Virginia’s coastline could be the next US offshore wind hotspot, if the US Department of the Interior (DOI) gets its way.
DOI announced this week it will hold America’s second-ever competitive lease sale for offshore wind on the US Outer Continental Shelf (OCS) September 4th, for 112,800 acres in a prime development zone 23.5 miles from Virginia Beach.
The announcement comes one week before DOI’s first competitive offshore wind lease auction is held for 164,750 acres for development off the coasts of Massachusetts and Rhode Island on July 31st, an event Interior Secretary Sally Jewell has said could set the pace for future auctions.
2 GW Offshore Wind Potential Up For Auction
Unlike the New England auction, the Virginia offshore wind area will be offered as a single lease, to eight qualified bidders. DOI predicts the area, composed of 19 full- and 13 sub-OCS blocks, has the potential to generate more than 2,000 megawatts (MW) of renewable electricity – enough to power 700,000 homes.
“The competitive lease sale offshore Virginia will mark an important transition from planning to action when it comes to capturing the enormous clean energy potential offered by Atlantic wind,” said Secretary Jewell. “Responsible commercial wind energy development has the potential to create jobs, increase our energy security, and strengthen our nation’s competitiveness.”
America’s coastal waters hold enormous wind energy potential – roughly 1,300 gigawatts (GW), according to a 2012 estimate. Even harnessing a realistic fraction of this potential could generate 52GW of clean electricity, while creating 300,000 green jobs and $200 billion in economic activity.
“Smart From The Start” Approach May Speed Development
But while the potential for offshore wind is massive, development has been held back by concerns over local aesthetics, environmental impacts, and economic realities. DOI’s newest push, however, could finally calm the rough waters that have swamped proposed projects like Cape Wind.
DOI’s efforts are part of President Barack Obama’s challenge to the agency to approve an additional 10,000MW of renewable energy production on public lands and waters by 2020. Using this “Smart from the Start” approach to stakeholder involvement, DOI hopes to expedite responsible development of commercial-scale wind energy off America’s coastline.
This auction block was selected through a coordinated process with Virginia’s government and environmental stakeholders to minimize ecological and local concerns. Consultations included multiple federal laws like the Endangered Species Act and Coastal Zone Management Act.
As a result, the 112,800 acres avoid sensitive habitat along the Chesapeake Bay, military training areas, marine vessel traffic, a dredge disposal site, and areas of concern specified by NASA’s Goddard Space Flight Center.
Business Concerns Still Loom Large
Anticipating environmental and local concerns is great and all, but the journey from DOI’s auction to generating clean electricity will be driven by business concerns – and those concerns are real.
Eight companies have expressed interest in the auction, and been deemed eligible to participate, including some of the world’s biggest and most experiences wind developers like Iberdrola and EDF Renewables. But potential development could be swamped if Virginia’s state utility, Dominion Virginia Power, wins the auction.
Environmentalists have raised concerns that if Dominion is awarded the lease rights, it might “drag its feet” to develop the area in light of existing investments in natural gas generation and nuclear power (full disclosure – I am a Dominion residential electricity customer).
In addition, because Virginia does not maintain a competitive electricity market, other developers may face difficulties in securing power purchase agreements for their Virginia offshore wind turbines. Without access to the local market, developers may have to look for customers in electricity markets in other states or wait until the Atlantic Wind Connection is complete.
Can America Keep Up In The Offshore Wind Race?
Regardless of Dominion’s involvement, the larger message is clear – DOI is setting sail for the future of America’s offshore wind industry and joining other US efforts to go from potential to reality.
There are approximately zero utility-scale offshore wind projects being built in the US, and we’re rapidly losing the opportunity to lead in a market estimated to be worth around $170 million by 2020.
If DOI’s first two lease auctions go well, we may see many more approved in the near future, and America might finally be on its way to catching up to our European competitors and keeping pace with the growing Asian market.