The US Energy Information Agency closed out 2016 by re-issuing some of its “favorite” observations from the last 12 months, and to cap the series it chose an article that summarizes the Interior Department’s offshore wind lease program for the Atlantic Coast states.
Just a wild guess, but by favorite the agency probably means most significant, and it certainly has hit the nail on the head with offshore wind — even though the US has barely gotten its first “steel in the water.”
US Atlantic Seaboard Should Be A Wind Energy Juggernaut But It’s Not…Yet
That’s too bad, particularly for Atlantic Coast states that are characterized by burgeoning urban centers in the north, industrial acceleration in the south, and a nice long, relatively shallow Continental Shelf of the US eastern seaboard, upon which wind farms are relatively easy to build.
Recognizing the potential (and the need), in 2010 the Obama Administration enlisted practically all of the east coast states to coordinate offshore wind energy development, by committing to an active or at least an observer role in the so-named Atlantic Offshore Wind Energy Consortium.
By 2014 the Interior Department began to take matters into its own hands by holding lease auctions for designated offshore wind energy development, state level support or not.
Wind Replaces Diesel
That brings us to the EIA summary. Before getting into the leases, EIA notes the significance of the new Block Island wind farm.
In addition to providing clean power to the mainland, the new 30 megawatt wind farm has replaced the island’s local diesel-fueled power supply.
There’s an interesting story behind those generators. Back in 1998, the Wall Street Journal reported that the island’s power company had been installing new diesel generators without permits. Once the US Environmental Protection Agency caught on, the company proposed running a pricey undersea cable over to the mainland to draw electricity from the grid.
According to the Wall Street Journal, Block Island customers were already paying among the highest electricity rates in the US, and the $10 million (in 1998 dollars) cable project would have boosted them even higher.
The emergence of commercial-ready wind technology provided an alternative, though electricity from the new wind farm is also relatively high. According to the Providence Journal it started at 23.5 cents per kilowatt hour in December and rose to 24.4 cents in January, which is almost three times the price of the grid blend. The contract calls for annual increases that top out at 47.9 cents in the final year, though if everything works out the increase will come out to a few cents less.
Residents of Block Island are still expected to win out, though. Even with the premium for wind, their electricity rates will drop slightly. Mainland residents on the grid will see their rates go up by just over $1.00 monthly for the first year.
Like It Or Not, Offshore Wind Leases Are Here
State waters generally extend only three nautical miles offshore, which is why the federal government can lease areas for development relatively close to state shorelines (federal control extends to 200 nautical miles).
According to EIA, the first federal offshore wind leases went out for bid in 2013, with almost 165,000 acres off Massachusetts and of Rhode Island.
Here’s the rundown from EIA as of December 2, 2016:
Since then, BOEM [the Bureau of Ocean Energy Management] has held four additional auctions for wind development in the Atlantic region. To date, it has issued 11 commercial leases in federal waters, 9 of which were purchased through the competitive bid process. BOEM issued the other 2 leases before the first competitive lease sale.
Competition for the wind leases has been steadily ramping up, demonstrating how the offshore wind market has matured over the past few years.
Only eight companies qualified to bid on the 2013 leases. In comparison, 14 companies qualified for the most recent sale, which occurred last month for 80,000 acres off New York State’s Long Island (for the record, Norwegian oil and gas giant Statoil won the lease).
According to EIA, the next area up for bid will be North Carolina. That should be interesting. As described by Politico among other sources, back in 2013 the Koch brothers targeted North Carolina as part of a broader plan to influence state-level policy, including energy policy.
The plan worked, though perhaps a little too well. Backlash against state policy focused on the Koch-supported governor, Pat McCrory. The disaffection grew so intense that Governor McCrory lost his bid for re-election last November, making himself the first incumbent governor in North Carolina history to lose the office.
During his tenure McCrory claimed to support offshore wind development for North Carolina, but his Administration took steps that would effectively stop BOEM from selling leases off the coast.
Incoming Governor Roy Cooper assembled an impressive record on environmental issues during his tenure as North Carolina Attorney General, so keep an eye out for his statements on the upcoming lease sale.
Meanwhile over in New Jersey, it appears that the joke is on Governor Chris Christie. The 80,000 acre New York lease area is off Long Island, in a pocket that is nearly equidistant from the New Jersey coastline.
In fact, video simulations provided by BOEM indicate that the turbines will be visible on the horizon when viewed from parts of the New Jersey shore.
So, New Jersey gets the turbines after all. What it does not get is bragging rights to the new wind farm for its renewable energy portfolio, or the new jobs that are expected to attend its construction and operation.
Governor Christie is term-limited and has one year left in office, so stay tuned.
Image: via US EIA.
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