U.S. to take bids Aug. 19 for nearly 80,000 acres off Ocean City
July 02, 2014|By Timothy B. Wheeler, The Baltimore Sun Continuing the Obama administration’s effort to launch a U.S. offshore wind energy industry, federal officials announced Wednesday that they will auction off the rights next month to build huge turbines off Maryland’s coast. The U.S. Bureau of Ocean Energy Management said it would take bids Aug. 19 to lease nearly 80,000 acres of Atlantic Ocean about 12 miles off Ocean City for up to two wind projects.
Interior Secretary Sally Jewell called the move to lease turbine sites off Maryland “another milestone as we strengthen our nation’s foothold in the new energy frontier.” She praised Gov. Martin O’Malley, who has championed state-financed support for offshore wind and directed his aides to work closely with federal officials on the leasing process. “To combat climate change, we must develop cleaner, renewable sources of energy,” O’Malley said. He called the federal auction “a tremendous step forward” for the offshore wind industry.
This would be the sixth commercial offshore wind lease awarded by the federal government. Three have been granted off New England, with the other two off Delaware and Virginia.
Sixteen companies have declared interest in the leases off Maryland and have been found qualified by the federal bureau to bid.
“We are very optimistic that this large expression of interest indicates that the policy we have created is agreeable to offshore wind developers,” said Abigail Ross Hopper, director of the Maryland Energy Administration.
Last year, O’Malley persuaded lawmakers to approve ratepayer-backed subsidies for an offshore wind project. Under the legislation, Maryland households would pay up to $1.50 a month and businesses up to 1.5 percent more on their power bills once turbines are up and running.
An offshore wind project would help Maryland reach the goal set by state lawmakers of getting 20 percent of the state’s power from renewable sources by 2022.
Federal officials say the Maryland leases, if fully developed, could support 850 megawatts to 1,450 megawatts of generating capacity, enough to power 300,000 homes. Maryland lawmakers approved only enough “offshore renewable-energy credits” to underwrite perhaps 40 large turbines capable of generating 200 megawatts of power. But state officials hope the subsidy — up to $1.7 billion over 20 years — would enable a developer to finance a larger project.
Once winning bidders have been selected, they would have a year to submit site plans and up to five years after that to start work.
But offshore wind still faces major hurdles in the United States, though there are projects in Europe and Asia. The first offshore wind lease was awarded in 2010 in Nantucket Sound off Massachusetts. But the 130-turbine Cape Wind project has struggled to overcome legal, political and financial challenges. The federal government announced last week a $150 million loan guarantee for the $2.5 billion project, which backers hope will make it possible to begin construction next year.
Rep. Andy Harris, Maryland’s lone Republican congressman, issued a statement criticizing offshore wind subsidies as costly to consumers and taxpayers. He suggested that O’Malley’s support for the industry is driven by his presidential ambitions.
“Offshore wind remains one of the most expensive forms of energy production, costing many times more than energy produced from clean, American natural gas,” said Harris, whose district includes the Eastern Shore and northeastern Maryland.
But wind advocates say that government action is needed to move the nation away from reliance on climate-altering coal, oil and natural gas.
Among the bidders for the Maryland offshore lease is Dominion Wind Development LLC, a division of the Richmond, Va.-based energy company that is seeking federal permission to export liquefied natural gas from Cove Point in Calvert County.
The company has a 50 percent stake in two land-based wind projects in West Virginia and Indiana, and bid $1.6 million in September to win the lease for 112,800 acres of federal land off Virginia Beach. It also has expressed interest in bidding for offshore wind leases off North Carolina.
The company recently received a $47 million Department of Energy grant to build two 6-megawatt turbines on innovative foundations 27 miles off the Virginia coast.
Dominion spokesman Dan Genest said that between its lease and the offshore demonstration project, the company “is acquiring the expertise and personnel to develop large-scale wind projects offshore … that can deliver cost-effective energy to onshore transmission grids.”
One company not among the approved bidders was Exelon Corp., which as part of its takeover of Baltimore-based Constellation Energy Group pledged to develop 125 megawatts of new renewable energy generation in Maryland. The Chicago-based Exelon also gave the state $30 million for promotion of offshore wind. Exelon spokesman Paul Adams noted that the company is behind two new land-based wind projects proposed for Western Maryland.