Introduction

Power Generation, Transmission, and Use

Markets, Regulation, and Oversight

Impacts of Power Generation and Transmission

Looking Ahead

Appendices

CEIR Report Map

PPRP Home

Maryland Power Plants and the Environment (CEIR-18)

5.5.1 Offshore Wind Energy

There are 13 countries with offshore wind power facilities—Denmark, Belgium, China, Germany, Finland, Ireland, Italy, Japan, Netherlands, Norway, South Korea, Sweden, and the United Kingdom. By June 2015, there was 8,990 MW of offshore wind installed capacity in these 13 countries. To date, no offshore wind facilities have been developed in United States waters. With Maryland’s greatest wind energy potential located offshore, the possibility of developing a wind facility off the coast of Maryland has received growing attention in recent years.

The estimated capital costs of offshore wind vary widely depending on technical aspects of the specific project and the availability (or lack thereof) of parts through the supply chain. Additionally, because of the lack of U.S. experience, there is significant uncertainty surrounding the cost estimates. The DOE’s National Renewable Energy Laboratory (NREL) estimates the installed capital costs for an offshore wind facility installed in 2014 at $5,925 per kW of capacity, which equates to installed costs of approximately $3 billion for a 500-MW facility. Comparatively, capital costs of land-based wind facilities are typically around $1,700 per kW—less than a third of the estimated installed cost of offshore wind.

There are several factors that contribute to the higher capital costs for offshore wind facilities. Performing work at sea is more complicated, and therefore more expensive, than performing work on land. Offshore wind turbines require more complex foundations and specialized installation vessels. Capital costs typically increase with greater water depths, and the developer may be required to purchase and install submarine transmission cables necessary to transmit the energy to shore. Capital costs for offshore wind facilities are also expected to increase when projects are sited farther from shore, because longer power cables would be required and project logistics become increasingly complex. Nevertheless, as offshore wind technology matures, prices are expected to decline. NREL projects that the capital costs of an offshore wind plant will range between $4,500/kW and $5,200/kW through 2020.

Offshore Wind Energy Activities in Maryland

Maryland Offshore Wind Energy Act of 2013

During the 2013 legislative session, the Maryland General Assembly passed, and Governor O’Malley signed, the Maryland Offshore Wind Energy Act of 2013 (Offshore Wind Act). The Offshore Wind Act creates a mechanism to incentivize the development of up to 500 MW of offshore wind capacity, at least ten nautical miles off of Maryland’s coast. A project size of 200 MW would require the installation of an estimated 40 turbines off the coast of Ocean City. The Offshore Wind Act establishes a Maryland Offshore Wind Business Development Fund and Advisory Committee within the Maryland Energy Administration (MEA) to promote emerging businesses related to offshore wind and also establishes a Clean Energy Program Task Force.

The Offshore Wind Act creates a “carve-out” for energy derived from offshore wind within the State RPS. The carve-out requires that a specified portion of State electricity sales must come from offshore wind power facilities beginning in 2017 and for every following year, with the amount of offshore energy required in each year set by the PSC. The PSC would base the size of the carve-out on the projected annual creation of “offshore wind renewable energy credits” (ORECs) by qualified offshore wind projects, but not exceed 2.5 percent of total retail sales. The Offshore Wind Act establishes an application and review process for the PSC for proposed offshore wind projects and limits rate impacts to both residential and non-residential electric customers. The increase in the electric bills of residential customers owing to the offshore wind energy carve-out is limited to $1.50 per month; commercial customers are limited to a 1.5 percent bill increase.

Under Maryland’s Offshore Wind Power Act, a “qualified offshore wind project” means a wind turbine electricity generation facility, including the associated transmission-related interconnection facilities and equipment, that:

Leasing in Federal Waters

Under the Energy Policy Act of 2005, the DOI’s Bureau of Ocean Energy Management (BOEM), formerly the Minerals Management Service, is the lead federal agency responsible for issuing leases in federal waters (greater than three nautical miles from shore) for ocean energy technologies. BOEM is responsible for issuing a lease on a competitive basis unless BOEM determines no competitive interest exists for such leases. In April 2010, BOEM established a Maryland/Federal Renewable Energy Task Force to provide input throughout the BOEM leasing process. The Task Force, comprised of officials from State and federal agencies as well as elected officials from Maryland’s coastal communities, provided recommendations for siting offshore wind projects. In November 2010, BOEM accepted these recommendations, and issued a Request for Interest (RFI) for wind leases off Maryland’s coast. An RFI is a formal invitation for submissions of interest in obtaining a commercial lease from BOEM, and it is the first major step in the leasing process under BOEM regulations. Eight offshore wind developers responded with development proposals and 12 stakeholders submitted comments. Based on the responses to the RFI, BOEM made a determination of competitive interest for a commercial lease off of Maryland’s coastline.

The next major step in the competitive leasing process for commercial renewable energy leases on the OCS is the publication of a Call for Information and Nominations (Call) in the Federal Register. Maryland’s Call was published in February 2012, after BOEM released a regional environmental assessment (including the coastal areas of Delaware, Maryland, New Jersey, and Virginia) for siting activities on the OCS. Individual projects would require a more in-depth environmental analysis (likely an Environmental Impact Statement) before construction may begin on the OCS. The Call was intended to inform the public of the area under consideration for leasing; solicit comments from all interested parties on areas or subjects that should receive special attention or analysis; invite potential bidders to indicate areas and levels of interest; and invite public input regarding possible advantages and disadvantages of potential leasing and development to the region and the nation. The comment period for the Call closed on March 19, 2012, and BOEM received six nominations of interest and six comments.

In 2013, BOEM developed a Proposed Sale Notice (PSN) which describes proposed terms and conditions for a lease sale for two commercial wind energy leases in the Maryland Wind Energy Area (WEA). After publication of the PSN in the Federal Register on December 18, 2013 and the closing of a 60-day public comment period, BOEM published a Final Sale Notice. The Final Sale Notice stated that BOEM would hold a commercial lease sale (i.e., auction) on August 19, 2014 for the Maryland offshore WEA. The WEA covers approximately 80,000 acres, and its western edge is located about ten nautical miles from the Ocean City coastline, as shown in Figure 5-18. It was auctioned as two leases, referred to as the North Lease Area (32,737 acres) and the South Lease Area (46,970 acres). After the lease sale was held, the final step in the competitive leasing process was for BOEM to select the winning bidders and issue the commercial leases.

In August 2014, BOEM selected U.S. Wind, a subsidiary of the Italian company, Renexia, as the winner of BOEM’s competitive lease auction. Thanks to the offshore wind carve-out in the Maryland RPS, the auction value was the highest of any of the offshore wind leasing auctions that the BOEM had held to that date and accounted for almost 60 percent of the total revenue the BOEM has realized from these auctions. Although the lease area could support nearly 1,000 MW of offshore wind capacity, U.S. Wind is considering a 500 MW project to minimize costs and to keep the project in areas with water depths of no more than 85 feet. In February 2016, U.S. Wind applied for ORECs from the Maryland PSC, triggering a process whereby other companies can apply to the PSC as well. Should the PSC approve U.S. Wind’s application, the company hopes to begin construction on an initial 250 MW phase in 2018 and begin operation in 2020. The company currently plans to develop two interconnection points, each at 250 MW, with one located in Maryland and the second located in Delaware.

The PSC received a second application for ORECs, submitted by Skipjack Offshore Wind, a subsidiary of Deepwater Wind Holdings. In November 2016, the PSC announced that it had determined both applications are administratively complete and met minimum threshold criteria. The PSC initiated a docketed proceeding, Case No. 9431, to conduct a multi-part review to evaluate and compare the two applications. The review process calls for the PSC to make a decision on the applications within approximately six months.

Figure 5-18 Map of the Maryland Wind Energy Area

Figure 5-19 - Map of the eastern shore of Maryland specifying the north and south lease area

Source: U.S. Department of the Interior, Bureau of Ocean Energy Management, “Renewable Energy Programs, Maryland Activities,” http://www.boem.gov/Maryland.

Permitting Issues

Offshore wind power is new to the United States energy industry, and the regulatory and institutional structures for offshore wind energy are still emerging. Offshore wind energy facilities will require regulatory approval from both federal and state agencies, and in many cases local agencies as well.

Prior to construction, the developer’s project must undergo an environmental and permitting review process. This process typically includes the following federal government reviews and approvals:

In addition to federal approval, it will be necessary for developers to obtain state and local regulatory approval. For example, a CPCN from the Maryland PSC would be necessary to transmit electricity to the existing electrical grid.

Offshore Wind Turbines Research and Development

Over 60 percent of offshore wind resources in the U.S. are in deep waters, i.e., the water is so deep that the usual techniques of fixing large steel piles or lattice structures to the ocean floor are not possible. Utilizing floating foundations for offshore wind turbines could access these offshore wind resource areas, and could also lead to improved offshore wind industry standardization as the floating platforms are not as sensitive to differences in seabed conditions or water depth. That, in turn, translates into greater efficiencies in manufacturing and assembling offshore wind turbines and could lead to an offshore wind project being constructed on land and towed out to sea. Additionally, floating foundations result in reduced environmental impacts as pilings do not have to be installed and the ocean seabed is not disturbed.

Click to OpenExposure to Severe WeatherFloating foundations will need to meet new design criteria encompassing weight and buoyance requirements and the heaving and pitching from ocean waves. The technology is at an early stage and much more design and testing needs to be completed before floating foundations are commercially feasible. Three types of floating wind concepts are under investigation:  Ballast Stabilized, Mooring Line Stabilized and Buoyance Stabilized. Ballast Stabilized foundations (also known as spar buoy) rely on mooring lines with anchors that drag in the water. Mooring Line Stabilized (also known as tension leg platform) foundations uses suction pile anchors— essentially, upturned buckets that are embedded in marine sediment through negative pressure. Buoyance Stabilized (also known as semi-submersible) foundations are similar to Ballast Stabilized foundations except that they are semi-submersible and are on a floating platform. Figure 5-19 depicts these concepts.

Figure 5-19 Floating Wind Turbine Concepts

Figure 5-20 Image of floating wind turbine

Source: National Renewable Energy Laboratory. Artist: Josh Bauer

Several floating wind turbine prototypes are being tested around the world. Statoil’s Hywind test turbine was installed in 2009 off the coast of Norway and consists of a 2.3-MW wind turbine in about 700 feet of water. Principle Power has a 2-MW semi-submersible wind turbine, known as WindFloat, off the coast of Portugal that has been in the testing phase since 2011. The DOE provided $12 million to the University of Maine which resulted in a wind turbine installed on a semi-submersible platform in 2013. DOE also is funding a five-turbine, 25-MW offshore wind project to be installed off the coast of Oregon by Principle Power using its WindFloat technology. The project will not progress, though, until Principle Power finds a buyer for its generation.

Environmental and Socioeconomic Risks

Click to OpenAtlantic Wind ConnectionWind turbines can provide environmental benefits through the reduction of GHG emissions and conservation of water resources. However, as with all energy sources, there are environmental and socioeconomic risks associated with offshore wind energy. Studies suggest that the potential risks associated with offshore wind projects are typically site-specific. Research at European-installed projects and U.S. baseline studies are building the knowledge base and helping to inform decision-makers and the public. Outlined below are some of the primary stakeholder concerns regarding offshore wind power facilities:

Exposure to Severe Weather

Nor'easters and hurricanes pose a significant risk to wind turbines off of the Northeast Atlantic Coast. Further, anticipated global temperature increases and elevated sea levels associated with climate change may impact the intensity of these storms.

A group of Carnegie Mellon University researchers found that turbines built along the Atlantic Coast may be vulnerable to hurricane-force extreme winds. The team found that the maximum wind speeds in severe storms can exceed the design limits of currently available wind turbines. In 2003, for example, seven wind turbines in Okinawa, Japan, were destroyed by typhoon Maemi and several turbines in China were damaged by typhoon Dujuan. The research team emphasized that developing reasonable safety measures, including improved design requirements and backup power for the motors that allow turbines to track the wind direction could mitigate serious hurricane damage.

Despite such findings, industry experts maintain that wind turbines off the coast of New Jersey or New York would have survived Superstorm Sandy in October 2012. Most offshore wind turbines are designed to withstand Category 3 hurricane conditions, which exceed the conditions imposed by Sandy. Additionally, the offshore wind industry is anticipating and preparing for the type of extreme weather challenges these facilities will be subject to during their 20+ year lifespans. Whether a particular turbine design can handle the load from extreme weather events in the Northeast remains unknown, and will be subject to further research.

Atlantic Wind Connection

The Atlantic Wind Connection (AWC) project was the first offshore backbone electrical transmission system proposed in the United States. Instead of having each offshore wind project develop a radial line to shore, the AWC project would develop a comprehensive connection system to integrate offshore wind energy into the electrical grid. The AWC backbone would be able to connect up to 7,000 MW of offshore wind, enough power to serve approximately 1.9 million households. An additional side-benefit would be increased reliability and reduced transmission congestion in the heavily congested northeast transmission corridor by providing an additional backbone transmission link. The AWC project is led by the independent transmission company Trans-Elect with Atlantic Grid Development as the project developer and Google, Bregal Energy, Marubeni Corporation, and Elia as financial sponsors.

The AWC project is designed to be built in three-phases over a ten-year period. The figure below identifies the location of the three phases, which include Phase 1 New Jersey Energy Link, Phase 2 Delmarva Energy Link, and Phase 3 Bay Link. Phase 1 was originally expected to be completed between 2020 and 2021; however, it is unclear if the delay for the proposed Fishermen’s Energy 25 MW demonstration project off of Atlantic City will cause delays to the AWC project.

Map of the Eastern United States showing Wind turbines in the Atlantic from New Jersey to Virginia

Source: Atlantic Wind Connection. http://atlanticwindconnection.com/home

2014–2015 Offshore Wind Technologies Market Report,” NREL, September 2015, http://www.nrel.gov/docs/fy15osti/64283.pdf (Download Adobe Acrobat Reader).

Maryland General Assembly, Department of Legislative Services, “Maryland Offshore Wind Energy Act of 2013,” H.B. 226 (2013 Session), http://mgaleg.maryland.gov/2013RS/fnotes/bil_0006/hb0226.pdf (Download Adobe Acrobat Reader)
Navigant, “Offshore Wind Market and Economic Analysis,” September 2014, http://energy.gov/sites/prod/files/2014/09/f18/2014%20Navigant%20Offshore%20Wind%20Market%20%26%20Economic%20Analysis.pdf (Download Adobe Acrobat Reader)., and BOEM, “Guidelines for Information Requirements for a Renewable Energy Construction and Operations Plan (COP),” April 2016, ver. 3.0, http://www.boem.gov/COP-Guidelines/.
U.S. Department of Energy, “Offshore Wind Research and Development,” http://energy.gov/eere/wind/offshore-wind-research-and-development
U.S. Department of Energy, “Maine Project Launches First Grid-Connected Offshore Wind Turbine in the U.S. ,” May 31, 2013, http://energy.gov/articles/maine-project-launches-first-grid-connected-offshore-wind-turbine-us
Navigant, “Offshore Wind Market and Economic Analysis,” September 2014, http://energy.gov/sites/prod/files/2014/09/f18/2014%20Navigant%20Offshore%20Wind%20Market%20%26%20Economic%20Analysis.pdf (Download Adobe Acrobat Reader)