N.J. Whacks Fishermen’s Offshore Wind Demo Project
By a vote of 4-0, the New Jersey Board of Public Utilities (BPU) has rejected Fishermen’s Energy’s application, effectively killing the developer’s plans for a 25 MW demonstration project to be located 2.8 miles off the coast of Atlantic City, N.J.
Fishermen’s Energy was attempting to become the first offshore wind developer to be approved under New Jersey’s Offshore Wind Economic Development Act (OWEDA), a state-based allocation system signed into law by Gov. Chris Christie, R-N.J., in 2010.
The BPU’s approval would have allowed Fishermen’s to use New Jersey’s offshore renewable energy certificates (ORECs) – as part of OWEDA – to support the financing and construction of its $200 million demonstration project. The developer already has the state permits necessary to build the project.
The BPU also rejected the developer’s last-ditch plea to postpone a decision until after the U.S. Department of Energy (DOE) selects three recipients in the next round of federal grants. Fishermen’s, which was one of seven firms to receive a $4 million DOE grant in December 2012, was vying to become one of those three offshore wind recipients of $47 million in grants for four years in the next round of DOE funding.
In its ruling, BPU staff determined that the Fishermen’s pilot project was too costly and failed to demonstrate net economic benefits.
Once the potential DOE grant is factored in – along with the investment tax credit – the developer maintains the project will prove financially viable. Based on an assumption of $100 million in federal subsidies, Fishermen’s Energy told the BPU that the project would cost $199.17/MWh.
The BPU, however, asserts those federal subsidies have yet to materialize. Absent the federal subsidies, the regulator based its decision on the fact the project would cost $263/MWh.
According to a Fishermen’s Energy statement, “The BPU staff recommendation to deny approval has no legal basis and is inconsistent with OWEDA.” Further, the company asserts the transcript of a Dec. 20, 2013, hearing with the BPU demonstrates that the regulator’s assertions are based on opinion, not fact.
“It has taken the BPU more than two years to provide feedback on this project, which Fishermen’s Energy has proven will bring significant benefits to New Jersey without any risks to ratepayers,” says the company in a statement. “The Department of Environmental Protection, the Army Corp. of Engineering, and BPU consultants, including the Division of Rate Counsel, support the project.”
Particularly galling to Fishermen’s was a BPU assertion that the Cape May, N.J.-based company lacked commitment to the project.
To the contrary, Fishermen’s claims it has demonstrated its commitment by assuming all of the risks associated with the permitting, building, financing, operating and decommissioning of the project. Further, the company claims it has agreed to take on the risk of obtaining federal incentives and has already passed that benefit on to ratepayers in the form of its lower proposed power price.
Fishermen’s Energy will soon file an appeal in a New Jersey appellate court.
“The legislature acted in an overwhelming and bipartisan manner to pass this [OWEDA] legislation. The governor signed the law, but his administration has failed to implement it,” says Paul Gallagher, Fishermen’s Energy’s chief operating officer and general counsel. “Now, we must turn to the courts to give meaning to the Rule of Law, which we believe will ultimately result in an approval of this project.”
A rocky start for state-based models
The Fishermen’s case was thought to be a litmus test for the so-called state-based procurement model.
New Jersey’s procurement model, envisioned to get the basic financial and economic conditions in place to support the growing offshore wind, is thought to be an alternative for offshore wind developers unable to secure a power purchase agreement (PPA) with a traditional utility. In fact, Maryland has replicated the model.
However, New Jersey’s review process was anything but smooth.
During the lengthy review process – Fishermen’s CEO Chris Wissemann has said it lasted more than 1,000 days – the regulators raised questions on the Fishermen’s application, including its choice of turbine supplier XEMC and the impact to state ratepayers if federal tax credits and DOE grants did not materialize.
In July 2013, Fishermen’s thought it had reached a deal with the New Jersey Division of Rate Counsel (DRC), which represents ratepayers in the setting of electricity rates. Although the DRC initially opposed the Fishermen’s project, saying it was too costly, the two parties reached a settlement that featured a reduction in the wind farm’s projected rates, thus lowering costs and lessening potential impact to ratepayers.
However, the BPU rejected the settlement agreement, fearing that New Jersey ratepayers would be unduly forced to shoulder too much risk if federal incentives were not included.
What’s more, by submitting numerous versions of its application –each with a different turbine supplier – Fishermen’s Energy seemingly confused the regulator.
For example, the developer switched turbine suppliers several times. Originally, the BPU says the developer was considering three possible turbine manufacturers: Siemens, GE and China-based XEMC New Energy.
Ultimately, the BPU ruled “the repeated back-and-forth concerning [a] turbine manufacturer fails to instill confidence in the viability of this project.”
However, others maintain there’s good reason for the state’s delay. New Jersey stakeholders – including the BPU – are working on measures to close a loophole that would divert ratepayer funds – designed to bankroll the first offshore wind projects – to help balance future budget shortfalls.
Considering that other states, such as Virginia, could look to implement New Jersey’s offshore wind model, the BPU felt that it was paramount to properly vet the project.
The problem is in the financing of a project backed by RECs. Working with regulators and utilities, New Jersey has spent years trying to figure out how to structure the OREC program so that offshore wind developments are bankable.
Fishermen’s says the BPU’s approval would have not only proven that the legislation can work, but also paved the way for a larger, commercial-scale project planned by the developer in federal waters.
“The BPU was faced with the unenviable task of executing its duty of adequately vetting the project from a due-diligence perspective and balancing its findings against its opportunity to approve an innovative, novel technology for energy generation,” explains Kim Diamond, counsel at law firm Lowenstein Sandler.
“Ultimately, the BPU was in a difficult position,” she notes. “It needed to determine the strength of the overall package that Fishermen’s Energy presented and make the hard decision of whether the package’s strength was great enough to win Fishermen’s the role of building New Jersey’s first-of-its-kind, state-approved offshore wind project.”
Diamond says that if some aspect of the project had failed, the BPU could have been criticized for failure to sufficiently investigate and scrutinize the project. On the other hand, she says, the benefits from approving – and subsequently building – an offshore wind farm in New Jersey would have far outweighed the negatives. For example, she notes, building an offshore wind farm could catalyze an entirely new industry in a state sorely needing one – “a state that once had the vision of being a leader in the offshore wind industry.”
New U.S. Capacity
For the first two months of this year, renewable energy sources accounted for 91.9% of the 568 MW of new installed U.S. electrical generating capacity, according to a report from the Federal Energy Regulatory Commission (FERC). Coal, oil and nuclear provided none, while natural gas and 1 MW of “other” resources provided the balance. In February alone, wind and solar made up 80.9% of new domestic capacity, with five new “units” of wind providing 99 MW and 12 units of solar providing 92 MW. In addition, one new unit of natural gas provided 45 MW.
“Another month dominated by renewables!” comments Ken Bossong, executive director of the SUN DAY Campaign, a renewable energy advocacy group. “Only flat-earthers and climate-deniers can continue to question the fact that the age of renewable energy is now here.”
Citing the FERC statistics, SUN DAY notes renewable energy sources, including hydropower, now account for 16.14% of total installed U.S. operating generating capacity: hydro (8.45%), wind (5.26%), biomass (1.37%), solar (0.73%) and geothermal steam (0.33%). This is more than nuclear (9.26%) and oil (4.05%) combined.
Reaches $5.5 Billion
Clean energy investment in Nevada has accelerated rapidly in the past five years, reaching at least $5.5 billion since 2010, according to a new report from the Las Vegas-based Clean Energy Project.
Government officials joined representatives from renewable energy advocacy groups to highlight the report. During a press conference, U.S. Senate Majority Leader Harry Reid, D-Nev., said, “Las Vegas and Nevada are leading the way on deploying clean renewable energy. These technologies are creating thousands of jobs. And they are strengthening our state’s electricity supply.
“But, there is more we must do. From providing predictable and fair tax incentives that level the playing field, to quickly approving permits for projects on public lands, we can help clean energy grow in Nevada and nationwide.”
Nevada’s emergence as a renewable energy hub will also be symbolized by four major trade shows being held this year in the state, including the Solar Energy Industry Association’s Solar Power International conference and the American Wind Energy Association’s (AWEA) WINDPOWER show.
AWEA CEO Tom Kiernan, who was present at the press conference, remarked, “Las Vegas is the perfect place to celebrate how affordable and widespread wind energy has become, since Nevada’s first utility-scale wind farm is part of this $5 billion renewable energy boom for the state, and more wind energy is on the way.”
Firms To Fund U.S.
Wind, Solar Deals
Altus Power America Management, an investor and manager of clean energy projects and assets, and Macquarie Group, a provider of investment and funds management services, have teamed up to launch the Clean Energy Land Program. According to the companies, the program will finance up to $100 million in solar and wind land energy projects in the U.S.
The companies say the program is designed to bring to the market the most cost-competitive capital to acquire lands and rights under solar and wind assets, while allowing the developers and owners of these assets to monetize those values.
“Altus and its principals have deep experience in clean energy and a proven track record in developing wind and solar projects,” says Macquarie’s Matthew Lancaster. “This arrangement combines the provision of efficient asset-based financing with a strong track record in project sourcing and execution.”
The companies say the program will offer financial solutions to solar and wind developers to acquire lands under any projects in development and the opportunity to monetize any existing portfolios of similar assets immediately. The parties expect the first transaction to occur during the second quarter of this year.
AMSC To Shutter
AMSC, a Massachusetts-based provider of wind energy and power grid solutions, has announced plans to close a Wisconsin facility and reduce its global workforce. The company says these measures are part of strategic operational initiatives designed to better capitalize on emerging opportunities in its wind and grid businesses.
The company will consolidate its U.S. grid manufacturing and product development program and diversify its international wind power manufacturing operations.
As part of its Gridtec Solutions consolidation, AMSC expects to shutter its facility in Middleton, Wis., by year-end and transition that unit to its headquarters in Devens, Mass. The company says it plans to offer all employees in Middleton the opportunity to relocate to Massachusetts but did not specify how many workers will be affected.
AMSC says it believes that it can most effectively leverage its Gridtec Solutions team, as well as realize important synergies in new product development, by having those employees in one location. The company’s New Berlin, Wis., facility remains unaffected.
As part of the diversification of its wind power manufacturing operation, AMSC is establishing a wind turbine electrical control systems manufacturing center in Timisoara, Romania. Expected to be operational in fiscal 2014, the Timisoara plant will make electrical control systems for AMSC’s wind customers located outside of China.
As part of its restructuring plan, AMSC also expects to reduce its net headcount between 5% and 10% by year-end. The job cuts will impact as many as 120 total employees located at its Middleton, Devens, and Suzhou, China, locations. However, the company says its Windtec Solutions product development and support efforts remain unaffected.
Once all of these actions and associated costs are completed, AMSC expects to fully realize approximately $3 million of annualized cost savings starting in the fourth quarter of fiscal 2014.
More Legal Victories
For Cape Wind
Cape Wind has announced legal victories against project opponents in their four lawsuits that had challenged the offshore wind project’s permitting approval by the U.S. Department of the Interior (DOI).
In his rulings, U.S. District Judge Reggie B. Walton rejected the plaintiffs’ request to vacate the offshore wind lease for the 468 MW project, being developed off the coast of Nantucket Island.
According to the developer, Walton dismissed a long list of legal claims, including arguments over navigational safety, alternative locations, alternative technologies, historic preservation, Native American artifacts, sea turtles, and the adequacy of the project’s environmental impact statement and biological opinions.
In two instances, however, the judge has asked federal agencies to clarify findings on whales and birds. The order indicates that the case is administratively closed until the court is provided with the clarifications. Cape Wind says it expects these two compliance actions to be minor agency administrative actions that will not impact the project’s financing schedule.
The four legal challenges were originally filed in 2010 by the Alliance to Protect Nantucket Sound, the Town of Barnstable, the Aquinnah Wampanoag Tribe and the Public Employees for Environmental Responsibility.
Prior to these latest decisions, Cape Wind says it has won a series of legal challenges brought by the Alliance to Protect Nantucket Sound and other project opponents. In January, for example, a federal court upheld the Federal Aviation Administration’s approval of the wind farm. However, the alliance promptly filed a separate lawsuit regarding Cape Wind’s power purchase agreement with utility company NSTAR.
OKs Edison Sale
Both the U.S. Bankruptcy Court and the Federal Energy Regulatory Commission have approved Edison Mission Energy’s (EME) proposed sale of substantially all of EME’s assets to NRG Energy Inc.
The companies say these decisions represent the final regulatory authorizations to complete the deal.
Under the approximately $2.64 billion agreement, NRG will acquire EME’s 8 GW conventional and renewable generation portfolio throughout the U.S., which consists of about 1.7 GW of wind power assets. NRG currently has about 450 MW of wind power in its portfolio, and the company claims the acquisition will make it the largest competitive U.S. power company, with about 53.6 GW of overall generating capacity.
In December 2012, EME and several of its subsidiaries filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code. According to Edison International, EME’s parent company, this deal and a reorganization plan will allow EME to emerge from bankruptcy free of liabilities and remain a subsidiary.
BOEM To Review
The Bureau of Ocean Energy Management (BOEM) is seeking public comment as it prepares an environmental assessment (EA) for a 12 MW offshore wind pilot project off the coast of Virginia.
Dominion Resources Inc. is heading the two-turbine project, which is proposed adjacent to the BOEM-designated Wind Energy Area (WEA) offshore Virginia. Dominion recently won the commercial lease for the Virginia WEA, and this demonstration project will aim to help the company’s future development of an offshore project up to 2 GW.
For the 12 MW pilot, Dominion has teamed up with the Virginia Department of Mines, Minerals and Energy, which has requested the research lease.
EWEA: Wind Helps
To Conserve Water
A new report from the European Wind Energy Association (EWEA) echoes what recent studies in the U.S. have pointed out: Wind power saves water. Lots of it.
According to the EWEA report, nuclear, coal and gas plants in Europe use 4.5 billion cubic meters of water a year, equivalent to that of 82 million EU citizens – the same as the population of Germany. Energy production represents 44% of the EU’s total water use, more than any other activity.
However, EWEA says wind energy, which uses no water, avoids the use of 1.2 billion cubic meters of water per year, representing a savings of EUR 2.4 billion.
“Water equivalent to over three Olympic-size swimming pools is consumed every minute of every day of the year to cool Europe’s nuclear, coal and gas plants,” says Ivan Pineda of EWEA. “Increasing our use of wind energy will help preserve this precious resource far more effectively than any ban on watering the garden – while saving us money.”
The EWEA report is similar to a series of studies in the U.S., including a November 2013 report from Environment America. That study found that wind power in 2012 saved enough water to supply the annual domestic water needs of more than 1 million people.
In U.K. Offshore
In a move the company says will help create 1,000 new jobs, Siemens is investing more than EUR 190 million in new offshore wind facilities in England. The company plans to build a factory to produce rotor blades for 6 MW offshore turbines, as well as establish a nearby logistics and service center in Green Port Hull.
“Our decision to construct a production facility for offshore wind turbines in England is part of our global strategy: We invest in markets with reliable conditions that can ensure that factories can work to capacity,” says Michael Suess, CEO of Siemens’ energy sector. “The British energy policy creates a favorable framework for the expansion of offshore wind energy. In particular, it recognizes the potential of offshore wind energy within the overall portfolio of energy production.”
Siemens says the company and its British partner Associated British Ports will be investing a total of EUR 371 million at the project sites. The turbine maker expects to create 1,000 jobs, with 550 of these in rotor blade production and 450 at the logistics center.
Green Port Hull is scheduled to take up operations at the beginning of 2016, with commencement of rotor production scheduled that summer. Full capacity of the factory is to be reached starting in mid-2017.
DOE Names U.S.
The U.S. Department of Energy (DOE) has announced six Wind Energy Regional Resource Centers, selected through a competitive process administered by the National Renewable Energy Laboratory (NREL).
Working closely with the DOE and NREL’s broader outreach and education programs, these centers will aim to provide accurate, impartial information about challenges facing wind deployment in their regions to aid in efforts to overcome or mitigate these challenges; use best practices in education and outreach to deliver this information to create an educated stakeholder community; and work with decision-makers to ensure they have the tools to make informed decisions about wind energy projects and related policies in their jurisdictions.
The resource centers and their operators are the following:
- Northeast Wind Resource Center, operated by the Clean Energy Group and Sustainable Energy Advantage (SEA);
- Southeast Regional Resource Center for Wind Energy, operated by the Southeastern Coastal Wind Coalition;
- Northwest Wind Resource and Action Center, operated by the Renewable Northwest Project;
- Four Corners Wind Resource Center, operated by the Utah Clean Energy Alliance;
- Midwest and Prairie Regional Wind Resource Center, operated by Windustry; and
- America’s Islanded Grids Resource Center, operated by the Renewable Energy Alaska Project and Island Institute and covering islanded communities across the U.S. and U.S. Territories.
Chinese turbine maker Goldwind has announced approximately RMB 505.6 million in profit before tax for financial year 2013 – a big jump from nearly RMB 206.9 million in 2012. Furthermore, the company reports RMB 12 billion in revenue from operations – an 8.65% increase from about RMB 11.2 billion the year before.
According to Goldwind’s 2013 financial report, wind turbine sale revenues in 2013 increased 6.06% from 2012. Wind power services had revenues of RMB 589.96 million in 2013, up 50.45% from 2012. Revenues from electric power generated by wind farms operated by Goldwind in 2013 were RMB 384.62 million, up 52.65% from 2012.
Goldwind says its domestic newly installed capacity in China for 2013 was 3.75 GW, with a corresponding market share of 23.30%. According to a recent report from MAKE Consulting, Goldwind also became the second-largest wind turbine manufacturer in the world in 2013, with a global market share of 10.3%.
“The global wind power industry faced many challenges in 2013,” says Wu Gang, chairman of the board of Goldwind. “In comparison, China’s environmental policies were more encouraging for the wind power industry, and the market environment improved. China’s wind farm grid connectivity and curtailment improved in 2013 as the government introduced several encouraging policies, and after two years of industry adjustments, China’s wind power industry welcomed a gradual recovery.”
As of Dec. 31, 2013, Goldwind had a total of 3.36 GW in outstanding orders for wind turbines and had won bids for projects totaling 4.15 GW for which contracts have not yet been signed. The combined order backlog was about 7.52 GW at year-end 2013.
Gamesa says certification body DNV-GL has certified its G128-5.0 MW offshore wind prototype.
According to Gamesa, the wind turbine – which has a rotor diameter of 128 meters and a total height of 154 meters – has generated more than 6,000 MWh into the grid since it began operating in summer 2013. Additionally, Gamesa notes that the G128 turbine is lightweight, therefore reducing the cost of related wind farm civil engineering work.
Gamesa claims such characteristics make the platform more robust and reliable. For example, the prototype registered an availability reading in January of 97%. In November 2013, Gamesa notes the offshore prototype produced the most electricity ever generated by a single turbine in Spain in one day: 118.05 MWh.
EDF Opens Center,
EDF Renewable Services has successfully relocated its Operations Control Center (OCC) from a Minnesota-based facility to San Diego over the course of several months and is now fully operational, managing over 6 GW of wind and solar projects across North America. Furthermore, the company is now listed as a generation operator on the North American Electric Reliability Corp. (NERC) compliance registry with the Western Electricity Coordinating Council (WECC).
WECC is one of eight NERC Regional Reliability Organizations responsible for coordinating and promoting the bulk electric system (BES) reliability in the Western Interconnection.
EDF says its $4 million facility combines the OCC, supervisory control and data acquisition, and operations and maintenance auxiliary services into a technical services hub to help improve response times and track key performance indicators. The company adds that the new OCC offers customers the ability to grow their regulatory compliance practices and improve their cybersecurity over BES cyber assets by leveraging advances in cyber and physical security.
Grant Helps Wind
The Des Moines Area Community College (DMACC) Wind Turbine Technician Program has received a $5,000 grant from Alliant Energy, which owns and operates wind farms in Iowa, Minnesota and Wisconsin.
“We are so thankful for this generous grant and support from Alliant Energy,” says DMACC Wind Energy Program Chair Dean Hoffmann. “We will be able to purchase state-of-the-art equipment that will benefit DMACC wind energy students.”
DMACC students get hands-on safety training in the two-year Wind Turbine Technician Program, and Hoffmann says the money will be used to buy climbing harnesses and related safety equipment.
Julie Bauer, executive director of the Alliant Energy Foundation, comments, “Wind is an important element in our generation portfolio, and we appreciate DMACC’s efforts to train workers for this specialized field.”
Shares RE Data
The Hawaiian Electric Cos. are now sharing with their customers the Renewable Watch online displays for Oahu, Maui and Hawaii Island. The displays, hosted on each subsidiary utility’s site, show the daily contribution of solar and wind generation on the respective island and how energy from these resources changes throughout the day.
Data from wind facilities and utility-scale solar facilities comes from utility system-monitoring equipment. Data for customer-sited solar power comes from regional estimates using solar sensors strategically placed throughout the islands and other sources.
“This information can help us integrate higher levels of renewable energy more effectively,” says Scott Seu, Hawaiian Electric vice president for energy resources and operations. “Solar and wind power are increasingly important to our energy mix, so we need to understand when and how these resources affect our system.” w
New & Noteworthy
N.J. Whacks Fishermen’s Offshore Wind Demo Project
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