LEASING & PERMITTING OFFSHORE WIND & CABLES IN NEW ENGLAND

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1 LEASING & PERMITTING OFFSHORE WIND & CABLES IN NEW ENGLAND Michael Ernst, Esq, Director of Regulatory Affairs EBC Renewable Energy Committee Meeting Boston, MA January 15, 2013

2 Introduction to Tetra Tech Tetra Tech, Inc. FY 2011 Revenues - $2.6 Billion More than 13,000 employees in 330 offices worldwide Ranked #1 Wind Development Consulting Firm in 2012 and Top 10 Environmental Firms by Engineering News Record Full-Service Firm Providing Integrated Services Consulting (Siting, Surveys, Permitting), Engineering & Construction Critical Issues Studies: Siting; Avian, Wetlands & Marine Surveys Supported Development of over 1000 Energy Projects last decade Supporting 500 wind projects totaling 25,000 MW Supporting 65 utility scale solar projects 30 Energy Construction projects 2500 MW and $500 M Supporting Siting & Permitting of 10 Offshore Wind Farms Atlantic Coast: Maine, RI, MA, NY, NJ, DE, MD, VA, & NC Lakes Erie & Michigan

3 Outline of Presentation European Offshore Wind Industry Offshore Wind Resource for Coastal U.S. States Federal Offshore Wind Process Identify Wind Energy Areas/Environmental Assessments Requests for Information & Lease Block Nominations Competitive Bidding or Non-Competitive Process Site Assessment Plan (Surveys) & Construction & Operations Plan Federal & State Approvals Offshore Submarine Cables Status of East Coast Projects Massachusetts Rhode Island Maine Financial Challenges Policies to Overcome Challenges

4 International Offshore Wind Industry Denmark: First offshore turbines installed in 1990 European Installations 4.3 GW installed in GW planned for GW by 2030; 14% of EU demand 40,000 European Jobs > 300,000 jobs by 2020 DOE: Atlantic Coast could produce >54 GW of offshore wind DOE Projections: 54,000 MW by 2030 =14M homes 300,000 jobs and Cost reduced to 10 cents/kwh Incentives: RPS, Renewable Energy Credits, Long term contracts, Investment and Production Tax Credits

5 United States Wind Resource Wind Power Classification Wind Power Class Resource Potential Wind Power Density at 50 m W/m 2 a Wind Speed at 50 m m/s a Wind Speed at 50 m mph a Fair Good Excellent Outstanding Superb Wind speeds are based on a Weibull k value of

6 Total Wind Resource Potential Exceeds Total U.S. Electricity Demand

7 Eastern Wind Integration Transmission Study

8 OCS Alternative Energy Rulemaking EPACT 2005 directs DOI to issue rules within 270 days DOI delegates to MMS, now Bureau of Ocean Energy Management Programmatic EIS: May 2005 December pages of analysis plus appendices PEIS Conclusion: In general, most impacts would be negligible to moderate for all phases of wind energy development assuming that proper siting and mitigation measures are followed. Final Rule June 29, 2009 (233 pages in Federal Register) Minerals Management Service acknowledged final lease process may take 5-7 years or more by requiring 2 full EISs Negotiations with MMS, lead NEPA agency, in late 2009 to reduce length of process consistent with NEPA and other federal laws: Level of NEPA review should be commensurate with the likely environmental impacts BOEM Smart from the Start Program: BOEM EA for Site Assessment & 1 EIS before Construction;

9 BOEM Lease Process State Task Forces Identify Area of Interest aka a or Wind Energy Area (WEA) Request For Interest (RFI) Call for Information (Call) Determination of Competitive Interest Lease issued for Site Assessment with Site Assessment Plan (SAP) & EA Construction & Operations Plan (COP) File Permit Applications NEPA Review Draft EIS (Third Party Contractor) Final EIS Record of Decision COP approved; Lease for Construction Certified Verification Agent approves Design & Construction Plans Final

10 Lease Nominations Request for Interest Process State Task Force: Area of Interest State Constraint Analyses & Meetings Request for Interest Nominations for specific lease blocks Demonstrate Legal, Technical & Financial Qualifications Public comments on any concerns Call for Nominations & Information Identify Wind Energy Area Environmental Assessment for Site Assessment & Characterization Regional EA for VA, MD, DE & NJ EA for MA and RI/MA Area Mutual Int. Delaware Constraints Map

11 Competitive Interest Process Competitive Interest Process Call for Information & Nominations Area Identification by BOEM after State Input NEPA Review & Coastal Zone Management Act Consistency Determination Proposed Sale Notice & 60-day Comments Final Sale Notice Competitive Auction Process Options: Sealed bidding Ascending bidding Two-stage bidding Multifactor bidding (30 CFR ) Bid Evaluation Issuance of Lease NYPA, LIPA, Con Ed Site South of Long Island, NY

12 Site Assessment Plan Survey Plan Development Per the BOEM Rules, the SAP (or GAP) must: Describe the survey activities proposed to characterize the development area; Demonstrate how site assessment activities will collect the necessary information and data required for the COP filing; and Show how the developer will comply with all relevant Federal statutes when conducting survey activities. The following 5 offshore site assessment surveys will play an integral part of offshore wind facility siting, planning, permitting, construction and operation. Avian and Bat Surveys Marine Mammal and Sea Turtle Surveys Geological, Geophysical and Hazard Surveys Marine Cultural Resource Surveys; and Benthic Surveys Each survey plan should be developed in close coordination with resource agencies of concern before implementation. Regional Environmental Assessments reduce study & review requirements for standard surveys Individual EA tier off any Regional EA

13 Construction & Operations Plan BOEM COP Regs & Guidelines (30 CFR ) Site Investigation Report - Survey Results (shallow hazards, geological, geotechnical, biological, archeological) Construction & operation concept Compliance with Lease Stipulations Interconnection cables and power lines Decommissioning Plan Mitigation Measures List of Federal, State & Local Approvals NEPA Compliance Analysis: EIS Oil Spill Response Plan Safety Management System

14 Major Federal, State & Local Approvals Federal, state and local approvals and consultations for the project will include but not be limited to: CZMA Consistency Determination for SAP and COP (NY Dept. of State) NOAA Letter of Concurrence to support Geophysical surveys activities USACE Section 10/404 Permit EPA Air Permit (construction vessel emissions) NOAA Incidental Harassment Authorization/Incidental Take (IHA/ITS) Permits under ESA and Marine Mammals Protection Act USFW Consultation and possible Incidental Take Permit under ESA for Eagles or EFH for endangered species, and Migratory Bird Treaty Act Advisory Council on Historic Preservation & SHPO Consultation under NHPA Dept. of Defense Consultation for military practice areas and defense radar USCG Private Aid to Navigation (PATON) and Local Notice to Mariners (LNM) State Determines Consistency with State Coastal Zone Management Plans State Siting Board Approval of Interconnection Cables into State State Submerged Lands Easement for Cables State Tidal and Freshwater Wetlands Permits, Coastal Erosion Permits, CWA 401 Water Quality Certification, NPDES Stormwater Construction Permit Local zoning and building code approvals for interconnections & substations

15 Offshore Submarine Cables to Interconnect Renewable Projects to Grid BOEM Regulations for Cable Associated with Offshore Wind Farm A commercial lease will confer the right to a project easement to install on the OCS gathering, transmission, and distribution cables 30 CFR (b) Preliminary transmission plans submitted with the Construction & Operations Plan (COP) or General Activities Plan (GAP) Terms and conditions for the project easement will be issued by BOEM in an addendum to the lease

16 Offshore Cables for Renewable Projects Regulations for Independent Cable to Transmit Offshore Renewable Energy BOEM will issue ROW grants to allow for the construction and use of a cable or pipeline for the purpose of gathering, transmitting, distributing, or otherwise transporting electricity generated or produced from renewable energy not generated on a lease issued under this part (a). BOEM will consider on a case-by-case basis, renewable energy ROWs supporting the transmission of energy from oil or gas sources that is combined with energy from sources other than oil or gas, provided that renewable energy generated from sources other than oil and gas is primarily what is being transmitted. 74 Fed Register Application for ROW (200 foot width plus area necessary for substation(s) Atlantic Wind Connection filed ROW Request & BOEM issued Request for & Determination Competitive Interest

17 Offshore Submarine Cable Backbone Atlantic Wind Connection 6000 MW HVDC Cable Interconnections in NY, NJ, DE & VA Filed application for lease & GAP at BOEM in March 2011 No Competitive Interest Deepwater Wind Cable Rhode Island Sound Wind Farm Cable to Long Island Mass. RFI 2 Cable Bids Dominion Resources Study Virginia Cable Study multiple wind farms Delaware Atlantic Coast Weather Study Northeast Submarine Cables Rhode Island Sound Maine Mass. NH Mass.

18 Massachusetts Cape Wind Wind Farm in Federal Waters >3 miles offshore 12 mile 115kV transmission cable within MA borders and subject to Mass. regulation Coastal Zone Management Act gives state jurisdiction over wind farm impacts to MA USACE Application Met Tower: USACE IP & EA 2003 EFSB Petition for Interconnection only filed 2002 Interconnection approval conditioned on approval of wind farm 2005; upheld by SJC Composite Permit All State & Local Approvals 2009 SJC Upheld 2010: sufficient delegation of DEP Authority to EFSB for Tidelands License Chapter 91 Waterways License 2008 Water dependent use: infrastructure facility because it delivers or otherwise provides electric... services to the public from an offshore facility located outside the Commonwealth. 310 CMR 9.12(2)(b)10 DEP 401 Water Quality Certificate 2008 MA Ocean Sanctuaries Act-Sec.16 exemptions for electric power; cables approved by DPU Cape Cod Commission & Local Conservation Commission Approvals BOEM FEIS & Lease 2010 Final geotech surveys 2012 and construction planned fall 2014

19 Massachusetts Cape Wind MEPA MEPA ENF Filed 2001, MEPA Certificate 2002 Coordinated MEPA/NEPA Review until EPACT 2005 made MMS Lead Fed Agency Draft EIR/EIS 2004; FEIR Filed February 2007; FEIR MEPA Certificate 2008 Energy Policy Act of 2005 gives MMS NEPA Jurisdiction Draft EIS 2008; MMS Final EIS 2009 MEPA Issues Cable under MEPA threshold, but CW agreed to Discretionary EIR under MEPA Regs: Section Avian impacts: Loss of less than 1 Piping Plover and Roseate Tern per year for full wind farm Environmental Management System for post construction monitoring Marine mammal construction noise impact limit of 180dB Secretary designated OCZM to oversee and allocate $10M compensation, incl. 27% of fed lease fees for MA programs Finds environmental benefits and compensatory mitigation adequate to mitigate the project impacts No strict MEPA requirement to present alternatives due to limited state jurisdiction CW still presented alternative fossil and renewable generation options at same scale Conclusion: Massachusetts impacts adequately avoided, minimized & mitigated

20 Wind Turbine Visibility

21 Ocean Management Plan 2009 BOEM Request for Information: Dec Bids for leases >2,000 sq. nautical mi. Commercial fishermen objected: => 1,000 mi. Call for Nominations February 2012: 10 bids EA issued Oct. 2012; Comments due Dec.3 Competitive process extend through 2013 Massachusetts Lease Area

22 Environmental Assessment for MA Wind Energy Area Commercial Leases & Site Assessment Activities Reasonably Foreseeable Activities & Impacts Assumes 5 Leases and up to 2500 turbines (<1800 MW/lease and up to 9000 MW total) Site Characterization Surveys Met Tower or Buoy Construction Impacts Commercial Fishing North Atlantic Right Whales Std. Operating Conditions No Pile-driving November 1 to April 30 NOAA Marine Fisheries trained observers onboard always 1500 foot buffer from sighted whales and 10 knot max. speed 160dB & 180dB Exclusion Zones for Geophysical Surveys Night surveys only with active or passive acoustic monitoring Public Comments Due December 3, 2012 Proposed Sale Notice to be issued in 2013

23 Rhode Island Special Area Management Plan (SAMP) RI-MA Area of Mutual. Interest Call for Nominations Draft EA June 2012 Competitive Process Proposed process: Simultaneous Ascending Clock Auction Pre-Sale Notice & EA Final Sale Notice Lease Award SAP, COP, Final Lease

24 Rhode Island Block Island Wind Farm & Cable 30 MW 5 6-MW Turbines 110 meter hub height; blades 77 m 21 mile cable from Block Island to Narragansett Switchyard Power Purchase Contract State RFP: Preferred Developer 24.4 cents/kwh with National Grid PUC: not commercially reasonable New Standard of Review enacted: Compare with new renewable energy BOEM Right of Way for Cable All Permits filed October 2012 USACE NEPA Lead Federal Agency Environmental Assessment Spring 2013 BOEM ROW & other permits 2013 Block Island Wind Farm & Cable

25 Rhode Island Deepwater Wind Energy Center MW Siemens Turbines 15 miles off Martha s Vineyard Power Contract 300 MW to Rhode Island or Massachusetts Preferred RI Developer 600 MW to Long Island Cost in mid-teens/kwh Deepwater Wind Energy Center

26 Maine Statoil Hywind Floating Turbines 4 3-MW Turbines 20 miles offshore 500 feet deep BOEM Lease & ROW Determination of No Competitive Interest 12/19/12 Surveys & COP 2013 EIS & Approvals 2015 DOE Grant Maine PUC Contract Rejected 29 cents/kwh $40M committed to Maine companies

27 Overcoming Financial Challenges Offshore Wind Development Cost Savings Manufacture Components and Turbines in U.S. Manufacture Cables in U.S. Offshore Submarine Cable Backbone for Many Wind Farms Construct U.S. Construction Vessels; Train U.S. Crews Extend Production & Investment Tax Credits Competitive Long Term Contract RFPs Broad Net Benefits Standard of Review for PPA at PUCs Increase Ocean Renewable Energy Credits (ORECs-NJ) Federal and State Loan Guarantees Federal and State Low Interest Loans Accelerated Depreciation Federal R&D (foundations; turbines, e.g.,floating) Future U.S. Offshore Wind Project Prices Deepwater projects low teens/kwh for 1000 MW wind farms DOE & U.Maine project 10 cents/kwh by 2030

28 Navigant Consortium Offshore Wind Market Report Initial Major Policy Recommendations Extend Investment Tax Credits: (~5 cents/kwh) Strengthen Renewable Portfolio Standards -- Offshore Carve Outs Ocean Renewable Energy Credits (NJ, MD) Mandate Long Term Power Purchase Agreements Coordinated Competitive Procurement: (~3.5 cents/kwh) Provide Low Interest Financing Loan Guarantees/Tax Exempt Bonds: (~2 cents/kwh) Expand Transmission/Interconnection Incentives Offshore Submarine Backbones (Atlantic Wind Connection) Broaden Transmission Cost Allocation (FERC Order 1000) Streamline Leasing & Permitting Target Total Price: <10 cents/kwh

29 QUESTIONS?? Questions?? or rising over 1. Is this sun?setting offshore wind industry in New England? Contact Info: Michael Ernst, Esq. Director, Regulatory Affairs Tetra Tech Energy Program Michael Ernst, Esq. Director Regulatory Affairs 160 Federal Street Tetra Tech Inc. Suite Federal Street, Suite 300, Boston Boston, MA 02110