Interior seeks industry interest in N.Y. coastal waters

Source: Phil Taylor, E&E reporter • Posted: Friday, January 4, 2013

The Obama administration today said it is gauging industry interest in developing wind power in a 127-square-mile area off the coast of New York, where a state power organization has proposed building a 350-megawatt wind farm.

If no other parties are interested in developing the area, the Interior Department said it would consider granting the New York Power Authority the exclusive right to build a project.

“Today’s announcement represents an important step forward in facilitating renewable, clean energy generation offshore New York,” Bureau of Ocean Energy Management Director Tommy Beaudreau said in a statement. “We will work closely with the state of New York and stakeholders to share information and resolve issues in order to make responsible wind energy development in federal waters a reality.”

The announcement marks another step in the administration’s efforts to expand wind development off U.S. shores, where federal scientists believe 54,000 MW could be developed by 2030.

Interior weeks ago said it is advancing a Norwegian company’s proposal to build a 12 MW floating wind farm off Maine (E&ENews PM, Dec. 20, 2012). And in November, the agency announced it will hold its first competitive offshore wind lease sales this year off the coasts of Massachusetts, Rhode Island and Virginia (E&ENews PM, Nov. 30, 2012).

The New York project was first proposed in September 2011 by the Long Island-New York City Offshore Wind Collaborative, which consists of the NYPA, Consolidated Edison Co. of New York and the Long Island Power Authority. The 350 MW facility would be located in 60 to 120 feet of water and could eventually be doubled in size.

A cost estimate for the project has not been determined, and the earliest it could be built is 2017, the group said.

The group estimates the project could create up to $2.7 billion in new economic activity, 2,300 to 4,700 construction jobs and up to 170 permanent jobs. It said offshore wind is stronger, more dependable and closer to demand than onshore wind sites in the state.

Federal law requires BOEM to ensure there is no competitive interest in the area before issuing a lease. Any interest from outside developers would trigger a competitive bidding process.

BOEM said it is also seeking comment on any potential environmental or social impacts from leasing the area for wind development. The project would be located about a dozen miles south of Long Beach between two corridors for vessels traveling to and from the Port of New York and New Jersey.

A notice of the proposal will be published in tomorrow’s Federal Register.

Although roughly a dozen wind farms have been proposed in U.S. waters, none has entered construction due to high capital costs, a lack of transmission, tax uncertainty and some lawsuits.

The industry this week cheered Congress’ extension of the investment tax credit as part of a year-end “fiscal cliff” package, which it called critical for the finance and construction of projects.

Critics say offshore wind is still far too expensive and should not be subsidized, but industry backers say costs will fall once development is scaled up.

The U.S. offshore wind industry lags far behind Europe, where more than 50 projects and nearly 4,000 MW have been installed in the past decade.