr., the founder of the environmental
group Riverkeeper. Former news anchor Walter Cronkite, who owned a house on Martha's
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Vineyard, even appeared in television advertisements commissioned by the Alliance. The Cape
Wind project faced large amounts of push back from the fishing industry who believed the wind
farm would devastate their industry, the Federal Avian Administration who thought the project
would interrupt air-traffic control radar systems, and the Mashpee and Aquinnah Wampanoag
tribes who worried that the turbines would obstruct their view of the horizon and the construction
would disrupt scared burial sites. This strong opposition to the Cape Wind project by so many
different groups eventually led to its collapse (Lazer, 2012).
In contrast, the Block Island wind farm, a five turbine project off the coast of Rhode
Island proposed in 2008, was successfully implemented. Block Island became operational in
December of 2016 but the project was not completed without opposition. In the late stages of the
project, the Narragansett Indian Tribe filed a complaint against the National Grid that they had
not been properly notified about artifacts that were discovered during construction of the
transmission cable but the motion was ultimately denied (Kuffner, 2016). Additionally, Block
Island fishermen were initially worried about how construction of the wind farm would impact
fish populations in the area (Espinoza, 2016).
However, Block Island also had an advantage that helped them gain public support that
the Cape Wind project did not have: Excessive electricity costs. Block Island is not connected to
Rhode Island’s electric grid and is powered by diesel imported from the mainland, which
resulted in some of the highest electricity prices per kWh in the United States (Krasner, 1998).
The promise of decreased electricity bills from the offshore wind farm contributed to a more
favorable public opinion than that of the Cape Wind project. Additionally, Deepwater Wind, the
developer responsible for the Block Island offshore wind farm, utilized local professionals and
experts to include the local community in the project. For example, to gain support of the fishing
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industry the Block Island project performed fishing surveys around the area of the wind farm
with help from local commercial fishermen (Espinoza, 2016). Lastly, with only five turbines
compared to the 130 proposed for the Cape Wind project, the small size of the Block Island
project likely simplified the process of getting the wind farm up and running.
While offshore wind has the potential to grow at the state level, we believe state policy
makers currently lack sufficient information to effectively explore and subsequently pursue
implementation within a shorter timeframe. There are noted barriers to offshore wind
implementation (e.g. cost, stakeholder interests, the permitting process) that will arise in this
process and will need to be addressed. This report strives to be an applicable document that any
state policy maker can use to pursue an offshore wind farm while avoiding common barriers that
prevent the project's implementation. Overall, we hope our suggested management practices
reduce the time it takes to build an offshore wind farm and improve the efficiency of the energy
source and viability of the market as a whole.
In this report we will outline the major components of the offshore implementation
process and highlight the subsequent management practices that could diminish potential barriers
while producing timely results. We begin by outlining the process for assessing offshore wind
potential at the state level. Economic viability, policy incentives, public interest, and
environmental impacts are discussed. In Section 2 we outline stakeholder concerns and ways to
involve and engage representatives from various interest groups. The third section lays out the
permitting process and the final legal and regulatory steps that must be taken before construction
can begin. We conclude this report with a case study on North Carolina, highlighting the issues a
state might face and applying our recommended best management practices.
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1. ASSESSING OFFSHORE WIND POTENTIAL IN EACH STATE
Offshore wind potential in the United States is abundant. The highest wind speeds are
located in the Northeast and in Northern California, conveniently located near major population
centers in New York, Boston, and San Francisco. The success of an offshore wind project
depends upon a variety of factors including economic viability. For instance, states must first
consider the viability and dependability of the wind resource itself. The technical wind potential
for the U.S. is over twice the amount of electricity consumed today (DOE, 2016). Figure 2 below
reports wind speeds across the nation's coasts at about 100 meters above the surface (NREL,
2016). While other factors, such as ocean depth, are considered to determine technical potential,
extreme wind speeds off the coast of northern California, Oregon, and the Northeastern states are
a strong first indicator of potential development areas.
Figure 2. Map depicting offshore wind speeds (100 m above service) off the U.S coasts
Source: NREL
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Opportunities to develop offshore wind must also exist where there are identifiable
locations in either state or federal waters where construction and implementation can occur.
While states each have their own siting process, BOEM has implemented its own solutions for
the siting process in federal waters, which we will further outline in Section 3 (DOE, 2016).
Section 1 of this report discusses the several different ways to assess offshore wind
potential within a state. When developing an offshore wind farm, policymakers and subsequently
developers must assess the finances required, the policy incentives in place, public interest, and
whether the project is environmentally achievable. Each of these factors contribute to the overall
benefit an offshore wind farm can bring to a state and whether it makes sense for a state to
pursue offshore wind to begin with.
Is it financially achievable? Offshore wind projects in the United States have little precedent, and thus are relatively
expensive in comparison to other energy sources. Since wind power is a renewable source, it is
capital-intensive but has no fuel costs. With low fossil fuel prices, wind energy has not been
competitive with other traditional forms of energy (Ragheb, 2015). With all known costs
considered for each source, the levelized cost of energy (LCOE) of coal is $38.4 per MWh and
of nuclear is $29.6 per MWh, while the LCOE of new wind resources is $112.8 per MWh, on
average (Stacy & Taylor, 2015). However, offshore wind energy capital costs have steadily
declined to about $1600/kW (compared to $1000/kW for land-based wind), and the cost of
generating electricity from wind systems has dropped by more than 80 percent since the 1990s,
making it increasingly competitive (Ragheb, 2015). The key elements driving the cost of wind
power are capital expenditures, operating expenditures, and the market climate. When deciding if
an offshore wind farm is economically viable, each of these factors must be considered.
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Capital Expenditures/Installed Capital Cost. Capital expenditure is expenditure with
benefits lasting at least one year. It is generally referred to as the costs associated with building
and installing a wind farm (Levitt et al, 2011). NREL estimates this to cost between $4500 and
$6500 per kW for an offshore wind farm, and $1400 and $2900 per kW for an onshore wind
farm (Baring-Gould 2014). The capital expenditure or installed capital cost (ICC) of a wind farm
is largely made up of the upfront capital cost, with the wind turbine being the single largest cost
component of the ICC (IRENA, 2012), estimated to be approximately 32% of total costs
(Baring-Gould 2014). Wind turbine prices appear to have peaked in 2009 and have dropped due
to increasingly efficient technology, increased competition between manufacturers, and lower
commodity prices for steel, copper, and cement (IRENA, 2012).
A wide variation in turbine prices exists because of differences in cost structures between
local markets. Consequently, the United States has one of the lowest prices for wind turbines of
developed countries (IRENA, 2012). This is largely due to the differences in countries between
labor costs, competition, and bargaining power of market actors (IRENA, 2012). Data on turbine
prices typically comes from turbine supply agreements (TSAs), which are contracts between a
supplier and a buyer that negotiate the supplying and installation of a turbine (London et al,
2012). TSA prices can vary based on order size, warranty period, and availability guarantees, as
well as machine attributes such as turbine ratings and drivetrain topology. Suppliers may also
lower prices if they are looking to gain market share (Moné et al 2014).
Aside from the turbine, capital costs include civil works costs, such as material and labor,
grid connection costs, and project consultancy (IRENA, 2012). Civil works costs are also
comprised of the costs for site preparation as well as the foundations for the towers. Grid
connection costs include costs associated with the transformers, substations, and connections to
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the local distribution or transmission framework (IRENA, 2012). The magnitude of the capital
cost is driven by several factors: the marine environment (water depth, distance to shore, soil
conditions, wave climate), wind resources, project size, and supply chain (Baring-Gould, 2014).
Operating Expenditures. Operating expenditures include administrative costs,
operations and maintenance costs, insurance, taxes, and payments for rent, royalties, and rights
of way (Levitt et al., 2011). Annual operating expenses are estimated by NREL to be between
$15 and $55 per MWh over a lifetime of 20 to 30 years, while onshore wind costs between $9
and $18 per MWh over the same time span (Baring-Gould, 2014). The operating costs
encompass costs of labor, vessels, equipment, scheduled maintenance, unscheduled maintenance,
land-based support, and project administration, and typically make up 20% to 25% of the total
LCOE of wind farms (Smith, Stehly, & Musial, 2015). Although data on operations and
maintenance costs are not widely available, annual average costs have been declining in the last
30 years (IRENA, 2012). When considering an offshore wind farm it is important to remember
that operations and maintenance costs are not evenly distributed over the lifetime of a wind farm.
This factor contributes to higher costs. Offshore wind farms have significantly higher operations
and maintenance costs than onshore farms due to harsh marine environments and higher
expected failure rates for certain turbine components (IRENA, 2012).
Financial Market and Power Purchase Agreements. The US wind industry gets the
majority of its funding from project finance markets in particularly two types of investment: tax
equity and project debt. In tax equity, the industry recruits private capital from investors with
large federal tax obligations. These investors make an equity investment in a wind project after
assessing it in the late stages of development based on projected cash flows and expected output
to generate production tax credits (PTCs), commit to deals once they have sufficient detail on the
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project, and close the deal at the end of construction (AWEA, 2017). Project debt transactions
are often coordinated with construction lending used to pay for the contractor and focus on debt
service coverage, which measures how free cash flows from project operations (AWEA, 2017).
Currently, financers involved in the US offshore wind industry include Export Bank of Denmark,
KeyBank National Association, Natixis, PensionDanmark, Rabobank, Societe Generale, and
Tokyo-Mitsubishi UFJ (Wind Energy Update, 2016). The United States’ first offshore wind farm
at Block Island received over $290 million in project financing from Societe Generale of Paris
and KeyBank National Association of Ohio, as well as over $70 million in equity funding from
the owners of Deepwater Wind (Wind Energy Update, 2016). Investing in offshore wind projects,
however, is still a risky business, considering only one U.S offshore wind farm is currently in
operation.
Power Purchase Agreements (PPA) can reduce these perceived risks by ensuring stable
and long-term revenue streams (Wind Energy Update, 2016; Heibel & Durkay, 2015). A PPA is
a contract between the owners of the power generation facility, such as a wind farm, and long-
term purchasers of the power generated. While companies utilize transaction types other than
PPAs to obtain renewable energy, commercial and industrial customers are increasingly entering
into PPAs to directly purchase renewable energy (ACORE, 2016). PPAs specify the time frame,
location, and voltage level for delivery when the owner of a wind farm sells the electricity
produced (EWEA, 2009). PPAs are typically regulated by the Federal Energy Regulatory
Commission (FERC), but states are also involved in the regulatory process of PPAs through
agency rule-making and legislative action, with a majority of states having statutes mentioning
PPAs (Heibel & Durkay, 2015). Nevertheless, PPAs (and any amendments made to them after
signing) require regulatory approval in order to be signed to ensure that the terms of the
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agreement are fair to all parties (ESMAP, 2008). The PPA between Deepwater Wind and
National Grid for the Block Island Wind Farm demonstrates that a clear statement of political
support from the state government can be extremely helpful in receiving regulatory approval, as
approval of the PPA only occurred after legislatures recognized offshore wind’s merits
(Christopher & Mullooly, 2010). Under the Block Island PPA, National Grid agreed to purchase
all of the electricity generated by the farm as well as all associated renewable energy certificates
(RECs) and other environmental attributes for 20 years of commercial operation (Christopher &
Mullooly, 2010). Thus, detailed knowledge of all risks associated with project development and
state support are fundamental in ensuring investment for an offshore wind project.
Table 1. Points to Remember for Offshore Wind Finances
The operations and maintenance costs for an offshore wind farm are not evenly distributed
over the wind farm’s lifetime, and this factor can contribute to higher costs.
PPAs help reduce investing risks for offshore wind farms and political support oftentimes
helps these agreements come to fruition.
The high costs of an offshore wind farm must be compared to the benefits of offshore wind
to assess the energy source’s overall viability within a state.
Are there policy incentives in place?
While PPAs reduce volatility and uncertainty, the current high capital costs and lack of
economies of scale continue to make offshore wind seem like a risky investment. However,
policy incentives are being used to make offshore wind more economically viable. These policy
incentives include tax credits, renewable portfolio standards, and renewable energy certificates.
Tax Credits. Tax incentives have been a major driver of renewable energy adoption in
the United States. Wind energy, in particular, benefits from the enactment of the renewable
electricity production tax credit (PTC) and the investment tax credit (ITC).
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The PTC became law as part of the Energy Policy Act of 1992. Wind facilities may file
for the PTC under the Energy Policy Act of 1992. The PTC provides an inflation-adjusted tax
credit based on the electricity output produced by designated renewable energy sources (DOE:
“Renewable Electricity Production Tax Credit”). In 2016, wind facilities could receive a tax
credit of $0.023/kWh over a ten-year duration, if they were constructed prior to December 31,
2016. After that date, the PTC amount for wind facilities drops 20% for each subsequent year
through 2019 when the tax credit expires.
In some cases, wind facilities can substitute the PTC for an ITC. Under the American
Recovery and Reinvestment Act of 2009, the ITC provides an upfront credit of 30% of
expenditures for any wind project that was constructed before January 1, 2015 (Fox, 2015).
However, wind producers must choose between the ITC or the PTC, as they are not eligible to
receive both tax incentives.
Project finance markets illustrate how industries have been moving toward the PTC; in
2012, 52 percent of tax equity dollars were loaned overall, with 82 percent of tax equity dollars
going to projects using PTCs (AWEA, 2017). While onshore wind developers tend to favor the
PTC, the ITC may be more advantageous for offshore wind. The economic benefit of a PTC is
based in electricity generation. Since offshore wind development is nascent in the U.S., using
newer technologies in undeveloped places leads to greater uncertainty regarding an offshore
wind project's projected generation (Fox, 2015). Offshore wind development takes longer than
onshore, so the PTC may be less attractive for offshore developers due to its ten-year time
constraint and unpredictable generating capacity (Fox, 2015).
Both the PTC and ITC have created economic incentive to pursue renewable energy,
enabling the expansion of wind energy in the United States. Thanks in large part to these tax
22
incentives, installed domestic wind capacity for onshore wind grew from 16,700 MW to over
69,000 MW between 2008-2015 (AWEA, 2015). These tax incentives are currently set to expire
in 2019. While they have been extended in the years past, their future remains unclear.
Continued legislative financial support will be critical for the future development of offshore
wind in the United States.
Renewable Portfolio Standards. Many states have already adopted a renewable
portfolio standard (RPS), which is one example of a policy driver that can incentivize offshore
wind development. An RPS is an optional state government mandate that encourages or requires
utilities to acquire a specified amount of electricity from renewable energy sources (Durkay,
2016). Each RPS outlines the percentage of energy that must be renewable, the year by which the
goal must be met, and the energy sources that count toward the RPS. Presently, 29 states and the
District of Columbia have adopted an RPS. Of the 30 existing RPS mandates, eight are explicitly
voluntary, meaning utilities are encouraged, but not required, to comply with the state goal
(Durkay, 2016). Each state creates its RPS based on considerations such as its energy mix,
resource availability, and economic and political drivers. Thus, standards vary widely by state,
with Arizona aiming for 15% by 2025, while Hawaii works toward 100% renewable energy by
2045 (Durkay, 2016).
In order to promote the adoption of specific renewable energy sources, some states will
include credit multipliers or carve-outs in their RPS (NREL, 2015). A credit multiplier gives
more weight to a certain energy source in meeting the standard, giving it a competitive advantage
over other renewable sources, while a carve out explicitly requires that a designated amount of
energy come from a given source. New Jersey was the first to implement a successful RPS
carve-out for solar, which has led to the installation of over 1 GW of solar capacity in their state
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(State of New Jersey Board of Public Utilities, n.d.). One way to ensure state-level offshore wind
expansion is to include a carve-out for offshore wind in an RPS, which Maine, Maryland, and
New Jersey have already done. Massachusetts took this approach, implementing a carve-out in
2016 for 1600 MW of offshore wind by June 30, 2027 (Wade, 2016), making them a national
leader in offshore wind goals.
Overall, state RPS programs have been successful at increasing the adoption of
renewable energy. Coastal states with an RPS mandate have even greater incentive to explore the
development of offshore wind farms to achieve their renewable energy standards. For instance,
Rhode Island increased its RPS to 40% by 2035, just months before the Block Island offshore
wind farm came online (Kessler, 2016). Since Block Island began operating at the end of 2016,
their wind power has helped Rhode Island get closer to achieving its goal. Similarly, New York
plans to develop 2.4 GW of offshore wind, in order to comply with its RPS of 50% renewable
energy by 2030 (Walton, 2017).
Renewable Energy Certificates. Some state renewable portfolio standards include a
market for renewable energy certificates (RECs). Also known as renewable energy credits, green
tags, or green certificates, RECs are tradable commodities among power market participants that
represent some amount of electricity generated from a renewable source (DOE “RECs”, 2017).
Typically, a REC is distributed when a generator delivers one megawatt-hour of renewable
electricity to the grid (EPA, 2016). RECs can supplement renewable power generation to help
states meet their RPS standards (Hasic, 2011).
Texas was one of the first states to create a market for RECs when its RPS was enacted in
1999 (Center for Energy Economics, 2009). They required all electricity providers to obtain
RECs equivalent to their share of the state’s electricity production. As a result, they achieved
24
their goal of 2000 MW of renewable capacity four years earlier than they had planned, by
increasing their installed wind resources (Center for Energy Economics, 2009).
Similarly, RECs can help promote the development of offshore wind, as seen in the state
of New Jersey. In 2010, New Jersey adopted the Offshore Wind Economic Development Act,
which created Offshore Renewable Energy Credits (ORECs) to promote offshore wind
expansion (Caliguire, 2015). Though New Jersey has yet to install an offshore wind project, their
innovative OREC program serves as an example for other states looking for policy incentives to
develop offshore wind.
Table 2. Points to Remember for Offshore Wind Policy Incentives
While the PTC and ITC have helped advance wind energy in the United States, these
federal tax credits are set to expire in 2019.
A carve-out in a state RPS that requires wind generation is one way to ensure this offshore
energy source's development.
RECs, especially ORECs, are another tool to incentivize electricity providers to pursue
offshore wind resources.
Does it have the support of the public?
It is difficult to establish alternative energy sources at all, let alone develop them in the
quantities necessary to make them viable substitutes for traditional energy sources such as coal,
natural gas, and nuclear (Covert, Greenstone, & Knittel, 2016). A large part of this difficulty
stems from lack of public acceptance and support, and even strong public resistance, to these
projects. Even when the public agrees that renewable energy sources are necessary to reduce
greenhouse gas emissions from fossil-fuel based energy sources, unfamiliarity might lead to
disapproval (Devine-Wright, 2007).
25
Offshore wind is not immune to public skepticism and concern. Backlash against
offshore windfarms does not solely come from deniers of climate change. In the case of the Cape
Wind failure, survey respondents acknowledged that their opposition to the wind farm was
partially out of environmental concern (Firestone et al, 2009). A nuanced view of opposition
suggests that the presentation of an offshore wind farm creates a dilemma for the
environmentally concerned: how is it possible to reconcile the negation of climate change and
harmful environmental impact that clean energy provides, with the establishment of these clean
energy generators right in the middle of nature itself (Bidwell, 2013)? Without a better
understanding of how an offshore wind farm operates and what its impacts are, the atmosphere
for implementation in the United States cannot flourish (DOE, 2016). Understanding the public’s
reasons for opposition partnered with developer transparency and fostering of environmental
stewardship can bolster public opinion and support for offshore wind.
However, individuals oppose offshore wind for a variety of reasons. Common concerns
among the public about offshore wind include environmental concerns such as bird deaths, visual
impacts, location-based value and sentiment attached to the development waters, and doubts
about the positive and tangible benefits offshore wind can bring (Haggett, 2011).
Bird and Bat Deaths. Regarding bird and bat deaths, there has been no strong empirical
evidence supporting the claims that hundreds to thousands of birds or bats would die from
offshore wind turbines. In fact, according to an MIT Technology Review that used infrared
monitoring, seabirds have been shown to avoid the turbines when they do come close to contact
(Fairley, 2007). Studies have been completed in Europe and must be repeated in United States
sites as certain conditions may well be site-specific. However, presenting the lack of evidence of
bird deaths may still be significant in obtaining public support.
26
Visual Impacts. The visual impacts are tied to the symbolic attachment-based value of
the location, where it may not be just the impact of the wind turbine itself but also the symbolic
value of the location which causes the concern (Bidwell, 2013). This theory is called place
attachment, which causes concerns among the population about the “threat to the part of one’s
identity” tied to the land and landscape (Firestone et.al., 2009). Such concerns cannot be
immediately dismissed, as they were in the case of Cape Wind and the community attachment to
the Nantucket Sound, where the Sound was commonly proclaimed as a place of significant
aesthetic, historical, and symbolic value, as well as a prime location for recreational and
commercial ocean traffic. In fact, based on a study done by North Carolina State University,
overbearing visual impacts from turbines close to shore could convince tourists and residents to
move away from the site altogether (Lutzeyer, Phaneuf, & Taylor, 2016).
Doubts of Benefits. The most significant benefits of offshore wind are of course the
cleaner energy and overall improvement in environmental impact compared to fossil fuels. Other
benefits may, depending on the project and the site, include lower costs of energy and economic
benefits for the area. These are what some may call “macro-environmental benefits,” which were
often assumed by developers to be “so compelling that local objections could be disregarded as
parochial and self-serving,” (Kempton et al, 2005). In reality, the locally observed negative
effects must be presented in a way that is designed for the specific community so as to minimize
the impact perceived, because it is true that these negative effects may be what the public
chooses to focus on rather than the less visible positive impacts (Kempton et al, 2005).
Various studies have attempted to define the reasons for either public support or public
opposition to offshore wind farms. Though many of these rely on the experiences in Europe,
some level of these studies’ findings may be transferrable to the United States. Overall, the
27
formation of local and state attitudes to offshore wind development is more nuanced than
conventional wisdom would suggest. It seems easy to conclude that opposition to offshore wind
farm development comes from parties generally opposed to renewable energy sources, or parties
opposed to the establishment of offshore windfarms in their own living space- known as the "Not
In My Backyard" (NIMBY) phenomenon (Haggett, 2010). However, opposition stems from
other factors as well, and the key to creating a structurally sound management practice for the
establishment of offshore wind farms is to acknowledge these deeper factors and understand how
it may be possible to transform the opposition into support (Haggett, 2010).
Despite these commonly heard criticisms, there are several ways that advocates can work
to increase support for wind projects. The best ways to bolster public support for offshore wind
farms lie in two key concepts: transparency and stewardship.
Transparency. Transparency refers to the decision-making process and the strength of
the relationship between the local community and the developer; the entire process that is
embedded with transparency is known as innovative democracy (Mendonca et. al., 2009). The
public prefers to be involved in the processes that may affect their daily lives from the beginning
(Firestone et al, 2009). Approaching the public only after plans have been made tends to result in
a more contentious process than if interests of the public are sought out as part of the first stage
of the development process. Transparency also erodes the challenges of unfamiliarity presented
by the possible construction of an offshore wind farm. Given that few people have experience
with offshore wind, transparent developers are key to assuring misconceptions do not persist. For
instance, Deepwater Wind held several information sessions throughout the project development
timeline at Block Island, especially when conflicts arose, to ensure that the public was informed
about the process (Shuman, 2015).
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Communities may also rely on elected public officials for greater clarity regarding an
offshore wind project, something that was seen in the case of Block Island. Both U.S. Senators
for the State of Rhode Island expressed support for the project, along with detailed viewpoints
about the project (Reed, 2014). Governor Gina Raimondo of R.I. stated that she believed the
wind farm could contribute to the state’s job development and growth (Shuman, 2016b).
Transparency is also referred to as “joint fact finding,” and specific examples from the
Block Island development process support this term (Haggett, 2010). Joint fact finding highlights
the partnership between developer and the local community. In assessment studies in Block
Island, Deepwater Wind has hired stakeholders to be directly involved in processes like
characterizing fish catches (Espinoza, 2016). Such actions may also reduce the perceived barriers
between developers and stakeholders, which may be bolstered by lack of information given to
the public. Holding constructive, informative public forums and information sessions
necessitates that the local community stay engaged, while allowing for an opportunity to change
the minds of the opposition (Firestone, 2009). Constructive public forums did not occur with the
Cape Wind project. At Cape Wind, public forums did nothing more than articulate the same,
stale points between deadlocked parties (Eldred, 2007).
There was little headway made at Cape Wind, because the concerns of many parties were
overlooked or ignored. But, in surveys taken by various groups, support for Deepwater’s project
was never unanimous. There was a shift in support over time. In 2011, roughly half the
population opposed offshore wind and half supported it. By 2013, only 38% of the population
opposed the Block Island project compared to the 53% who supported it (The Block Island
Times, 2013). With CEO of Deepwater Wind, Jeff Grybowski, paying visits to the island in an
29
effort to stay connected to local residents, and hiring a local resident as the Block Island manager,
efforts at open transparency helped increase public support (Shuman, 2016a). These actions
would have contributed to the “broad support” seen from stakeholders such as environmental
groups, three different RI governors, and various other government officials (Dennis, 2016).
Stewardship. Transparency goes hand-in-hand with establishing stewardship of the
natural resources of the area. Opposition to offshore wind primarily comes from those who
proclaim an extended sense of stewardship already (Bidwell, 2013). However, this stewardship
must be considered on the local versus global scale. Local concerns for the tangible damage that
could result from offshore wind must be weighed against global concerns for the benefits from
reduced electricity generation through fossil fuels, lower carbon emissions, and more sustainable
energy production (BOEMa, 2016). In the case of Block Island, stewardship even involves
educating the island’s children about what is going on around the island. Stewardship also
carries over into the pride the most ardent supporters of the Block Island wind farm expressed,
even adopting the phrase “YIMBY-ism” (Yes, in my backyard!) (Turaj, 2012).
Table 3. Points to Remember for Offshore Wind Public Opinion
Public opinion for an offshore wind farm has the potential to massively help or derail an
offshore wind project.
The reasons people oppose offshore wind for a variety of reasons. The key is to
acknowledge public grievances and concerns, while attempting to combat and solve the
most notable ones.
Transparency and stewardship in the stakeholder process is imperative for increasing
public opinion and support.
It is helpful to review previous cases of offshore wind development in the United States and
understand how the state and developers interacted with the public and stakeholders to
learn from their mistakes and take advantages of successful practices.
30
Is it environmentally achievable? Another important consideration in the development and implementation of offshore
wind farms is the impact that these projects will have on the environment, beyond the impacts
perceived by the public that were highlighted earlier. Though the DOE and DOI note that
hundreds of environmental studies have taken place at offshore wind farms in Europe, there are
few official assessments that have been conducted on the U.S. coast (DOE, 2016). In accordance
with the National Environmental Policy Act (NEPA), environmental assessments are only
conducted once there is an intent for federal action with potentially significant environmental
impacts (DOE, 2016). The assessment then determines the need for an Environmental Impact
Statement (EIS), a document detailing the positive and negative environmental effects of a
proposed project. Due to the novelty of offshore wind technology and the low number of
offshore wind projects occurring in the United States, adequate research has not been conducted
to determine the effects they will have on wildlife. However, environmental stressors such as
noise concerns, habitat loss, and disruption of migration patterns have been evaluated at sites
across Europe and will serve as a starting point in determining how species on the eastern coast
of the United States will be affected (Trötscher & Korpås, 2011).
Underwater Noise and Electromagnetic Fields. An environmental impact of great
concern that comes with the installation and operation of an offshore wind facility is increased
noise. Installing turbines requires pile-driving (a process of inserting the turbine foundations into
the seafloor), drilling, and dredging, all very loud operations. Studies have shown that intense
noise causes avoidance behavior, damage to the inner ear sensory cells, and increased stress
responses in fish, marine invertebrates, and marine mammals. (Dähne et al., 2013; Popper et al,
2003). In addition, the turbines will continue to generate disruptive underwater noise and
vibrations once they are functioning and will emit electromagnetic fields from the cables
31
transmitting the electricity that have been shown to alter wildlife migration patterns (Westerberg
& Lagenfelt, 2008).
Vessel Traffic. Another consequence that comes along with the exploration, installation,
and operation of offshore wind farms is increased vessel traffic. During the exploratory stages of
the project and when the turbines and cables are being installed, heavy boat traffic is expected in
a concentrated area. However, when the wind farm is up and running, vessel traffic is expected
to decrease as a result of shipping routes being altered to avoid the turbines. The decrease in
large ships passing through the area of the wind farm is likely to have a positive long term
impact on marine species residing below the turbines. A decrease in boat traffic is not the only
long term benefit that wind farms may bring to marine wildlife.
Artificial Reef Formation. There are many documented accounts of ocean infrastructure,
including wind turbines, leading to the formation of artificial reefs that result in localized
increases in fish and crustacean density (Wilhelmsson, Malm, & Ohman, 2006). The creation of
artificial reefs on anthropogenic structures has been shown to attract marine mammals who come
to forage on the fish and crustaceans (Russell et al., 2014).
Comparisons to Europe. No U.S. studies of the effects of offshore wind farms on
migratory patterns in the U.S. exist due to the lack of facilities to study, but several studies have
been conducted in Europe. There are some similarities in wildlife distribution that we can
observe between Europe and the Eastern United States to begin extrapolating potential
externalities. For instance, the red-throated loon, which resides off both continental locations, has
experienced significant habitat loss and displacement and is now considered an internationally
vulnerable species (Williams et al., 2015). The common scoter, on the other hand, experienced
temporary loss of habitat and feeding grounds, but this bird has since rebounded and returned to
32
roost in the wind farm areas (Williams et al., 2015).
Although examining environmental assessments conducted on European wind farms is a
good starting place when examining the potential for offshore wind in the United States, there
are more differences than similarities that need to be considered. For one thing, all U.S. offshore
wind permits are for locations farther offshore than European wind farms, due to higher wind
speeds and a larger resource base (DOE, 2016). Similarly, the Mid-Atlantic Ecological Baseline
Study, published in 2015, found several potential environmental issues specific to U.S. Atlantic
wind projects. Looking at 13,000 km2 of ocean space, including the Virginia, Maryland and
Delaware coasts, this study analyzed which marine species and flora might be negatively
impacted by offshore wind development. Creatures like sea turtles, the North Atlantic Right
Whale, and several other bird species could all potentially face migration and habitat disruption
from offshore wind construction (Williams et al., 2015).
Greater Environmental Impact of Offshore Wind. Though a decrease in vessel traffic
and an increase in artificial reefs are certainly benefits of implementing an offshore wind farm
and noise concerns and habitat loss are negative results, these are localized outcomes. The
positive environmental impacts of switching from fossil fuels to wind energy generation will
extend far beyond the sight of the turbines. Like terrestrial wind, offshore wind is a carbon-free,
clean fuel alternative. Increased atmospheric carbon dioxide, resulting from burning fossil fuels,
has several negative environmental impacts including climate change, rising sea levels, ocean
oxygen depletion, and increasingly powerful storms (Schmidtko et al., 2017; Hansen et al., 2016).
Implementing offshore wind farms will continue to help the United States wean off of fossil
fuels and lower its impact on climate change.
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Ultimately, more site-specific studies and evaluations made at the population level will
determine the effect offshore wind will have on marine species. As offshore wind energy
continues to develop in the U.S., there will be a growing need for environmental impact
assessments and studies. Due to the newness of offshore wind development in the United States,
many impact assumptions are founded in predictive information rather than in empirical research.
But as the industry continues to grow, impact assessments will become increasingly available
and the information in them should be used to shape how offshore wind farms are implemented
(DOE, 2016). Vulnerable species and ecosystems will need to be protected and studied as
offshore wind energy grows and expands.
Table 4. Summary of Best Management Practices
For Assessing Offshore Wind Potential
Evaluate all potential costs, including capital costs, operational and maintenance costs,
and investment costs, to ensure adequate financial preparation to support the project.
Understand the policy incentives in place, both nationally and statewide, that may
impact the feasibility of achieving an economically viable offshore wind farm.
Make an effort to gauge whether or not an offshore wind farm will have the support of
special interests, especially the local community.
Perform a site-specific EIA, including consideration of animal impacts, noise
disturbances, and increased vessel traffic, to ensure that the project will be
environmentally achievable.
Work with specialists who understand the environmental pressures developing an
offshore wind farm can cause in order to mitigate potential conflicts of interest
regarding the environment and citizens concerned about the environment.
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2. CREATING A COMMISSION OF STAKEHOLDERS Stakeholder participation is an important facet of offshore wind development; their
participation and opinions might influence policy decision making and the development process.
Because offshore wind energy is a new industry for the United States, the process of
development is not as streamlined as that of other energy sources. The importance of early,
transparent, and frequent consultation with relevant stakeholders cannot, therefore, be overstated.
We created figures 3 and 4 highlight the various stakeholders involved in the Block Island and
Cape Wind offshore wind farms. The key, found in Figure 4, demonstrates how some
stakeholders were involved early in the process, while others were not. Managing the sheer
number of stakeholders alone can become a daunting and intricate task. This section explores the
different groups of stakeholders whose acceptance and involvement is imperative to its success,
and offers recommendations on ways to approach this aspect of the development process.
Figure 3. Key Stakeholders in Cape Wind Offshore Wind Farm.
35
Figure 4. Key Stakeholders in Block Island Offshore Wind Farm.
Federal Government The action of federal agencies can supplement the work of states, wind developers, and
other stakeholders to advance offshore wind development. In their 2016 National Offshore Wind
Strategy report, the DOE and the DOI put together a detailed plan outlining a set of actions for
federal involvement in developing the industry. The federal government could be involved more
deeply in all stages of offshore wind development, from research to development to oversight.
For instance, agencies can work together to leverage resources and manage issues related to
offshore wind, or partner with industry when needed to ensure successful development (DOE
2016). Divisions within the DOE, such as the Wind Energy Technologies Office in the office of
Energy Efficiency and Renewable Energy, can play an important role in the research and
development of wind technology.
36
However, the level of federal government involvement may depend upon the location of
the wind farm itself, as it may be located in either federally-owned or state-owned waters. The
Outer Continental Shelf Lands Act (OCSLA) of 1953, for instance, places several restrictions
and requirements on construction and BOEM involvement in the Outer Continental Shelf
(BOEM, 2013). Specifically, OCS is defined as "all submerged lands lying seaward and outside
of the area of lands beneath navigable waters" (Outer Continental Shelf Lands Act, 1953). More
than 88% of the technical offshore wind potential in the United States is in federal waters
(Musial et al, 2016). Depending on the ownership, federal organizations must be involved in the
regulatory and implementation process to ensure that the development takes place in a
sustainable fashion. The National Renewable Energy Laboratory (NREL), for instance, has
conducted cost benefit analyses on deploying offshore wind projects (Musial et al, 2016). On the
other hand, the Bureau of Energy Management regulates projects throughout the process, broken
into four phases in federal waters: "planning, leasing, site assessment, and construction and
operations" (DOE, 2016). While BOEM is the head federal organization for offshore wind
development, agencies such as the Department of Defense (DOD), National Oceanic and
Atmospheric Administration (NOAA), the Army Corps of Engineers, the U.S. Coast Guard, and
the National Park Service also become involved throughout the process. Such involvement might
include conducting impact evaluations on environmental degradation or shipping lanes, giving
authorizations, or performing economic assessments (Musial et al, 2016).
Learning in advance how the different agencies are involved in the planning,
development, and construction phases is imperative to a successful project. In Figure 5 below,
the federal government breaks down the development process into four segments: planning and
analysis, leasing, site assessment, and construction and operations. Certain federal agencies, in
37
accordance with various regulations, are involved or have certain requirements that must be met
at multiple parts within each step. OCSLA requires BOEM to ensure that the planning phase of
construction includes considerations for environmental responsibility and safety (DOE, 2016).
While the public support and opinions of more local and state officials can have a large impact
on a development project, development itself cannot occur without the appropriate approvals and
permits. If one can leverage the knowledge of each division appropriately, it can make working
together on the regulatory process more of a benefit than a required task.
Figure 5. Stages of offshore wind authorization for BOEM
Source: DOE, National Offshore Wind Strategy Report
38
State Government Offshore wind, like any energy resource, requires communication and collaboration with
not only the federal government but the state government as well. State government stakeholders
include both the governor’s office as well as a large number of energy, land, environmental,
recreational, electrical and economic resource agencies. State policies are considered even more
important than those of the federal government for offshore wind energy development (Bowes &
Hewett, 2014). There are two primary reasons for this: development has been so uneven up to
this point, and offshore wind is such a site-specific energy resource that even within states,
conditions can vary vastly in quantifying energy resources and turnarounds (Malhotra, 2011).
Thus, the state levels of organization may play roles in planning, permitting, development and
maintenance, and it is encouraged that they are kept informed and allowed input throughout the
process (AWEA, 2016). In addition, it is recommended that each agency's role is clearly define
(Baker et al, 2014).
Developers and state government agencies and offices should engage with each other in a
healthy way to clarify issues, exposes assumptions, and reduce uncertainties (BWEA, 2002).
This engagement is highly encouraged to move beyond the level that may be required, i.e.
beyond consultation during permitting and granting leases and towards maximizing benefits for
both the state and for the developer in the development process. States should continually obtain
all information from the developer on project planning and status to make this a joint venture.
Important resources such as status of and information from pilot studies and evaluations
must be shared between developer and state, and it may not always fall on the developer but also
the state government to do so (Van Cleve & Copping, 2010). This desire to share information
must be communicated before work on the project even begins. As the various state agencies
described below demonstrate, there are a multitude of interests of both the state as a whole as
39
well as individual residents of the state that must be kept in mind. The state government, as a
collector of information, can build a foundation for healthy collaboration throughout the process
between the developer and all stakeholders as the development continues and the project
progresses. The state can thus serve as a convener of stakeholders, improving consistency in
actions and relations (Baker et al, 2014).
State government relations enter the offshore wind process quite early, often as hosts of
the auction to buy a lease for the project when the project is located in state waters (Griffin,
2013). In states with favorable policies for offshore wind development, the governor may
designate a task force to coordinate stakeholder relations, such as is proposed for Washington
State (Baker et al, 2014). This proposed task force would aim to streamline agency
communication, particularly when timely information dissemination is necessary between federal,
state, tribal, and local governments (Baker et al, 2014). In addition, states work with the DOI
through BOEM to identify Wind Energy Areas, which are determined through various methods
of assessment to be favorable for offshore wind development (BOEMb, 2016). These WEA’s are
then bid for in a competitive lease sale, which is when developers become involved (Musial et al,
2016). The developer with the best plan for the area will win the lease, and following this, real
development can begin. In New York, the most recent auction resulted in Norwegian state-
owned oil company StatOil winning the rights to develop a windfarm with a 800 MW capacity in
80,000 acres off the coast of New York (Moriarty, 2017). In total, BOEM has leased 1 million
acres for $16 million, working with state governments to do so- although states do not actually
earn any of the lease sale revenue that happens in federal waters (Manning, 2016).
State governments can help increase the economic feasibility of projects by establishing
RPS’s and supporting PPA’s, as well as enacting other policies that would allow a project to get
40
off the ground (Christopher & Mullooly, 2010). Though these policies may not necessary be in
question at the time of development, states may encourage developers' interfacing with
governments to inform of progressive and foundational policies that would support offshore
wind development. acceptance of the PPAs by the Long Island Power Authority; while the
government itself did not have to vote at this stage to approve anything, the work done on their
part allowed for this to happen (New York State Government, 2017). On the other end of the
spectrum, opposition or even lukewarm interest from state government can end the hopes of
garnering funding for a project.
Beyond the developer, state governments may also engage with other stakeholders. One
specific example is states working with other state governments to negotiate location and
location-based resources. This may come into play when some areas of the ocean may “belong”
to two states, where both states may have valuable information about the area and both may hold
stakes in the projects (Musial et al, 2016). Since 2010, the states off the coast of the Atlantic
Ocean have piloted a joint organization called the Atlantic Offshore Wind Energy Consortium to
promote the development of offshore wind energy off their coasts, which eases the
communication between these states when possible developments are proposed (DOI, 2010).
Governors from Rhode Island, Massachusetts, New Jersey, Virginia, Delaware, and Maryland,
New York, South Carolina, and Florida represented their states as a part of the consortium,
which allows for states to pool their resources, and understand how to proceed in cases where the
best area for wind energy in the ocean may overlap state boundaries coasts (DOI, 2010).
Financial Investors Because offshore wind is a nascent, and thus risky, market in the United States,
stakeholder engagement with those involved in financing the project is crucial in order to secure
41
all of the required debt and equity funding. In an interview released by SgurrEnergy (2015), a
consulting company specializing in renewable energy, Raya Peterson, Principal Engineer, notes
that an important risk factor that equity investors and banks particularly scrutinize is the
expertise of project teams and participants involved in the project. Banks, lenders, and investors
who provide debt financing and equity want to know that the project team can make informed
decisions and learn from past mistakes and successes. Thus, a strategy for finance should be
established early on in the development phase, and banks and investors should be drawn into the
process early. According to Peterson, developers who are not familiar with project financing of
offshore wind projects should involve credible technical and legal advisors (SgurrEnergy, 2015).
Since the offshore wind market is so new and financially risky in the United States, it would be
especially critical for project developers to hire consultants and lawyers to assist in planning how
to finance an offshore wind farm at the beginning of the project development phase. When Block
Island Wind Farm reached full debt and equity funding with a financial close on $290 million in
project financing from Mandated Lead Arrangers Societe Generale of Paris, France, and
KeyBank National Association of Cleveland, Ohio, Societe Generale commented on Deepwater
Wind’s world class management team and experienced contractors when discussing their
readiness to work on the wind farm with them (Deepwater Wind, 2015).
SgurrEnergy also notes that lenders often prefer for all construction contracts to be
finalized before reaching financial close (2015). For states, this means that it would be helpful in
securing financial close to have contracts for each aspect of construction negotiated before
seeking out financing. It could be especially helpful to hire a consulting company to follow the
project and to analyze construction costs and contracts to ensure they are fair and will be signed.
Steel jacket foundations for Block Island Wind Farm were already being fabricated when
42
Deepwater Wind closed with Societe Generale and KeyBank (Wind Energy Update, 2016). At
that time, Deepwater already had over $70 million in equity funding from owners of an entity of
the D.E. Shaw Group (Deepwater Wind, 2015). Shortly after reaching full funding, installation
of the foundations for the turbines was able to begin.
Once financial close has occurred, investors will also follow implementation and
construction, often utilizing help from consulting companies through construction monitoring
reports, construction progress verification, site visits, and/or risk and reserve reviews
(SgurrEnergy, 2015). Thus, banks, investors, and lenders should continue to be updated
throughout the project's construction. Transparency is vital during the entire process in order for
all risks to be considered.
In some cases, government funding is available for offshore wind farms. New Jersey’s
Offshore Renewable Energy Credit (OREC), for example, offered a $1.9 billion subsidy
(Windenergy Update, 2016). In order to secure the OREC, the developer, US Wind, had to show
that the project’s economic and environmental benefits would outweigh the subsidy
(Windenergy Update, 2016; GWEC, 2016). Thus, when the government is the financier, it is
particularly important to highlight the significant economic contributions and impacts the wind
farm may have using economic analysis.
Long before an offshore wind project can actually begin, a power purchase agreement
should be signed. In August 2010, six years before construction began, Deepwater Wind Block
Island LLC and National Grid signed a PPA regarding the electricity produced by Block Island
Wind Farm (Christopher & Mullooly, 2010). The PPA is a key factor in project finance, and
securing a contract requires stakeholder engagement with the electricity provider before the wind
farm is operational. Additionally, since offshore wind farms are project financed, PPAs are a
43
source of loan repayment, and are considered a cornerstone of the project’s development (La
Fratta, 2002). This is especially important to consider since a project often cannot proceed
without a signed PPA. Since utilities generally like to sign the PPA after the project begins, and
financiers want the PPA signed before funding, states may have to prioritize one over the other,
or proceed without full financing in order to sign the PPA after the project has started.
Manufacturers It is important for wind project developers to consider who is going to manufacture and
provide their turbines, and to form good relationships with them. Offshore wind turbines are
similar to those that are on land, though they must have additional modifications to endure
underwater conditions, such as storm waves, forceful winds, corrosive elements, and possibly
even ice flows (BOEM). Thus, the manufacturer is responsible for installing the offshore wind
site, which requires creating a stable foundation, transporting the turbine parts to the site,
constructing the full turbines, and sometimes even providing maintenance throughout the
turbines' lifetime (Egan, 2015).
These project-specific manufacturer responsibilities are negotiated between the developer
and manufacturer, and then outlined in a contract. Lacking a national precedent for this process,
Deepwater Wind initially negotiated a pre-contract with Siemens to supply Block Island's
turbines. When the pre-contract expired in 2012 and no final contracted had been prepared,
Deepwater Wind chose to enter a final contract with Alstom, a French wind turbine manufacturer
that was acquired by General Electric (GE) in 2015 (Quilter, 2014). As outlined in the contract,
Alstom supplied and installed Block Island's six Halide wind turbines, and committed to a
service agreement, meaning Alstom will provide turbine maintenance for the first fifteen years
(Montgomery, 2014).
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Overall, the manufacturer is an important stakeholder, as they are responsible for
providing and installing the turbines, and may also play a role in servicing the turbines once they
begin operating. With such a large-scale project, be purposeful with forming partnerships with
knowledgeable and established businesses to help ensure the integrity and quality of a project
that must adhere to a long but strict timeline.
Utilities Along with purchasing the power, utility companies play a critical role in offshore wind
transmission, and their buy-in should be considered early on. In order for any wind project,
onshore or offshore, to generate power, the project developers must submit an interconnection
request to their regional transmission operator. All interconnection requests are added to a queue,
so this may hinder the length of the project planning phase, since developers cannot control when
they will get to the top of the list. Once the request is submitted, the developer will arrange a
meeting with the RTO and transmission utilities to discuss project details and plans moving
forward (Daniels, 2007). When the request is granted, the utility and developer will finalize an
interconnection agreement to ensure the project gets linked to the grid. In some cases, the
developer will handle the transmission requirements, but in other cases, the utility company may
construct the cables. During the construction of Block Island, Deepwater Wind started the
transmissions plans, but eventually transferred the job to the local utility.
To connect Block Island, Deepwater started by filing an interconnection request with ISO
New England. Under Rhode Island legislation, National Grid, a New England utility company,
was required to purchase the offshore wind generation. Deepwater had already been developing
its project transmission plans before National Grid became involved in the project. However,
Deepwater and National Grid eventually negotiated the transfer of all of Deepwater’s
45
transmission plans and assets over to National Grid to complete (Hahn, 2014). Relinquishing
authority of the project’s transmission gave Deepwater the opportunity to continue to focus on
developing the generation side of the project. Meanwhile, National Grid called on its experts to
construct and install underwater cables and connect the project to the grid (Miller, 2014).
Utility companies are instrumental in connecting offshore wind projects to the grid.
Future policy makers and project developers ought to consider Block Island, and determine
whether a local utility should be responsible for transmission installation and operation.
Local Economy While assessments of offshore wind energy’s impacts on the national economy have been
completed, the impacts on the local economy may be even more significant in terms of the
success of individual projects. States can encourage developers to build the same level of
relationships with stakeholders in the local economy as they would with any other stakeholder
described here, particularly because these are the people and local businesses that will stay
involved and experience direct impact from offshore windfarms beyond the planning, permitting,
and construction phases. Though some aspects may be site-specific, overall, the coastal economy
involves two significant stakeholders that are not largely studied: the fishing industry and the
tourism industry.
In coastal communities, a large part of the local economy is constituted by the fishing
industry. According to the National Oceanic and Atmospheric Administration (NOAA), fisheries
generated nearly $200 billion in the United States in 2011, and the economy is strong throughout
coastal states be it the Northeast, Southeast, or West Coast (Matheson, 2013). The significance of
this cannot be understated, and local traditions place the fishing industry as a strong priority of
the local economy and community. Fishermen have had varying levels of support for offshore
46
wind, particularly commercial fishermen (Hagos, 2007). The primary response of fishermen
when asked about offshore wind energy is the desire for more information, specifically
information on the impact of the wind farms on the fish environment, navigational limitations,
and ownership of the facility (Hagos, 2007). In another, unique case, commercial fishermen were
actually involved in the creation of Fishermen’s Energy, which is aiming to develop an offshore
wind project in New Jersey- and this background may inform the developer of the level of
stakeholder engagement needed with fishermen (Bloomberg, 2017). However, possible lack of
support for offshore wind farms on the part of fishermen may be partially due to the decline of
the fishing industry overall in the United States, which would prompt fishermen’s wariness to
voice support for a development whose impact on their industry in not yet fully characterized
(Colgan, 2004). There have been some prediction-based studies completed, but given the youth
of the offshore wind industry, there is some level of doubt associated with these studies
(Espinoza, 2016). Nevertheless, preliminary evidence suggests that installations would lead to
the creation of artificial reefs that increase species diversity and density as well as protect
trawled organisms; however, there is potential for invasive species to threaten the stability of the
underwater ecosystem (Langhamer, 2012).
Though some noise impact studies have been completed, there is still an inherent
unknown component with the limitations of environmental studies that can only serve to
emphasize the need to work with local fishermen and establish relationships. The same kind of
stakeholder engagement that developers may participate in for government relationships or
permitting agency relationships should be present in this case. For example, Deepwater Wind has
commissioned a research study, working with a research firm as well as local fishermen, to study
the impacts of the foundations of the windfarm (Espinoza, 2016). The emphasis was on local
47
fishermen, who know the waters around the area best. Thus far, negative impacts during
construction were limited, and at this phase the foundations have already become artificial reefs
that continue to attract fish. While this study is certainly Rhode Island based and cannot be
broadly applicable to all wind energy areas, the set-up is the exact kind of stakeholder
collaboration and local economy involvement that is needed to produce both accurate results in
the study and strong relationships with the local economy. Though this is a research study
beginning years into the development process, it would be prudent to begin relationships with
stakeholders in the local economy in advance of even the permitting process so that acceptance
of the windfarm can occur.
Encouraging and building relationships with the tourist industry is also crucial. Beaches
and estuaries are among the most-visited tourist locations in the United States, with about 85% of
all tourist revenue in the country coming from visitors to coastal areas economies (Haisman et al,
2008; Marlowe, 1998). More importantly, the tourism industry is almost entirely driven by small
business, with more than 95% of tourism revenue generated coming from the locally established
economies (Haisman et al, 2008). Thus, preserving relations with the constituents of the tourism
industry is significant for the health of the United States economy. Tourism industries and local
small businesses have expressed concern regarding the impact the offshore wind turbines could
have on the industry, motivated primarily by the reason that the turbines would endanger the
view that tourists come to experience. According to a study by North Carolina State University, a
significant portion of tourists would choose not to return to a location if turbines were placed
close to shore, i.e. within 8 miles of shore, in Dare County, a coastal county in North Carolina
(Lutzeyer, Phaneuf, & Taylor, 2016). Though the impact of the turbines on tourism declined as
turbines were placed farther away, this brings into question the feasibility of the wind farm.
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Other components of the local coastal economy that are important are universities and
colleges. Universities in the area may be pursuing research for pilot and siting studies, and may
require stakeholder input. In addition, community colleges would be a large provider of the
skilled labor needed for offshore wind during construction and later, with farm maintenance.
According to developers such as Deepwater Wind, the offshore wind industry could create
thousands of jobs. Of course, it would be expected that a good number of these jobs would stay
in the local economy- for this to happen, there needs to be a procedure in place that allows for
the generation of skilled labor. In addition, it would be beneficial for developers to employ
workers from the local economy, for ease, continuity, and dependability as well as the
knowledge of the area. Developers should work with local communities and community colleges
to establish the needs of all stakeholders and impacted parties so that programs can be created
(Farley, et.al., 2014).
Other Stakeholders Non-governmental organizations (NGOs). NGOs are not-for-profit advocacy
organizations run by civilians and independent from any government organization. The missions
of individual NGOs vary significantly and often span all sides of a particular issue. An NGO
may endorse a wind farm, oppose a wind farm, or simply advocate for a particular issue that has
the potential to be impacted by the implementation of a wind farm. It is important to consider the
opinions of all NGOs when developing an offshore wind farm because they are often a good
representation of public opinion. Since NGOs are not for profit, and rely heavily on donations,
their motives are oriented towards those of their donors. Lastly, NGOs can often provide
assistance by assisting in development of guidelines or tools as well as providing information on
vulnerable parties.
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Media. The main role that media plays in the development of an offshore wind farm is
enabling a flow of information to reach the general public. Media increases public awareness of
the project and can either encourage public support or aid in public opposition. Positive media
coverage is a crucial part of gaining public support for an offshore wind farm.
Academic institutions. Universities and colleges play an important role in offshore wind
farm development by providing research on wind energy technologies and conducting project
studies. The DOE’s Wind Energy Technologies Office is currently funding 70 projects
happening at universities in the United States (DOE, 2016). Additionally, universities and
institutions in the area of proposed wind farms often organize studies about the project such as
public opinion surveys, economic modeling, or environmental assessments.
Native American populations. Since the last Ice Age, sea level has risen about 400 feet,
resulting in many former Native American settlements being submerged under water. Installing
turbines and transmission cables off the east coast of the U.S. poses threats to archaeological
sites under the sea floor if adequate precautions are not taken. In order to promote respectful
relationships with indigenous tribes and avoid conflict, developers must work as equal partners
with Native American groups, as they are sovereign nations and require adequate government-to-
government consultation. Tribes should be involved in the implementation of an offshore wind
farm from the initial exploration of the site to the installation of the turbines and transmission
cables. In some cases, interfacing with Native Americans may even determine whether a project
is appropriate for a certain area or not, such as in California, where task forces are currently
considering whether floating turbines could harm hunting and ceremonial grounds of state-
recognized tribes (California Energy Commission, 2017).
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In other cases, keeping Native Americans engaged as stakeholders can help push a
project forward. This was the case in their collaboration with Deepwater Wind in Rhode Island’s
Block Island Windfarm, where interest groups were brought to the stakeholder table (Gellerman,
2016). In Cape Wind’s case, however, there was a failure to reach out to Native American tribes
in Nantucket and the surrounding area. Subsequently, developers were not able to entirely
address the concerns that the sacred ceremonial grounds could be damaged by the turbines
(Spinelli, 2011).
Public Opinion The public is a stakeholder in offshore wind development primarily because the
individuals that comprise it are state constituents and ratepayers. To quantify public opinion,
surveys and polls can be conducted to capture public sentiment. A 2011 public opinion poll from
Atlantic Wind Connection discovered most citizens in Maryland, New Jersey, and Delaware
support offshore wind (Clean Energy States Alliance, 2017). Concerning utility rates, a subject
that often leaves some weary of offshore wind is the potential for high electricity bills. However,
the study did find that most residents were willing to pay about two dollars more each month for
offshore wind electricity (Clean Energy States Alliance, 2017).
Case Study: The Maryland Offshore Energy Act (MOEA) Public opinion has the potential to propel or stall the development of offshore wind. The
MOEA is a prime example. Signed into law in 2013, the MOEA requires 2.5% of electricity
generated within the state to come from offshore wind by 2022 (DSIRE, 2017). The legislation
initially failed in 2011 and 2012 due to concerns regarding the source’s impact on consumer
utility bills. Nevertheless, since the bill arose in 2011, public opinion regarding the MOEA has
been quite supportive. While legislators were primarily concerned with expensive electricity bills
51
for ratepayers, a large and vocal portion of the Maryland constituency valued offshore wind for
the clean energy it produces and the amount of jobs the energy source could generate. The
Maryland Department of Energy Resources estimates a 500 MW offshore wind farm in
Maryland could create almost 2,400 manufacturing and maintenance jobs, generate $1.9 billion
for the state’s economy, and reduce carbon dioxide emissions by 945,000 tons each year
(Maryland Department of Energy Resources, 2016).
After the legislation initially failed to pass in 2011, the following year supporters
crowded public forums advocating for the MOEA. As the 2012 General Assembly session began,
over 100 offshore wind supporters crowded the assembly’s front lawn chanting, “Get it done in
2012! Wind works for Marylanders’ health, jobs, climate, and energy costs!” (Harrington, 2012).
Polling results released in January of 2012 echoed similar sentiment. A state survey discovered
that of 1,405 registered voters, 62% supported offshore wind (Wheeler, 2012). Offshore wind
garnered plenty of support, even when voters were asked if they support the energy source if it
increased utility rates by $2 a month (Wheeler, 2012).
Public desire for offshore wind in Maryland encouraged state legislators to enact the
MOEA. To quell concerns for utility bills, the MOEA has included safeguards that require
electricity from offshore wind to be at the most $1.50 per month. In order to ensure the economic
development that likely convinced many Marylanders to support offshore wind, the legislation
also requires energy developers to supply a plan for how they plan to stimulate the Maryland
economy with their offshore wind farm. The development and enactment of the MOEA reveals
how public opinion can help create a demand for offshore wind.
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Due to the large number of stakeholders involved in domestic offshore wind farm
develop, we recommend understanding who all these key players will be and considering the
following best management practices when interacting with them:
Table 5. Summary of Best Management Practices
For Creating a Commission of Stakeholders
Be inclusive from the very beginning and transparent through the entire process to develop
positive relationships with all stakeholders.
Utilize and prioritize the knowledge of stakeholders to your advantage.
Involve the local community as much as possible, so that they may participate in the
process. In doing so, it may help to hire or work with a local representative that speaks the
local language, as he or she will likely be most effective in engaging the community.
When presenting the opportunity for offshore wind development to specific stakeholders be
sure to frame your arguments in a context that resonates with the stakeholders being
addressed.
3. PERMITTING AND IMPLEMENTATION
Since both the federal government and coastal states have jurisdiction over coastal waters,
they each participate in the offshore wind permitting process. The extent to which each level of
government is involved depends on whether the project will be built in state or federal waters.
By law, each coastal state has authority over the first 12 nautical miles of water off the
country’s coast. This area is known as the territorial sea (Vann, 2012). The next 24 nautical miles
comprise the contiguous zone, which is under federal jurisdiction. Beyond the contiguous zone
lies the Exclusive Economic Zone (EEZ), a 200-mile stretch within which the United States has
economic control (Vann, 2012).
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Whether a wind farm is proposed in federal or state waters, the coastal state government
will play a role. According to the Coastal Zone Management Act (CZMA), states may create
coastal zone management plans that the federal government must comply with. A Supreme Court
decision expanded this legislation with the “consistency review” provision, allowing states to
solicit consistency with national processes such as federal water permitting (Vann, 2012).
Further, any parts of a project that are in state waters, including transmission cables, are
under state jurisdiction, which can vary state by state. Some states have streamlined their coastal
management so that one agency is in charge of processes such as offshore wind permitting.
However, many states have split jurisdiction among multiple agencies, which means offshore
wind projects may involve multiple state government stakeholders (Vann, 2012).
BOEM received authorization to issue leases for renewable energy development on the
outer continental shelf (OCS), including offshore wind energy, in 2005 under the Energy Policy
Act (EPAct). Under EPAct, BOEM coordinates with relevant federal agencies, state and local
governments, and other stakeholders in order to ensure that development happens in an
economically and environmentally safe way. BOEM also has to work under Renewable Energy
Program Regulations, which were finalized in 2009 and set the basis for the phases in the
decision-making process (BOEM, 2017). While BOEM has ultimate authority over offshore
wind energy development, other agencies, like the Army Corps of Engineers, retain roles in the
process under various statutes.
The process BOEM uses to issue leases and approve plans for offshore wind energy
under the regulations has four phases: planning and analysis, leasing, site assessment, and
construction and operations (BOEM, 2017). The planning phase is used simply to identify an
area of the OCS to be considered for a lease; these areas are identified as Wind Energy Areas
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(WEA) that appear, without any initial research being done yet, to be suitable for wind energy
development. During this phase, BOEM consults with stakeholders and state and federal
government agencies to analyze the potential for wind energy development and conducts
environmental compliance reviews (BOEM, 2017). survey or build yet, but they may assess how
the area will be affected by the work that could happen. They complete an environmental
assessment for the survey work, and at this point may also begin assessing the subsequent towers
and buoys in order to make it easier later during the site assessment phase. Companies have up to
five years to collect data on the area about wildlife and wind resources (BOEM, 2012). At this
point, they also need to do research to measure the wind resource in order to get financing.
Within five years, they must submit a site assessment plan that details how they will assess the
site with minimal environmental impacts, which begins the site assessment phase.
At this point, another environmental review is conducted at the site and may result in an
environmental impact assessment or an environmental impact statement. For an offshore wind
farm, an environmental impact statement may be necessary if issuance of leases and approval of
site assessment plans would have a significant effect on the environment (BOEM, 2012). Both
the Site Assessment Plan and Construction and Operations plan require an EIS under NEPA
(Van Cleve & Copping, 2010). After the environmental impact statement is finalized, BOEM can
approve, approve with modification, or not approve the site assessment plan (BOEM, 2017). If
the plan is approved, the company can begin assessing the site as the plan is presented. If it is not
approved, they may not build the wind farm and may start at the beginning of the process. A plan
that is approved with conditions has mitigation measures placed on it; for example, they may be
able to build the structures but only during certain months so as to avoid whale migration, or
55
perhaps certain lights cannot be used on structures. Lastly, a construction and operation plan is
submitted that details plans for building and operating the wind energy project (BOEM, 2017).
By the end of this process, BOEM will have reviewed several environmental, social, and
economic considerations during two phases: site assessment and construction and operation.
These include data collection on and reviews of air quality, water quality, marine mammals and
other wildlife species (endangered or not and including sea turtles, birds, bats, etc), benthic
habitats and ecosystems, physical oceanography, coastal habitats, socioeconomics, cultural
resources, fisheries, and multiple use conflicts (AWEA, 2017). Consultations throughout the
process are on the grounds of NEPA, the Coastal Zone Management Act, Magnuson-Stevens
Fishery Conservation and Management Act, National Historic Preservation Act, Endangered
Species Act, Clean Air Act, the Migratory Bird Treaty Act, and others (AWEA, 2017).
4. POSSIBILITIES IN NORTH CAROLINA As the first state in the Southeast to adopt an RPS, North Carolina is well poised to take
advantage of having one of the largest offshore wind potentials to deliver tens of thousands of
megawatts of offshore wind energy to its residents in the upcoming decades (BOEM, 2006).
Though the estimate of offshore wind potential is based off of a BOEM report from more than a
decade ago, the wind still blows and the technology has only advanced. So: how can North
Carolina harness this vast potential for the state? We consider our best management practices as
specifically applied to North Carolina.
The first offshore wind lease sale was signed off in March 2017, to Avangrid Renewables,
LLC for upwards of $9 million; the company beat out three other competitors, including StatOil
Wind US, LLC, which won a large lease sale in New York (Sasse & West, 2017; Symons, 2016).
This was one of the three identified WEAs in North Carolina, the Kitty Hawk site, which covers
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122,405 acres about 24 nautical miles from the shore (BOEM, 2014). The remaining two sites,
Wilmington East and Wilmington West, have not been considered for competitive lease sales yet
(BOEM, 2014). Kitty Hawk has a potential of producing 1,486 MW of energy, enough to power
about 500,000 homes, and would be a windfarm of commercial size, compared to the 30 MW
that the only currently operating windfarm in the United States, Block Island, is capable of
(Kennedy, 2017; Deepwater Wind, 2017). Avangrid Renewables currently operates onshore
windfarms in the United States, including in North Carolina; it is a part of the Spanish energy
company Iberdrola, which operates windfarms onshore and offshore in Europe (Kennedy, 2017).
The possible first offshore windfarm in North Carolina would be developed by a company that is
not a newcomer to the energy game, or even the offshore wind energy game. Still, given past
experience with offshore wind energy in the United States, a windfarm in North Carolina may
take more than a decade to be up and running.
Relatively little site assessment data and public opinion data exists for North Carolina,
because of a lack of serious commitment to offshore wind in the state in the past, based on
political, economic, and other factors. Though visualization studies of offshore wind have also
been done with different locations, lighting, distances, and turbine models of offshore wind
turbines in North Carolina to assess the impact of these factors, it has not been used for gauging
public interest (Lavallee et. al., 2012). Furthermore, a site assessment plan, a construction and
operations plan, and environmental impact assessment would need to be completed.
After these initial stages, the developer still has up to 25 years to get the project off the
ground, and without greater incentive, and with time for a project to be mired in public
discussions, there is a possibility of failure - especially when the Kitty Hawk project has a
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relatively large magnitude of 1000 MW1 (DOI, 2017). This failure can be avoided by continually
pushing the project forth by assessing its progress, continuing healthy stakeholder engagement
and open information sharing, and maintaining the project timelines.
Based on the current RPS in North Carolina, investor-owned utilities are to supply 12.5%
of retail electricity sales from renewable energy and energy efficiency sources by 2021 (General
Assembly of North Carolina, 2007). One of these renewable energy sources could be offshore
wind, but it is definitely will not be the case by 2021, and would be difficult even later on, as
well, because of the cost of the energy. Based on estimates of average electricity costs by state
provided by the EIA, electricity in the Southeast from the current energy mix (which consists
primarily of coal, natural gas, and nuclear) costs 10.39 cents per kWh, whereas- for a
comparison- electricity in the Northeast costs 15.94 cents per kWh (Jiang, 2011; McLaren, 2011).
Perhaps the most significant analysis this could provide in terms of offshore wind development is
the greater need for governmental support for renewable energy initiatives when other sources of
energy are already much cheaper in the Southeast compared to other parts of the country. The
cost of offshore wind energy on Block Island comes in at about 24 cents per kWh, more than
double the average cost in the Southeast. This does not seem attractive from a long-term
financial perspective or allow for offshore wind to be market competitive (Gellerman, 2016).
It is helpful that a Task Force for offshore wind, headed by North Carolina’s division of
BOEM, already exists, consisting of state, federal, local and tribal government representatives
(BOEM, 2016b). The Task Force’s work led to the identification of the three WEA’s in the state
as well as the sale of the Kitty Hawk site lease, so there is certainly a level of investment on part
of these government stakeholders (BOEM, 2016b). However, caution is expected in that the Task 1The project would still be up to the developers to decide, but there is some level of return expected when the WEA is greater than 100,000 acres and when the resources for a wind farm are already going to be used for a project of any size.
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Force must also meet regularly and expand to include all significant opinions that impact
decisions in the state, before and during meetings with the developer. The developer is expected
to work closely with this Task Force and its subsidiaries to remain aware of public interests,
political climate, financial situations, and environmental impacts that all are always subject to
change in the next few years as this project begins to come to life.
In summary, it would not be a wasted effort on the part of North Carolina’s policymakers
to invest in offshore wind energy. No other state has as much accessible wind along the coastline
at an optimal distance from the shore, and in a growing state in a world where renewable energy
is the future, this investment would make sense on economic as well as environmental scales.
CONCLUSION AND FUTURE STEPS This report strives to identify and address noted barriers to timely offshore wind
development in the United States. While the best management practices for site assessment,
stakeholder interests, and the permitting process aim to aide U.S offshore wind development, we
believe future steps can be taken to further develop the U.S offshore wind market. Based upon
our best management practices, steps that could be taken to make U.S. offshore wind more
feasible in the future include the conducting of more site-specific research, improved conveyance
of the benefits of offshore wind to all parties involved and affected, and a streamlining of the
federal regulatory process (DOE, 2016). We believe these are realistic goals and suggestions that
would further improve the timeliness of U.S. offshore wind projects.
When planning U.S. offshore wind farms, as of now developers rely upon information
and research from land-based U.S. wind farms and European offshore wind farms to predict the
needs for turbine designs, energy production estimates, capital costs, and more. With insufficient
information available for U.S. sites, risks (and costs) can be high, and those advocating for
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offshore wind are often met with opposition. More site-specific research could dispel rumors and
speculation. Providing detailed answers to peoples’ questions regarding offshore wind’s effect on
wildlife and noise concerns (Deepwater Wind, 2016). More research could specifically answer
peoples’ questions about effects on wildlife and noise levels loud enough to affect people.
Further research can also address risks associated with technology to drive down costs
(Deepwater Wind, 2016). Site-specific research in WEAs can help developers choose the right
turbine designs, reduce capital costs, increase safety, better assess wind potential and energy
estimates, and drive down the risk associated with the project (GE, 2015). Such research can also
help make drafting EISs easier. With more information, EISs become easier to conduct and carry
out, making offshore wind projects more attractive to investors. The more research conducted
before the regulatory process begins, the easier and quicker the entire process becomes later on.
Improved conveyance of offshore wind’s benefits can encourage further pursuit of offshore
wind in a state. Offshore wind energy can be favorable to different people or groups for different
reasons. Explaining offshore wind in contexts that suit the individuals being addressed will all
affected understand how offshore wind can impact their lives for the better. As this report reveals,
public opinion has a drastic impact on the success of an offshore wind project. Therefore, it is
important to explain why offshore wind is a positive investment for a state’s energy portfolio.
A streamlining of the regulatory process will decrease the time it takes to develop and
offshore wind farm. BOEM realizes that the regulatory process for projects in federal waters is
complicated. Specific aspects BOEM hopes to improve include making their plan-review process
more transparent, adding a degree of flexibility to allow developers to make certain design
decisions at commercially advantageous times, and coordinating with other agencies when
identifying WEAs. Decreasing the steps developers must take to construct an offshore wind farm
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will make offshore wind an increasingly favorable and viable economic option for U.S. energy.
Considering offshore wind's technical potential, proximity to coastal populations, and successful
European implementation, we believe offshore wind is a viable alternative energy resource the
United States should continue to pursue.
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Appendix A. Global Offshore Wind Development
While a new energy source in the United States, offshore wind energy has and is
currently being utilized around the world. As offshore wind increases globally, our report begins
as production ramps up in the United States. Support for global offshore wind capacity is
imperative to understanding the landscape for offshore wind globally, and in comparison, the
United States.
Figure A-1. Global Cumulative Offshore Wind Capacity in 2015. This figure and its subsequent
data follows offshore wind development in 15 countries, including the U.S. The figure also
highlights total annual cumulative offshore wind capacity for these fifteen countries.
Source: GWEC.
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Table A-1. This table references the number of wind farms, turbines, and fully connected MW to
the European electric grid in 2015. This graph gives context to the European offshore wind
energy market and its continued growth in comparison to the U.S. offshore wind energy market.
Source: GWEC.
