for offshore transmission projects such as the Atlantic Wind Connection and the New Jersey Energy Link progressed steadily in their development efforts.
In 2013, BOEM held the first two competitive lease sales
for renewable energy in US federal waters off the shores of Rhode Island and Virginia. On the state level, Illinois passed the Lake Michigan Wind Energy Act, which requires Illinois to develop a detailed offshore wind energy siting matrix for Lake Michigan.
As independent power producers (IPPs) predominantly drive the development of offshore wind projects in the US, offshore developers are unlikely to self-finance projects through balance sheet financing and will therefore need access to project financing. The banks likely to participate in US offshore projects initially will be the same European banks that have offshore project financing experience in Europe. However, pricing and other market conditions may be subject to the terms of the US wind project finance market, which at times have deviated from European terms and conditions. Navigant says that, given the size of proposed offshore wind projects in the US, the support of government agencies could be critical, via loans or loan guarantees. Investors and lenders in Europe rely on support schemes
that provide long-term revenue stream stability, either directly through feed-in tariffs (FiTs) or public payments, such as green certificates, or indirectly through long-term PPAs made possible by the underlying regime. Projects in the US to date, such as those in Massachusetts and Rhode Island, rely upon income received from regulated PPAs that provide a fixed price per MWh produced that is well above the wholesale price. Another support regime that has been proposed in New Jersey is the offshore wind renewable energy certificate (OREC) system, which, as a ‘contract for difference,’ is not that different from a FiT. Both systems are expected to be bankable, as they provide sufficient price support to make projects economically viable.
August 2014 saw the Obama administration hold the third competitive lease sale for renewable energy in federal waters, which offered nearly 80,000 acres offshore Maryland for potential wind energy development. The provisional winner of the lease sale was US Wind Inc. BOEM auctioned the Maryland Wind Energy Area as two leases, referred to as the North Lease Area (32,737 acres) and the South Lease Area (46,970 acres). US Wind Inc submitted the provisionally winning bid for both. A month earlier, Secretary of the Interior Sally Jewell also announced the proposed sale of leases for nearly 344,000 acres offshore New Jersey for commercial wind energy leasing. In July an important milestone was achieved when the DOE announced the first step towards issuing a US$150 million loan guarantee to support the construction of the Cape Wind offshore wind project with a conditional commitment to Cape Wind Associates, LLC. If constructed, the project would be the first commercial-scale offshore wind facility in the US, with a capacity of more than 360MW of clean energy. “This announcement marks real progress towards getting steel in the water. Cape Wind is one step closer to completing financing and commencing construction in the near future,” said Representative William Keating. “Today’s announcement is an important endorsement by the US government,” said Cape Wind’s president, Jim Gordon. Weeks earlier Cape Wind had announced that it had signed a contract with Weeks/Manson (WMJV), a joint venture, to serve as the lead construction contractor for the project. WMJV will install the turbines with a fleet of vessels including RD MacDonald, the first special-
www.owjonline
Initially at least, banks likely to fund projects in the US will be the same ones that funded European projects
purpose offshore wind installation vessel built in the US. RD MacDonald, a jack-up barge, was launched in Jacksonville, Florida in 2012, and will be outfitted with a crane in Houma, Louisiana next year.
May 2014 saw another important milestone when the Block Island windfarm received the first of two state permits it requires. The project, which remains on target to be first offshore windfarm in the US, secured an environmental permit it needs from the Rhode Island department of environmental management (RIDEM). “The approval of RIDEM is a major step forward for the Block Island windfarm. Momentum for the project is strong and we are moving closer to having steel in the water,” said Deepwater Wind’s CEO Jeffrey Grybowski. Deepwater Wind must next secure an assent from the Rhode Island Coastal Resources Management Council, as well as approvals from the US Department of the Interior’s Bureau of Ocean Energy Management and the US Army Corps of Engineers. As the remaining approvals are sought from the relevant bodies, Deepwater Wind has begun the initial stages of construction on the 30MW Block Island windfarm, which is approximately 3 miles off the coast of Block Island. The windfarm is due to be in operation in 2016. Earlier this year, Deepwater Wind selected Alstom as turbine supplier and long- term maintenance and service provider, and has already taken delivery of 15 turbine blades from Alstom. OWJ
Offshore Wind Journal I 3rd Quarter 2014 I 21
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