Administration Fast-Tracks Offshore Wind Farms

Source: RYAN TRACY • Wall Street Journal • Posted: Friday, February 3, 2012


The Obama administration said it planned to make areas off the coasts of Maryland and New Jersey available to wind-energy developers by year’s end, paving the way for the first leases under a program designed to fast-track offshore wind farms.

While President Barack Obama has said he favors an “all of the above” approach to energy development, Thursday’s announcement highlighted the stronger emphasis he places on wind and solar power compared with Republicans. A House committee on Wednesday approved three bills promoting oil-and-gas exploration, an issue also stressed by the GOP’s presidential candidate

Republicans also have criticized the White House for backing renewable-energy companies such as solar-panel maker Solyndra LLC, which filed for bankruptcy protection after getting $527 million in public funds. In his State of the Union address last week, Mr. Obama responded by saying “some companies fail” and pledging to “double down” on clean energy.

The U.S. gets about 3% of its electricity from land-based wind turbines, but doesn’t yet have any turbines offshore.

Announcing the wind plan, Interior Secretary Ken Salazar said his department found there would be “no significant impact” on the environment from issuing the leases and allowing developers to test whether the areas are viable.

The decision eliminates a step from the environmental-review process, shortening it by as much as two years, said Jim Lanard, president of the Offshore Wind Development Coalition. “This is a critical step,” he said.

Environmental reviews will still be needed for individual project plans, and wind farms in the designated areas are still years away from coming online.

“There’s a whole lot more work ahead of us to get the project in the water,” said Jeffrey Grybowski, chief administrative officer for Deepwater Wind, which is backing a wind farm off New Jersey’s coast with Public Service Enterprise Group Inc. The goal is to bring the wind farm online by 2017, Mr. Grybowski said.

Under the only offshore lease executed so far by the U.S.—for a 46-square-mile parcel in Nantucket Sound, off the coast of Massachusetts—project owner Cape Wind Associates would pay the government about $88,000 in annual rent for 33 years, plus 2% to 7% of electricity sales.

The push to expedite offshore wind permits has drawn criticism for being too friendly to the wind-energy industry. Maryland lawmakers have raised concerns about higher electricity costs as a result of state mandates to buy renewable power, while local groups in New Jersey have said conflicts with the fishing, tourism, and shipping industries haven’t been adequately examined. Clean Ocean Action, an advocacy group which doesn’t oppose offshore wind power, is seeking a more thorough review of the New Jersey lease proposal. “There has been no input from stakeholders in a comprehensive way,” said Cindy Zipf, the group’s executive director.

A spokeswoman for the Interior Department said the leasing review process has involved significant public comments and would continue to do so.

The Interior Department is also targeting areas off the Delaware and Virginia coastlines for future leases. “We will be able to see one day the harnessing of the tremendous amount of energy we have off the Atlantic coast,” Mr. Salazar said.

Wind tends to blow harder and more consistently over the ocean than over land, providing a potentially significant energy resource. Atlantic Wind Connection, a project backed by Google Inc. that wants to build an offshore wind power transmission line between New Jersey and Virginia, says it could link up enough capacity to power about 1.9 million homes.

Developers and policy makers are facing bumps in the road as they try to build the first turbines in U.S. waters.

A proposal in Delaware ground nearly to a halt in December after backer NRG Energy Inc. said it couldn’t find an investment partner without a federal loan guarantee and tax credits, both of which it didn’t expect to get unless policy changed. A company spokesman said Thursday that NRG was still pursuing its federal lease for the project, but has dropped work on other parts of the proposal.

The Cape Wind project already holds a federal lease, but lawsuits by local authorities and uncertain financing have delayed construction.

Mr. Grybowski, the developer working on a New Jersey offshore-wind deal, said he was concerned the Interior Department would move forward with its leasing program before the state awarded its own offshore wind-power incentives. In that case, a company could win a federal lease only to see a competitor secure backing from the state.

At an event in Baltimore highlighting Thursday’s announcement, Mr. Salazar stood with Maryland Gov. Martin O’Malley, a Democrat, in an effort to show the administration is working with states to eliminate hurdles for the industry.