Mid-Atlantic enters ‘offshore game’ in a big way
The Public Service Commission was initially expected to only award renewable energy credits to one of two companies vying for state financing. In the end, commissioners elected to grant the credits to both: a 248-megawatt development proposed by U.S. Wind Inc. and a 120-MW project planned by Skipjack Offshore Energy LLC.
Regulators hailed the economic benefits of the projects. They estimated the developments would spur $1.8 billion in investment, create 9,700 direct and in-direct jobs, and contribute $74 million in taxes over 20 years.
But for industry advocates who have managed only fleeting success in installing turbines off American shores, the decision amounted to a breakthrough.
“This is a big deal because it really brings the Mid-Atlantic into the offshore game,” said Andrew Gohn, who oversees eastern state policy at the American Wind Energy Association, a trade group.
The decision makes the developments the largest individual projects to be approved by state regulators and comes as Atlantic states rush to position themselves as a hub for the nascent offshore industry.
A 30-MW project off Rhode Island went into operation last year. New York regulators have approved a 90-MW development off Long Island, which is expected to be operational by 2022 (Energywire, Jan. 26).
States have set even more ambitious goals. Massachusetts is accepting bids to develop up to 1.6 gigawatts of offshore wind capacity. New York Gov. Andrew Cuomo (D) has set a target of bringing 2.4 GW of wind online off the coast of the Empire State by 2030.
The states hope the new turbines will not only generate large amounts of non-emitting power, but enliven aging ports with new shipping and manufacturing jobs.
But to land the jobs onshore, the states must first sink turbines in the seafloor.
‘We will be the epicenter’
That dynamic was on display in Maryland yesterday. Commissioners said their decision to approve both projects reflected the developments’ falling costs and a desire to position Maryland as a leader in the offshore wind industry.
“I think the first-mover advantage consideration was a very important one for the commission as we looked at these two projects,” PSC Chairman W. Kevin Hughes said in an interview.
As part of the agreement, he noted, the developers agreed to invest $76 million at a steel fabrication plant outside Baltimore and almost $40 million in upgrades at the Tradepoint Atlantic shipyard in Baltimore County.
“We think those facilities will be used not only by our developers, but by developers of other projects in the New Jersey, Delaware, Maryland, Virginia region,” Hughes said.
The projects will also help Maryland meet its goal of slashing carbon emissions by 40 percent over the next 14 years. Commissioners estimated the two wind farms would reduce carbon emissions by 19,000 tons annually.
Yesterday’s decision stems from 2013 legislation aimed at promoting Maryland’s wind industry, requiring 2.5 percent of the state’s retail electricity sales to come from offshore wind.
The legislation establishes offshore renewable energy credits, paid for by consumers and granted to wind developers. In its decision yesterday, the PSC set the value of the credits at $131.93 per megawatt-hour over the course of 20 years.
U.S. Wind will receive 913,845 credits annually, or roughly $120 million. Skipjack will receive 455,482 credits annually, or about $60 million a year.
At one point, it looked as if only one of the projects would proceed. The two developers clashed at a hearing in March over their competing bids. Ultimately, both walked away happy (Energywire, March 20).
The U.S. Wind project calls for 62 turbines to be built some 15 miles offshore of Ocean City. It has a projected price tag of $1.4 billion and is expected to be operational by 2020.
“This decision cements Maryland as a first-mover. We will be the epicenter of this exciting new industry for decades to come,” said Paul Rich, director of project development for U.S. Wind.
Skipjack, a subsidiary of Rhode Island-based Deepwater Wind, is planning to bring 15 turbines online by 2022. The project’s cost is $720 million. It is located 26 miles from Ocean City and will generate enough capacity to power 35,000 Maryland homes, said Deepwater Wind CEO Jeff Grybowski.
“With today’s decision, Maryland is taking a big step forward in building a clean energy future,” Grybowski said in a statement. “Offshore wind is a home run for the state. It creates jobs, promotes clean air, and delivers cost-effective and reliable energy.”