Biden Administration’s Focus On Offshore Wind Energy: DOI’s Plan And Other Recent Developments – Energy and Natural Resources – United States – Mondaq…

Highlights

U.S. Department of the Interior (DOI) Secretary DebHaalandannounced in Octoberthat the BidenAdministration would be opening up the U.S. coastline tolarge-scale, offshore wind farming. Speaking at a wind industryconference in Boston, Haaland described a plan under which heragency's Bureau of Ocean Energy Management (BOEM) wouldpotentially sponsor up to seven offshore lease sales by 2025 in theGulf of Maine, Gulf of Mexico, New York Bight, as well as off thecoasts of the Mid-Atlantic states, Carolinas, California andOregon.

The announcement followed the Biden Administration'searlier pledgeto build 30 gigawatts (GW)of offshore wind energy by 2030, which is pivotal to theadministration's plan to cut the nation's fossil fuelemissions 50 percent from 2005 levels by 2030. In line with thisgoal, on May 11, 2021, BOEM approved Vineyard Wind, thenation's first major commercial offshore wind farm, to belocated off the coast of Martha's Vineyard in Massachusetts. Inaddition, in late November,DOI approvedthe construction andoperations of the 132-megawatt (MW) South Fork Wind Project off thecoast of Rhode Island and Long Island, New York. Earlier this year,DOI announced a proposed lease auction for offshore winddevelopment on the Outer Continental Shelf in the New York Bight,the area of water between Long Island and the New Jersey coast.BOEM has also considered wind projects elsewhere, including off thecoast of California.

Although California's offshore wind planning processes havelanguished in comparison to some East Coast states (e.g.,Massachusetts), that is quickly changing. BOEM's announcementdovetails with recent developments in California aimed atstimulating the deployment of offshore wind projects. For example,the State Legislature recently enacted a piece of milestonelegislation (AB 525) that requires state agencies to developoffshore wind megawatt (MW) targets for 2030 and 2045. At the sametime, BOEM is actively underway with the leasing process for two"Call Areas" off the California coast: 1) the HumboldtCall Area (North Coast) and 2) the Morro Bay Call Area (CentralCoast). (For additional analysis, see Holland & Knight'sprevious alert, "California Legislature Passes Landmark Legislationto Bolster Offshore Wind Energy," Sept. 14, 2021.) Indeed,on Nov. 12, 2021, BOEMannounced its designation of the Morro Bay WindEnergy Area, which triggers environmental review and relatedpublic comment under the National Environmental Policy Act(NEPA).

To realize the full fruition of the state and federal strategy,agencies and stakeholders must address a number of technological,infrastructure and regulatory questions specific to California. Forexample, offshore wind development in California is largelyexpected to be comprised of floating wind turbines, given that thevast majority of the West Coast Outer Continental Shelf (OCS)reaches depths greater than 60 meters the limits of oceanfloor-mounted foundations. Floating wind projects are not yetwidely deployed in contrast to their ocean floor-mountedcounterparts. However, at least two floating projects are inoperation in Europe and are a harbinger of the technology'spotential (the 30-MW Hywind project in Scotland and the 24-MWWindFloat Atlantic project in Portugal).

Assuming that the technological challenge is surmounted, neitherthe Humboldt or Morro Bay Call Areas are in immediate proximity tomajor population centers. The Humboldt Call Area has an estimatedgeneration potential to power more than 1 million homes, yetHumboldt County as a whole has only approximately 60,000 homes.(See 2019 U.S. Census Bureau Data). Consideration must be given tothe extent to which existing transmission and distributioninfrastructure can transport electricity from these Call Areas tomore densely populated areas, which for both areas are significantdistances. The Humboldt Call Area is approximately 280 miles fromthe nearest major urban area (the San Francisco Bay Area), whileMorro Bay is approximately 150 miles from the nearest urban area(Ventura County). It is similarly unclear whether the Call Areashave sufficient port resources to accommodate the ingress andegress of project components due to their nature as small, ruralcoastal communities.

Future California offshore wind projects will need to satisfystate-level environmental review requirements under the CaliforniaEnvironmental Quality Act (CEQA), in addition to the federal NEPAreview required of all offshore projects. Even projects locatedsolely on the OCS are likely to have impacts in state and localjurisdictions (e.g., onshore infrastructure such as port upgrades,nautical and automatic transportation, transmission lines and powergrid upgrades). CEQA requires lead agencies, includingmunicipalities, to analyze, adopt and implement feasible mitigationmeasures to the extent practicable to avoid or reduce significantimpacts. This requirement, which is a cornerstone of Californiaenvironmental law, can add time and expense to project approval andimplementation.

Texas has long embraced wind power. In 2005 and 2008, the TexasLegislature and Public Utility Commission of Texas createdCompetitive Renewable Energy Zones (CREZ) in order to facilitatethe development of wind resources in resource-rich areas such asthe panhandle and west Texas, and then transmit that energy toareas of high energy demand such as cities in central and eastTexas. After Winter Storm Uri hit the state in February 2021,however, renewable resources including wind resources have come under scrutiny due to their intermittentoperating characteristics. Moreover, offshore wind has differentoperating characteristics than inland CREZ wind resources and wouldbe located in a warmer climate zone, thus providing potentialreliability benefits compared to CREZ wind resources.

In terms of the Gulf of Mexico more broadly, the DOI and BOEM in2020 published two studies showing that the Gulf is an attractivelocation for offshore wind development. (See Holland &Knight's previous alert, "Studies Find Gulf of Mexico Has Untapped Potentialfor Offshore Wind Development," May 21, 2020.) The studiesfound that more than 500 GW of potential offshore wind developmentmay be possible in the Gulf, with such developments becomingeconomically competitive in the market without subsidies by 2030.The studies identified several geographic areas of interest, whichwill likely inform the areas selected for leases in this mostrecent effort.

Pursuant to this, on Oct. 28, 2021,DOI announcedthat it would publish a"Call for Information and Nominations" to further assesscommercial interest in wind energy leasing in an area within theGulf of Mexico consisting of 30 million acres just west of theMississippi River to the Texas/Mexican border. The Call waspublished in theFederal Registeron Nov. 1,triggering a 45-day comment period that will end on Dec. 16, 2021.Afterward, BOEM will conduct an environmental review and solicitpublic feedback. According to the agency'spublished timeline, any lease sales arisingfrom the Call are expected to occur approximately one yearlater.

DOI's recent announcement is a promising step towardcatalyzing offshore wind development. Despite this importantaction, however, a number of substantial challenges will remain fordevelopers seeking to construct offshore wind projects on the OCS.On Nov. 19, 2021, Vineyard Wind LLC announced that it had commencedconstruction of the Vineyard Wind 1 Project off the coast ofMassachusetts). In order to reach that point, the project developerhad to successfully achieve the following milestones:

These highlights demonstrate that the scope of financing andcontracting activities needed to roll out a first-utility scaleproject for offshore wind development are extensive, but withsufficient planning and resources, they can be resolved.Successfully expanding leasing and development will require aconcerted effort be made by regulatory agencies, developers, statesand relevant stakeholders in order for projects to be developed onthe scale needed to meet ambitious and important renewable energygoals.

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Biden Administration's Focus On Offshore Wind Energy: DOI's Plan And Other Recent Developments - Energy and Natural Resources - United States - Mondaq...