Biden Administration works to expand US offshore wind market
This month, the second US offshore wind project, Vineyard Wind, closed its project financing following receipt of its long-awaited approval from the Bureau of Ocean Energy Management (BOEM) in May.
The successful approval and financing of this project is the latest sign that the Biden Administration’s commitment to combatting climate change, including its determination to expand offshore wind farms, is moving forward.
In January 2021, President Biden signed an Executive Order committing his Administration to combatting climate change. Then, in March this year, the White House announced that offshore wind farms are being planned for the Gulf of Mexico and the waters off the US Atlantic Coast and the Pacific.
These initiatives came at a time when the offshore wind sector in the United States was somewhat stalled. Currently, there is only one small project that is actually operating. Significant delays had been seen for years in offshore auctions for additional leases. The project which ultimately received regulatory approval this month, Vineyard Wind, had been delayed for more than three years.
Offshore wind in the US
Leasing offshore lands for wind generation is managed by BOEM. The offshore wind industry in the US is only a decade old – BOEM granted the first commercial offshore wind lease in late 2010 and conducted its first competitive lease auction in 2012. Eighteen commercial leases are now in place with respect to property off the coasts of Rhode Island, Delaware, New Jersey, New York, Massachusetts, Maryland, North Carolina, Virginia and Oregon. However, the sole operating project is the 30 MW Block Island Project off the coast of Rhode Island, which commenced commercial operations in December 2016.
Offshore wind projects in the United States are subject to state and federal laws as well as county and municipal requirements which require the project owner to procure certain environmental, land use, marine and aviation permits and approvals to construct or operate and contain various compliance obligations. In addition, the lease granted by BOEM requires each project owner to comply with some fairly burdensome planning and reporting obligations in close consultation with BOEM.
Some projects have struggled to complete development in the face of these complex contractual and legal obligations and the opposition of local residents. For example, Cape Wind, the holder of the first lease granted in 2010, worked for several years to procure required permits and achieve financing. Ultimately, the leases were relinquished and the project canceled in 2017 when lawsuits by Massachusetts residents created further delays in the planned start of construction.
Biden Administration’s actions
On January 27, 2021, the Biden Administration signed the Executive Order on Tackling the Climate Crisis at Home and Abroad. Section 207 of this Executive Order spells out President Biden’s goal.
Goal: Doubling offshore wind production by 2030
In expanding renewable energy in offshore waters, the Secretary of the Interior is to identify to the National Climate Task Force what steps can be taken in the siting and permitting processes in offshore waters to expand renewable energy. The ultimate goal is to double the production of offshore wind by 2030 by generating 30 gigawatts of energy from offshore wind while also “ensuring robust protection for our lands, waters, and biodiversity . . ..”
In identifying and reviewing these laws and regulations, the Secretary of the Interior must consult with a variety of department heads, including the Secretary of Defense, the Secretary of Agriculture, the Secretary of Commerce, the Secretary of Energy, the Chair of the Council on Environmental Quality, Tribal authorities, project developers, and other interested parties.
Target: BOEM to complete review of at least 26 projects by 2025
The government is moving forward assertively with an expanded leasing program. In March 2021, the White House released a statement providing more detail on the expansion and commitment of offshore wind farms in the United States. The Interior Secretary, Energy Secretary, Commerce Secretary, Transportation Secretary, and National Climate Advisor met with state, industry, and labor leaders to announce the Administration’s plan.
One objective of this plan is to “[a]dvance ambitious wind energy projects to create good-paying, union jobs.” The plan also included a target for BOEM to complete review of at least 16 construction and operation plans (referred to as COPs) for offshore wind projects by 2025. BOEM also announced plans for competitive lease auctions off the coast of Massachusetts, the New York Bight, and parts of the Pacific Ocean.
Approved: Vineyard Wind
The 800 MW Vineyard Wind Project, the second offshore wind project seeking BOEM approval to start construction, was approved in May 2021 after remaining under review for more than three years. This delay included a year-long suspension for reconsideration of environmental concerns raised by the fishing industry regarding the aggregate impact of BOEM’s wind leasing program. BOEM also completed the project’s environmental review.
Vineyard Wind plans to install up to 100 turbines off the coast of Massachusetts. and on September 15, 2021 Vineyard Wind announced that it has closed its $2.3 billion project financing.
In June 2021, the Department of Interior and BOEM announced the advance of the long-pending auction for a wind energy farm in the New York Bight. This area includes waters between Long Island and the New Jersey coast.
BOEM also announced that it is conducting environmental assessments for potential offshore wind energy leases in areas off the Pacific Ocean and the Gulf of Mexico. For example, in May 2021, BOEM hosted an online virtual meeting with the state of Oregon on offshore wind energy planning. In June 2021, BOEM published a Request for Interest in the Federal Register to assess potential developments in the Gulf of Mexico off the coasts of Louisiana, Texas, Mississippi, and Alabama. BOEM is also working with the Gulf of Mexico Intergovernmental Renewable Energy Task Force to coordinate these efforts.
It is worth noting that the most recent auction – conducted by BOEM in December 2018, regarding eight leases representing 390,000 acres off the coast of Massachusetts – yielded three winning bids totaling $405 million. That amount exceeded the aggregate total paid in all previous offshore wind auctions. Each of the winning bids was three times the previous high bid for an offshore wind lease of $42 million in 2017. DLA Piper expects this intense competition to continue in future BOEM offshore wind auctions.
State support of offshore wind
In addition to the actions of the Biden Administration, a number of states have taken action to support offshore wind. This includes cooperation with BOEM in its leasing efforts.
Importantly, such state action has also resulted in requirements for utilities to purchase energy from offshore projects in the form of legislation, executive order or informal resource plans. Such commitments, and the firm revenues associated with the resulting long-term power purchase agreements, will remain essential to the development of offshore wind in the United States.
Examples of state action in support of offshore wind include:
- The California state legislature just passed bill AB-525, which directs state agencies to develop a strategic plan for offshore wind energy to be installed off the California coast and by June 2022 establish “offshore wind planning goals for 2030 and 2045.” This legislation still requires the signature of the governor. Massachusetts, via state statute, has committed to purchase 1600 MWs via the execution of PPAs by June 30, 2027.
- Massachusetts is also the location of a port terminal designed to support the operation of large construction vessels which was developed based largely on state-advanced funds.
- The governor of New Jersey issued an executive order in 2020 requiring the state to finalize regulations and solicit bids for up to 1100 MWs in offshore wind power and expressing a commitment to purchase up to 3500 MWs by 2030.
- In 2019, the Clean Energy Jobs Act was enacted in Maryland requiring the procurement of 1200 MWs of offshore wind via three new solicitations. The first solicitation commenced in July of 2021.
- During the 2020 session of the Virginia General Assembly, Virginia lawmakers passed the Virginia Clean Economy Act (Clean Economy Act), joining environmental organizations, business coalitions and consumer advocates to modernize the Virginia’s clean energy portfolio, combat climate change and create green energy jobs for future generations. The Clean Economy Act sets the goal of having 73 percent or more of Virginia’s electricity coming from clean energy (including offshore wind) by 2035, achieving 100 percent by 2050.
- In 2019, New York passed the nation-leading Climate Leadership and Community Protection Act (called the Climate Act) to empower every New Yorker to fight climate change at home, at work, and in their communities. The Climate Act introduces measures to reduce New York’s carbon footprint, creating the opportunity for citizens and communities to partner with businesses, schools, and government to build a green economy and a climate-proof future. One of the goals of the Climate Act is to generate 9,000 MW of electricity from offshore wind by 2035.
But offshore wind developers in the US will continue to face challenges
Many European countries already have robust offshore wind energy programs in place. To date, Europe has 116 operating offshore wind farms across 12 countries. Asia Pacific has also expanded its offshore wind energy efforts in recent years. Taiwan, South Korea, and Japan are all committed to offshore wind energy projects. Meanwhile, offshore wind in the United States is still in its early stages.
Arising from concerns over climate change, demand from commercial and residential customers, and long-standing state and federal policies in support of clean energy, the development of renewable generation in the United States is experiencing robust growth, and the US government’s actions in support of offshore wind energy are intended to add to that growth.
But despite support from the federal government and several state governments, developers of offshore wind in the United States will continue to face material challenges, including strict regulation, high lease costs, limited existing infrastructure, concerns about long-term environmental impacts, and opposition from neighboring residents. The path ahead for the development, construction and financing of offshore wind projects will still be full of twists and turns.
Find out more about the implications of these issues and the changing landscape of offshore wind farming by contacting any of the authors.
 BOEM manages the property on the outer-continental shelf (OCS) commencing three nautical miles off the shores of the United States, pursuant to the Outercontinental Shelf Lands Act. 43 U.S.C. 1331 et seq. The US National Renewable Energy Laboratory estimates that 88 percent of potential offshore wind sites are within the OCS. This does not take into account potential sites within the Great Lakes or other internal water bodies and intentionally excludes certain key shipping lanes and protected areas.
 In 2011, the DOE and the US Department of the Interior (which manages BOEM) released the initial US National Offshore Wind Strategy: Creating an Offshore Wind Industry in the United States. This strategy was updated and a new version issued by the DOE in 2016.
 See BOEM’s description of the history of the Cape Wind Project on its website at https://www.boem.gov/Massachusetts-Cape-Wind/.
 Exec. Order No. 14,008, 86 F.R. § 7619 (2021).
 Press Release, The White House, Biden Administration Jumpstarts Offshore Wind Energy Projects to Create Jobs, (March 29, 2021).
 See https://www.wbur.org/earthwhile/2021/04/19/boem-record-of-decision-vineyard-wind-preview.
 Department of the Interior-Bureau of Ocean Energy Management, 2021 Oregon Offshore Wind Energy Planning Public Webinars.
 Department of the Interior-Bureau of Ocean Energy Management, Gulf of Mexico (GOM) Intergovernmental Renewable Energy Task Force Meeting.
 “Offshore wind energy—Oceans of opportunity,” WindEurope.org (2021), https://windeurope.org/policy/topics/offshore-wind-energy/ (last visited July 16, 2021).
 “Shaping the future of offshore wind energy in Asia,” MacQuarie (December 0, 2020), https://www.greeninvestmentgroup.com/en/projects-and-perspectives/offshore-wind-power-in-asia.html (last visited July 16, 2021).