07/07/2020 - Legal Analysis - Oceans & Offshore Energy - Student Work

BOEM predicts offshore wind boom, but where does the industry stand today?

by Martin Levy, JD 2020

Research Assistant Martin Levy (JD 2020) has been tracking the permitting of offshore wind energy for EELP. This is his third post covering ongoing developments. See also his prior posts on the federal permitting program and the Vineyard Wind Supplement EIS.

In a recent environmental analysis of the offshore wind industry, the Bureau of Ocean Energy Management (BOEM) projected that a network of about 2,000 turbines will generate 22 gigawatts (GW) of energy by 2030.[1] For scale, this is double the total power demand of nine east coast states, including New York, Massachusetts, Virginia, and North Carolina.[2] But, as of today, there are only five offshore turbines operating off the Atlantic coast; altogether, these turbines produce a relatively paltry 30 megawatts (MW) of energy.[3] How, then, does BOEM anticipate this momentous growth in offshore wind development?

First, BOEM projects that the Massachusetts-based Vineyard Wind project will generate 800 MW of energy.[4] Vineyard Wind, whose review prompted BOEM’s industry-wide study, is months away from final regulatory approval and (assuming all goes well) is expected to go into service sometime in 2023.[5] Next, BOEM points to six offshore wind projects that have submitted or approved a Construction and Operations Plan (COP). A COP provides an overview of a developer’s project proposal and is the final stage of BOEM’s permitting process.[6] At this stage, BOEM analyzes a project’s development plans, conducts environmental reviews, and coordinates with affected state and local governments.[7]

Yet energy production is not necessarily imminent when a project reaches the COP stage.[8] The first of these six projects, South Fork Wind — a 15-turbine development that will generate 130 MW off the coast of Long Island —[9] was initially forecast to begin installations in 2021 and operations by the end of 2022.[10] However, BOEM has not begun its environmental review of South Fork’s COP[11] and Ørsted, one of South Fork’s developers, recently declared the 2022 start date unlikely due to a lagging regulatory process and the Covid-19 pandemic.[12]

Ørsted, along with state utilities, is developing four other projects at the COP stage: Skipjack Wind off the Maryland-Delaware coast;[13] Ocean Wind off of New Jersey;[14] Bay State Wind in Massachusetts;[15] and Coastal Virginia Offshore Wind.[16] Each project demonstrates the challenges facing the industry. For the 120 MW Skipjack project, Ørsted anticipates operation will be delayed into 2023.[17] Meanwhile, Ørsted is unsure whether the 1,100 MW Ocean Wind project will be ready by 2024 given regulatory delays at BOEM.[18] The 800 MW Bay State Wind submitted their COP in March of 2019, but neither BOEM nor developers have announced a project timeline.[19] While BOEM has approved the Coastal Virginia project, which finished construction in June, this two-turbine pilot will only produce 6 MW of power once operational.[20] The sixth project at the COP stage, Equinor’s 816 MW Empire Wind off of Long Island,[21] is scheduled to be operational by 2024.[22] As of yet, Empire Wind has not announced any delays, but BOEM has similarly not begun review of their COP.[23]

Together, these six projects emphasize the yet-unrealized potential of Atlantic offshore wind generation. Apart from the smaller Coastal Virginia pilot, none of the COP-stage projects are scheduled to be operational before 2023. Even if all six projects begin operating on schedule, the industry must still develop four times that much energy to account for BOEM’s 2030 projections.

Diagram of projects BOEM evaluated in Vineyard Wind Supplemental EIS

Above: Visual Representation of BOEM’s Offshore Wind Projects evaluated in Vineyard Wind’s Supplemental EIS. Source: BOEM Vineyard Wind Supplemental EIS

BOEM analyzed all “reasonably foreseeable” projects in addition to those at the COP stage.[24] The agency defined “reasonably foreseeable” projects as those that have secured state power purchase agreements,[25] any projects with announced development plans, all announced and scheduled state offshore wind solicitations, and any remaining unscheduled state solicitations.[26] Among these, some notable mentions include Dominion Energy’s plan to develop a 2.6 GW project off the Virginia coast,[27] the 1,200 MW Liberty Wind project in New York,[28] and Vineyard Wind 2, a 400 MW Massachusetts project with two options for the development of an additional 800 MWs.[29] At their current pace, BOEM would have to rapidly increase their regulatory capacity to meet the 2030 projections.

As demonstrated by BOEM’s project backlog, building out the enormous potential of the offshore wind industry will require a herculean regulatory feat. While offshore wind faces some consistent (but surmountable) opposition from commercial fisheries,[30] nothing will complicate the industry’s development more than continued regulatory uncertainty. The environmental review that produced BOEM’s optimistic 22 GW by 2030 projection was itself the product of a year-long delay of the Vineyard Wind project.[31] For the moment, this ambitious 2030 projection along with the absence of unanticipated negative findings in the draft environmental review, has buoyed the industry.[32] Ultimately, the regulatory benefits of BOEM’s cumulative environmental review depend on the final approval of Vineyard Wind later this year,[33] and whether the agency uses their comprehensive study of the offshore wind industry to streamline future permitting,[34] or instead conducts equally expansive environmental reviews for each subsequent project.[35]

In another development, this month the Trump Administration is expected to announce new, streamlined renewable energy regulations at BOEM.[36] A revised permitting process may quicken project review, which has reportedly slowed to just one COP at a time given the Covid-19 pandemic and staff shortages.[37] For its part, industry would likely prefer any regulatory process that minimizes the delays and litigation that have so far hampered development.[38] These new rules might just propel the offshore wind industry to the super-charged heights envisioned by BOEM. While it is not clear what shape these new rules will ultimately take, BOEM’s 2030 projections highlight the great potential of offshore wind development, while also underscoring the many challenges new regulations will have to address.

See our previous posts on offshore wind energy development:

 

[1] Bureau of Ocean Energy Management: Vineyard Wind 1 Offshore Wind Energy Project, Supplement to the Draft Environmental Impact Statement, ES3. ENVIRONMENTAL AND CUMULATIVE IMPACTS at ES-2 (June 2020) available at https://www.boem.gov/sites/default/files/documents/renewable-energy/Vineyard-Wind-1-Supplement-to-EIS.pdf.

[2] BOEM projects 22 GW of offshore wind energy by 2030, while a recent study by McKinsey suggest that 20GW would double the total power demand of several atlantic coast states. See Nicolas Lefevre-Marton, Rohan Saharia, Richard Sellschop, & Humayun Tai, Scaling the US East Coast offshore wind industry to 20 gigawatts and beyond, McKinsey & Company (April 11, 2019) (showing that 20GW of energy is twice the total power demand of North Carolina, Virginia, Delaware, Maine, Maryland, Massachusetts, New Jersey, New York, and Rhode Island) available at https://www.mckinsey.com/industries/electric-power-and-natural-gas/our-insights/scaling-the-us-east-coast-offshore-wind-industry-to-20-gigawatts-and-beyond.

[3] The Rhode Island Block Island project was constructed in state waters and thus not subject to BOEM permitting procedures. See U.S. Offshore Wind Industry Status Update, American Wind Energy Association, (“The U.S. currently has one operational offshore wind project with many more on the way. The nation’s first commercial offshore wind project, the Block Island Wind Farm, came online in December 2016. Developed by Deepwater Wind, the Block Island Wind Farm is a 30 megawatt (MW) project with five turbines located three miles off the coast of Block Island, Rhode Island.”) available at https://www.awea.org/Awea/media/About-AWEA/U-S-Offshore-Wind-Fact-Sheet-September-2018_2.pdf; Additionally, Dominion Energy and Orsted completed construction of a 6 MW project that is expected to become operational this summer. Karl-Erik Stromsta, Second US Offshore Wind Project Finishes Construction Off Virginia, Green-Tech Media (June 29, 2020) available at  https://www.greentechmedia.com/articles/read/second-us-offshore-wind-farm-finishes-construction-off-virginia.

[4] See Iberdrola: Vineyard Wind 1 Offshore Wind Farm, Vineyard Wind 1, our first offshore wind farm in the United States (“Iberdrola, through Avangrid Renewables, is taking part in the development of a large-scale offshore wind farm off the coast of the state of Massachusetts, United States. Vineyard Wind 1 will have a capacity of 800 MW, which will be able to meet the energy needs of one million homes.”) available at https://www.iberdrola.com/about-us/lines-business/flagship-projects/vineyard-wind-offshore-wind-farm.

[5] Id.; See also Vineyard Wind, Statement on Bureau of Ocean Energy Management Timeline (Feb. 11, 2020) (“We have received updated information from the Department of Interior that indicates the Final Environmental Impact Statement (FEIS) for the Vineyard Wind I project will be published later than what was previously anticipated,” said Lars Pedersen, CEO of Vineyard Wind. “While we need to analyze what a longer permitting timeline will mean for beginning construction, commercial operation in 2022 is no longer expected. We look forward to the clarity that will come with a final EIS so that Vineyard Wind can deliver this project to Massachusetts and kick off the new US offshore energy industry.”) available at https://www.vineyardwind.com/press-releases/2020/2/11/statement-on-boem-timeline.

[6] Bureau of Ocean Energy Management (BOEM), U.S. Department of the Interior, Guidelines for Information Requirements for a Renewable Energy Construction and Operations Plan (COP) at 6 (April 7 2017) https://www.boem.gov/COP-Guidelines/; see also 30 CFR §585.626.

[7] See 30 CFR § 585.628 – How will BOEM process my COP? (Detailing environmental analysis under the National Environmental Policy Act, state approval under the Coastal Zone Management Act, and coordination with affected Federal, State, local, and Tribal governments as part of the COP review process).

[8] Bureau of Ocean Energy Management: Vineyard Wind 1 Offshore Wind Energy Project, Supplement to the Draft Environmental Impact Statement, ES3. ENVIRONMENTAL AND CUMULATIVE IMPACTS at ES-2 (June 2020) available at https://www.boem.gov/sites/default/files/documents/renewable-energy/Vineyard-Wind-1-Supplement-to-EIS.pdf.

[9] See Constructions & Operations Plan: South Fork Wind, Revision 3: February 2020 (Submitted to Bureau of Ocean Energy Management) (15 turbines, each producing between 6 MW and 12 MW) [hereinafter South Fork COP] available at https://www.boem.gov/sites/default/files/documents/oil-gas-energy/SFWF_COP_Vol%201_2020-02-12.pdf; see also Long Island Power Authority, South Fork Wind Farm Fact Sheet (Describing the project as “produc[ing] a total of 130 mega-watts of energy”) available at https://www.lipower.org/wp-content/uploads/2019/10/LIPA-First-Offshore-Wind-Farm-Doc-V19_102819-FINAL.pdf; see also Fact Sheet: South Fork Wind available at https://orstedcdn.azureedge.net/-/media/www/docs/corp/jv/sfw-factsheet.ashx?la=en&rev=37a7198bce2e49109d41a7354ca2dfa8&hash=53A727213A8FA3B07BF6D520416E265E.

[10] South Fork COP at ES-1 (“The Project is scheduled to be installed during 2021 and 2022, and to be commissioned and operational by the end of 2022.”).

[11] The Bureau of Ocean Energy Management (BOEM) published a Notice of Intent (NOI) to prepare an Environmental Impact Statement (EIS) for the Construction and Operations Plan (COP) submitted by Deepwater Wind South Fork LLC (Deepwater Wind) on October 19. 2018. There have been no further updates from the agency. See U.S. Department of Interior, Bureau of Ocean Energy Management, South Fork available at https://www.boem.gov/renewable-energy/state-activities/south-fork.

[12] See Ørsted, Interim report for the first quarter 2020: Strong Q1 results (April, 29, 2020) [hereinafter Ørsted Q1 2020 Statement] (“For the South Fork project, which was also planned for a 2022 commissioning date, we have received the ‘Notice of Intent’, but have not received a confirmed permit schedule from the federal government outlining when the ‘Construction and Operations Plan’ (COP) will be received. This combined with impacts from the COVID-19 related shutdowns in New York, will also very likely delay South Fork to beyond 2022.”) available at https://orsted.com/en/company-announcement-list/2020/04/2023899.

[13] See Ørsted , Skipjack Wind Farm FAQs https://orstedcdn.azureedge.net/-/media/www/docs/corp/us/skipjack/sjw_faq_april_2020.ashx?la=en&rev=ace27e9d93c544bd8daa8658e54ea142&hash=3CEDE2155932861B22D82977E234DB2E.

[14] See Ørsted, Ocean Wind https://oceanwind.com

[15] See Bay State Wind:  Project Overview, https://orstedcdn.azureedge.net/-/media/www/docs/corp/us/factsheets/bay-state-wind-factsheet.ashx?la=en&rev=a46fbb88a141444c8e4f37fb9595ecab&hash=D88C08730AC6151D4194E8C77B068756

[16] See Dominion Energy, Coastal Virginia Offshore Wind (“The CVOW project calls for development of two 6-megawatt wind turbines on a site leased by the Virginia Department of Mines Minerals and Energy (DMME) . . . We have contracted with a global wind leader – Ørsted Energy of Denmark – for construction of the two turbines.”) https://www.dominionenergy.com/company/making-energy/renewable-generation/wind/coastal-virginia-offshore-wind.

[17] See Ørsted Q1 2020 Statement (“For Skipjack it is no longer realistic to receive the ‘Notice of Intent’ from BOEM in due time to meet commissioning date in late 2022. Therefore, we now expect to commission the wind farm approx [sic] one year later.”)

[18] See Ørsted Q1 2020 Statement “. . . Ocean Wind . . .  expected commissioning in 2023 and 2024, we also see increased risk of delays. We have submitted our COP applications for Ocean Wind . . . await[] BOEM to issue their ‘Notices of Intent’, outlining the timeline for COP approval . . .  we need more visibility on the path to COP approval before concluding whether commissioning in 2023-24 remains realistic. We expect to have more clarity after summer.) (emphasis added).

[19] See, e.g. Permitting Dashboard: Federal Infrastructure Projects, Bay State Wind https://www.permits.performance.gov/permitting-projects/bay-state-wind-project; see also Bay State Wind, Read news coverage about Bay State Wind https://baystatewind.com/news.

[20] See Heather Richards, 2nd offshore wind farm in U.S. now built, utility says, E&E News (June 30, 2020) (“Dominion Energy Inc. has installed the first two offshore wind turbines in federally controlled waters off the coast of Virginia, laying the groundwork for the largest single offshore wind proposal in the country . . . Dominion’s 12-megawatt pilot — engineered and constructed by the world’s largest offshore wind developer, Ørsted A/S — is currently undergoing testing and is anticipated to come online by the end of summer. It is expected to provide enough power at peak capacity to power 3,000 homes, according to the company.”) available at https://www.eenews.net/energywire/stories/1063477819/.

[21] See Equinor, Equinor offshore wind bid wins in New York State (Feb. 17, 2020) https://www.equinor.com/en/news/2019-new-york-offshore-wind-bid.html.

[22] See Offshore Magazine, New York Selects Two Offshore Wind Projects (July 19, 2019) (“Project development is expected to begin as early as spring 2021, with construction expected in 2022, and commercial operation beginning in December 2024. According to Equinor, the project will be able to power more than 500,000 homes in New York.”) available at https://www.offshore-mag.com/field-development/article/14036507/new-york-selects-two-offshore-wind-projects; see also Long Island Press, NY Announces Nation’s Largest Wind Farm To Be Built Off Long Island (July 19 2019) available at https://www.longislandpress.com/2019/07/19/ny-announces-nations-largest-wind-farm-to-be-built-off-long-island/.

[23] See, e.g. Bureau of Ocean Energy Management, Lease OCS-A 0512 available at https://www.boem.gov/renewable-energy/state-activities/lease-ocs-0512.

[24] See Bureau of Ocean Energy Management: Vineyard Wind 1 Offshore Wind Energy Project, Supplement to the Draft Environmental Impact Statement, 1.2. METHODOLOGY FOR ASSESSING CUMULATIVE IMPACTS at 1-2 – 1-3 (June 2020) available at https://www.boem.gov/sites/default/files/documents/renewable-energy/Vineyard-Wind-1-Supplement-to-EIS.pdf.

[25] The five projects are Revolution Wind, U.S. Wind, Sunrise Wind, Mayflower Wind, and Vineyard Wind 2 (including Park City Wind). Id.

[26] Id.

[27] Dominion said it expects ocean survey work to begin in 2020, with a Construction and Operations Plan submitted to BOEM in 2022. See Robert Walton, Dominion proposes 2.6 GW offshore wind project, positioning Virginia as ‘hub’ for regional development, Utility Dive (Sept. 20, 2019) available at https://www.utilitydive.com/news/dominion-proposes-78b-offshore-wind-project-positioning-virginia-as-hub/563332/.

[28] Vineyard Wind, Liberty Wind (“Liberty Wind proposes to deliver up to 1,200 megawatts of offshore wind power to New York. The Liberty Wind project would supply enough emission free energy to power over 750,000 New York homes.”) available at https://www.vineyardwind.com/liberty-wind.

[29] Vineyard Wind, Vineyard Wind 2 (“Vineyard Wind submitted a set of commercial large- scale offshore wind proposals to Massachusetts Electric Distribution Companies (EDCs) as part of the Commonwealths’ second Section 83C procurement for clean energy generation and transmission. The proposals include a required 400 megawatt (MW) option and two options for development of an 800 MW project.”) available at https://www.vineyardwind.com/vineyard-wind-2.

[30] See, e.g., Scott Carpenter, Offshore Wind Companies Are Racing To Develop America’s East Coast. First They Must Appease The Fishermen, Forbes (Jun 16, 2020) available at https://www.forbes.com/sites/scottcarpenter/2020/06/16/offshore-wind-companies-are-racing-to-develop-americas-east-coast-first-they-must-appease-the-fishermen/#7dbf29da37d8.

[31] See Vineyard Wind Press Release Shareholders Affirm Commitment to Deliver Offshore Wind Farm but with Revised Schedule (August 12, 2019) (“Vineyard Wind today announced that company shareholders have affirmed a commitment to deliver a proposed 800-megawatt (MW) wind farm off the coast of Massachusetts, albeit with a delayed project schedule. This decision follows the August 9th determination by the United States Department of the Interior (DOI) to significantly delay publication of the Vineyard Wind 1 project’s Final Environmental Impact Statement (FEIS) and to instead undertake a supplemental draft Environmental Impact Statement process.”) available at https://www.vineyardwind.com/press-releases/2019/8/12/shareholders-affirm-commitment-to-deliver-offshore-wind-farm-but-with-revised-schedule-1.

[32] See, e.g., Business Network for Offshore Wind, Business Network, AWEA and NOIA react to Vineyard Wind Draft Supplemental Environmental Impact Statement (June 10, 2020) (“Business Network President and CEO Liz Burdock – “I plan to virtually raise a toast to BOEM for its commitment to staying on time and on target . . . AWEA CEO Tom Kiernan – “BOEM has taken the first in a series of important steps in finally unlocking the enormous potential for offshore wind to deliver clean, reliable power to major population centers in the U.S. . . . NOIA President Erik Milito – “The Vineyard Wind Supplemental EIS brings us a step closer towards thousands of jobs and billions of dollars in economic growth and a step further away from unexpected and unintended bottlenecks and holdups. This is great news as America looks for ways to recover our economy”) https://www.offshorewindus.org/2020/06/10/business-network-awea-and-noia-react-to-vineyard-wind-draft-supplemental-environmental-impact-statement/; see also Lisa Rushton, Belton Zeigler, Joseph Tirone, & David Efird, The Vineyard Wind Supplement EIS – A Strongly Positive Signal for the Growth of US Offshore Wind Industyr and Supply Chain, Womble Bond Dickson (June 26, 2020) (“The supplemental EIS assumes that development of OSW project in the US will proceed at this accelerated pace. For that reason alone, global OSW supply chain companies considering the US market should see the supplement EIS as a strongly positive signal of future opportunities here.”) available at https://www.womblebonddickinson.com/sites/default/files/2020-06/The_Vineyard_Wind_Supplemental_EIS_A_Strongly_Positive_Signal_for_the_Growth_of_US_Offshore_Wind_Industry_and_Supply_Chain.pdf.

[33] See, e.g., Martin Levy, Vineyard Wind is One Step Closer to Construction: Will Anything Else Get in the Way?

Harvard Environmental & Energy Law Program (July 22, 2020) (describing potential pitfalls at the final stage of BOEM’s Vineyard Wind review) https://eelp.law.harvard.edu/2020/06/vineyard-wind-is-one-step-closer-to-construction-will-anything-else-get-in-the-way/#_ednref18.

[34] At a 2020 offshore wind conference, acting BOEM Director Walter Cruickshank stated “As we have worked through this process for the first time [with Vineyard Wind], we have adapted our initial approach which we believe will allow the permitting of projects to run more smoothly in the future.” See Richard A. Kessler, Vineyard Wind review will make ‘permitting future projects run more smoothly’: BOEM boss, ReCharge (June 19, 2020) available at https://www.rechargenews.com/wind/vineyard-wind-review-will-make-permitting-future-projects-run-more-smoothly-boem-boss/2-1-829117.

[35] At the same 2020 offshore wind industry conference as the note above, acting BOEM Director Walter Cruickshank stated that similarly expansive environmental reviews of “cumulative impacts” will now be part of all future COP approvals. Heather Richards, Interior seeks input after finding turbines hurt fisheries, E&E News (June 11, 2020) (“BOEM acting chief Walter Cruickshank reiterated during an offshore wind panel yesterday his stance that the federal government intended for Vineyard permitting to be exemplary to set a standard for the burgeoning industry to come. Cumulative impact studies will now be part of all offshore construction and operation plan environmental reviews, he said during the Business Network for Offshore Wind’s 2020 International Partnering Forum.”) available at https://www.eenews.net/stories/1063371249. Interestingly, this expansive approach to “cumulative impact” analysis differs significantly from the Trump Administration’s Council of Environmental Quality (CEQ) proposal to eliminate mandatory “cumulative impact” analysis in NEPA reviews. See Update to the Regulations Implementing the Procedural Provisions of the National Environmental Policy Act, 5 Fed. Reg. 1708 (Jan. 10, 2020) (“In addition, CEQ proposes a change in position to state that analysis of cumulative effects, as defined in CEQ’s current regulations, is not required under NEPA . . . Excessively lengthy documentation that does not focus on the most meaningful issues for the decision maker’s consideration can lead to encyclopedic documents that include information that is irrelevant or inconsequential to the decision-making process.”) available at https://www.federalregister.gov/documents/2020/01/10/2019-28106/update-to-the-regulations-implementing-the-procedural-provisions-of-the-national-environmental.

[36] See Office of Information and Regulatory Affairs, Deregulating and Streamlining Renewable Energy Regulations (Spring 2020) available at https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202004&RIN=1010-AE04.

[37] See Joan Bondareff & Dana Merkel, Offshore Wind: Driving Factors and Recent Impediments, Blank Rome/JD Supra (June 29, 2020) (“In an abundance of caution and perhaps due to staffing shortages, BOEM is only processing one COP at a time. Therefore, other COPs from major developers are waiting behind the Vineyard Wind project, which is certainly slowing down the permitting and construction process. This, in addition to COVID-19, is leading to delays for many other offshore wind projects.”) available at https://www.jdsupra.com/legalnews/offshore-wind-driving-factors-and-58762/.

[38] See Martin Levy, Offshore Wind Development: Federal Permitting Program Challenges, Harvard Environmental & Energy Law Program, (Mar. 24, 2020) (describing delays with Cape Wind and Vineyard Wind projects) https://eelp.law.harvard.edu/2020/03/offshore-wind-development-federal-permitting-program-challenges/; see also Jon Chesto, Now it’s official: Cape Wind project dead, Boston Globe (Dec. 1, 2017) (Cape Wind Delays) https://www.bostonglobe.com/business/2017/12/01/now-official-cape-wind-project-dead/0899me8Xd3ziWOujgkvbwL/story.html; Robert Whitcomb & Wendy Williams, Cape Wind: Money, Celebrity, Class, Politics, and the Battle for Our Energy Future on Nantucket Sound (2007) (detailing early opposition to Cape Wind project).