October 20, 2019

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What’s Up With Offshore Wind?

In August, the Bureau of Ocean Energy Management (BOEM), the branch of the Department of the Interior tasked with managing energy development on the outer continental shelf, changed its course on the permitting schedule for the Vineyard Wind project. What had been a smooth, thorough, and predictable process came to an abrupt halt when BOEM “determined that a greater build-out of offshore wind capacity is more reasonably foreseeable than was analyzed in the initial draft EIS [environmental impact statement],” and therefore “decided to supplement the Draft EIS and solicit comments on its revised cumulative impacts analysis.” Rampant speculation followed and the future process for approval of offshore wind projects seems unclear. So, what changed?

While it’s true that the acceleration of offshore wind development has been swift, it was hardly unforeseeable to anyone following the industry. The draft EIS for Vineyard Wind is publicly available and, on page 368 (p. C-8), there is a chart of leases that BOEM has auctioned off with an assessment of the development stage of each, so the backtracking seems unfounded. Granted, some things have changed since this chart was put together several months ago. For instance, Equinor’s Empire Wind was awarded a power purchase agreement (PPA) from New York, and Ørsted’s Ocean Wind won the New Jersey solicitation for 1.1 GW, but, again, nothing unforeseeable. Curiously, Ørsted’s Sunrise project, the other winning bid in the New York solicitation, seems to have been left off the chart (lease number OCS-A 0487). The lease was awarded to Deepwater Wind in 2013 – one of BOEM’s earliest leases, granted prior to Ørsted’s acquisition of Deepwater Wind.

The Vineyard Wind draft EIS was prepared just prior to the blockbuster lease auction of December 2018 that netted over $400 million for three parcels. The dollar figures surprised many, but those parcels are listed in the cumulative impact chart in the draft EIS, albeit without yet knowing the winners of the auction. But the parcels were known to BOEM at the time. Does BOEM not see the strong correlation between leases granted and projects developed? BOEM’s statement about foreseeability seems like a deflection.

It’s unlikely we’ll get a clear answer, let alone a clear timeline. A joint letter signed by the members of the Senate and House delegations of Massachusetts and Louisiana hasn’t hastened review. A more recent letter from five state governors, including Governor Baker, isn’t likely to dislodge whatever is stuck in BOEM’s gears.

Unfortunately, there is a downstream impact with project delays pushing up against supplier schedules. Sif, the company set to fabricate the foundations for the Vineyard Wind project, announced recently that a prolonged delay will have a financial impact on the company.

In the meantime, projects press on. Bids are in for the Massachusetts RFP for its second 800 MW solicitation. Ørsted, Vineyard Wind, and Mayflower Wind all submitted bids. All three companies also submitted bids for the more recent Connecticut solicitation.

© 2019 SHERIN AND LODGEN LLP

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About this Author

Tyler N. Ballew associate renewable energy, technology, and life sciences industries.
Associate

Tyler N. Ballew is a business lawyer who concentrates his practice in the renewable energy, technology, and life sciences industries.

Tyler assists clients in the full range of business law matters, including entity formations, financing, fundraising, mergers, asset sales and purchases, construction, real estate, risk management, commercial operations, and corporate governance.

Tyler has represented project developers, lenders, offtakers, and equipment manufacturers in wind and solar deployments of all sizes across the U.S.  He has successfully counseled developers on...

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