First competitive Atlantic lease bumped to 2013 — Interior official

Source: Phil Taylor, E&E reporter • Posted: Friday, October 12, 2012

VIRGINIA BEACH, Va. — The Interior Department’s first competitive lease for offshore wind in the Atlantic Ocean will not occur until 2013, an Interior Department official said today at a conference here on offshore wind.

The announcement at the American Wind Energy Association event pushes back by two years an original goal of having a competitive sale in the mid-Atlantic by late 2011.

Darryl Francois, of the Bureau of Ocean Energy Management, said the agency is working to finalize an auction format for the sale and is still designing lease language to protect endangered species and other marine resources.

“We’re in the process of moving forward on several different fronts, and I’d say we are close,” Francois said. He said the sale will likely happen “sometime in 2013,” though he would not say in which of a handful of states it would occur.

An agency spokeswoman as recently as August said BOEM had planned to offer at least one sale this year. Interior Secretary Ken Salazar at last year’s offshore wind conference in Baltimore said the agency was within weeks of issuing a noncompetitive lease off the coast of Delaware, which would have marked the second such agreement in U.S. waters (E&E Daily, Oct. 12, 2011).

NRG Energy Inc., which had sought the lease, in January said it was putting its 450-megawatt Bluewater Wind project on hold, citing difficulty financing the project and the pending expiration of the investment tax credit, though it said it was moving forward with its lease.

Francois said he had no update on the status of the Delaware lease.

Jim Lanard, president of the Washington, D.C.-based Offshore Wind Development Coalition, said he wasn’t surprised that competitive leasing has been put off until 2013, given the upcoming Thanksgiving and Christmas holidays.

“If it’s the early part of 2013, I’m not surprised,” he said. “If it’s the later part of 2013, not only am I surprised, I’m disappointed.”

He added, “It has to happen early in 2013, and we’re making that very clear to people in the administration.”

Francois said leasing conditions stem from consultations with other federal agencies, states, tribes and historical preservationists, and have to be translated into contract language, a process that happens internally at BOEM.

For example, he said some of the requirements include protection of endangered species such as the right whale, which is sensitive to noise and vessel strikes from site characterizations. Mitigation steps could include marine mammal observers and specifications about when to ramp up and ramp down operations.

Biologists discussed right whale threats and mitigation strategies at a session here yesterday (Greenwire, Oct. 11).

“It’s easy to have that agreement come out of the consultation process,” he said. “But then to put that into binding language in the contract is a work in progress.”

Interior in October 2010 issued the first federal lease for offshore wind to Cape Wind, a 468 MW project off the coast of Cape Cod, Mass., and permitted construction for the project in April 2011. The multibillion-dollar project has secured agreements to sell about 75 percent of its power and hopes to begin construction by 2014.

BOEM earlier this year also finalized an environmental assessment clearing the way for offshore leases in “wind energy areas” off the coasts of Virginia, Maryland, Delaware and New Jersey. Similar progress is expected for separate wind energy areas off the coasts of Massachusetts and Rhode Island.