As first US utility-scale offshore wind project nears approval, supply chain, permitting come into focus
Despite the complex regulations in place for permitting offshore projects, Vineyard Wind is confident in its ability to get approval this summer for the largest U.S. offshore wind project to date.
While offshore wind facilities have cropped up around Europe and other parts of the world at varying sizes, the United States is only now advancing its first utility-scale project. Vineyard Wind is pursuing permitting for a single 800-MW project in federal waters off the coast of Massachusetts, making it a point of interest for developers, supply chain manufacturers and utility executives.
"I think people are appreciating that U.S. offshore wind is here and now, and a lot of people want to get involved around the world."
Chief development officer, Vineyard Wind
Changes in offshore wind are brewing besides this project: other state solicitations and goals have cropped up throughout the East Coast and the federal Bureau of Ocean Energy Management received record-high bids for offshore wind leases last winter. State offshore wind targets and the heightened competition for bids and leases signal increasingly competitive prices for the technology.
"I think people are appreciating that U.S. offshore wind is here and now, and a lot of people want to get involved around the world," Erich Stevens, chief development officer for Vineyard Wind, told Utility Dive in a December phone interview.
Planning without a strong domestic supply chain
Various energy analysts have pointed to a domestic supply chain for offshore wind as a key component of lowering prices for development. However, as Deloitte and others have reported, several utility-scale projects are needed to send strong market signals and create manufacturing demand.
Given regulatory approvals, the Northeast U.S. has the capacity to meet engineering needs for an 800 MW offshore wind farm, according to Matthew Palmer, vice president and offshore wind manager of WSP, a contractor of Vineyard Wind.
While the United States can meet the engineering needs for such projects, components will need to be imported.
"[Wind turbine] manufacturers, at the moment, all manufacture their components outside the United States," Palmer told Utility Dive in a November interview.
"The greatest degree of capacity for manufacturing the monopyle structures," the bases for the turbines, "is really at this point based in Europe. ... In the U.S., we don't at the moment have the ability to manufacture the style and length of subsea cables that are required for the offshore wind project."
The technical and engineering activities involved in designing offshore wind structures and doing a cable burial risk assessment "are very similar between European work and work in the U.S.," Palmer said. "But regulatory processes and the regulatory requirements that govern all of those things are very different."
"[Wind turbine] manufacturers, at the moment, all manufacture their components outside the United States."
Vice president and offshore wind manager, WSP
Berkshire Hathaway's manufacturing subsidiary, Kerite, is the only U.S. manufacturer of subsea transmission cables, which might not suit the needs of offshore wind projects, according to Michael Blaha, utility sales director at the American Wire Group and former global sales manager at Kerite.
Importing the large cables will make them more expensive, and prices could be higher still due to tariffs on the materials being used for the subsea products, he said.
"The current tariff situation will cause higher costs as strong competitors will be at a price disadvantage if these very expensive cables are only supplied by non-tariff manufacturers," Blaha told Utility Dive via email. "It will limit the number [of] cable suppliers and thus competition."
Blaha offered more skepticism toward the progress of offshore wind in the country.
"I feel strongly that offshore wind needs to bring the utilities into this development of a new industry," he said, adding that developers "can't make all these decisions that will determine the landing points without utility input and agreement."
Currently, several of the offshore wind developers bidding for projects in the Northeast are joint ventures with utility partners. Vineyard Wind is a joint venture of the renewable arm of Avangrid, an investor-owned utility serving customers in New England and New York, along with Copenhagen Infrastructure Group.
Anticipating a 'smooth' permitting process
While there are opportunities to make regulations for approving offshore wind projects more efficient and streamlined, Vineyard Wind is making "good progress" on its permitting process, Stevens said. "It's not like the regulations are unworkable in any way or are somehow problematic."
The project finalized its state environmental review process in February under the Massachusetts Environmental Policy Act (MEPA), kicking off permitting processes on a local, state and federal level. The last step in MEPA certification came with the approval of the farm's final environmental impact report by the Executive Office of Energy and Environmental Affairs.
Vineyard Wind permit tracker as of Jan. 2019
|Agency||Permit type||Expected completion|
|MEPA (MA)||Environmental||Q1 2019|
|Energy Facilities Siting Board (MA)*||State||Q2 2019|
|Cape Cod Commission**||Environmental||Q2 2019|
|Barnstable Conservation Commission**||Environmental||Q2 2019|
|National Environmental Policy Act||Environmental||Q3 2019|
|U.S. Bureau of Ocean Energy Management
(Federal Environmental Impact Statement)
|Department of Environmental Protection (MA)||Environmental||Q3 2019|
|Coastal Zone Management (MA)||Environmental||Q3 2019|
|U.S. Army Corps of Engineers||Environmental||Q3 2019|
*completion of transmission line review in April
**to be reviewed after MEPA process is complete
As the first project of this size to be conducting stakeholder outreach and searching for environmental permitting solutions, the project is expected to have a longer and more expensive permitting process, while future applicants may take advantage of greater efficiencies.
"We certainly are not planning for any changes to the regulations for the purposes of permitting these projects," Stevens said.
Potential partners "see us keep hitting milestones," like the draft environmental statement and the Final Environmental Impact Report that Vineyard Wind submitted last fall, "so I think actually that there's a lot of confidence in our schedule," Stevens said.
Environmental groups, fishery industry groups and other local stakeholders have expressed their support for the development, and the town of Barnestable, Massachusetts, has struck a host community agreement with Vineyard Wind for where the transmission cable will come ashore. The developer hosted a public presentation of its construction plans in Barnstable on March 12.
The project was pitched off the coast of Massachusetts to take advantage of the existing infrastructure in New Bedford, specifically built to handle heavy offshore wind equipment, Stevens said. Other ports will need to be upgraded to facilitate development around the U.S.
Interconnection regulations weren't written with offshore wind in mind, and so there may be "an occasional little glitch" concerning particular requirements, he said, adding that the interconnection process will be similar to other projects.
"I think we've sort of banished any lingering ghosts from other offshore projects here in New England and things are going well," Stevens said.
Locking down sources of revenue: ISO-NE's capacity market
While the permitting process is on track, Vineyard's owners continue work to secure revenues for the project.
The project was less competitive than owners had hoped in ISO-New England's recent forward capacity market auction for 2022-2023. Vineyard failed to attain renewable technology resource status for the auction, which would exempt it from the minimum offer price rule. Vineyard Wind will be eligible for the exemption next year, for the next capacity auction.
The Federal Energy Regulatory Commission (FERC) failed to act in time on a pending waiver, filed Dec. 14, to allow the offshore wind project to seek a renewable technology resource exemption. Being the first utility-scale project, there was no precedent of offshore wind capacity in federal waters seeking the waiver. ISO-NE filed a package of changes to revise the language, which FERC accepted on Jan. 29, meaning Vineyard Wind would be able to seek an exemption directly from the grid operator in the future.
FERC's inaction on the last-minute request from Vineyard Wind to delay the capacity auction was deemed a "failure" by Democrat Commissioners Cheryl LaFleur and Richard Glick.
The offshore wind project secured a bid during ISO-NE's secondary substitution auction for a 54 MW security obligation. The renewable status exemption would make a certain volume of power capacity from a new resource, such as the offshore wind project, more competitive in the auction, ISO-NE wrote in a statement. The grid operator filed with FERC asking the federal regulators to oppose Vineyard Wind's emergency request to re-run its auctions, saying the project could participate in the next forward capacity market with a renewable status.
Delaying or re-doing the auction would have been unprecedented and the grid operator stipulated that it "would harm market participants who made decisions under the expectation that the auction results would be final, subject to FERC approval," the ISO-NE statement said.
"The project remains on track as envisioned prior to the start of the permitting process with approvals expected later this year followed by onset of construction onshore," Scott Farmelant, a spokesperson for Vineyard, told Utility Dive via email.
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