Big Fish Weigh In On Wilmington Offshore Wind 

By Johanna F. Still, posted Feb 3, 2022
Some of the world's most notable renewable energy companies reached out to the Bureau of Ocean Energy Management (BOEM) with feedback on the proposed lease for the Wilmington East Wind Energy Area. (Courtesy U.S. Department of Energy)

Major players in the renewable energy sphere have shared their perspectives with the Bureau of Ocean Energy Management regarding its proposed offshore wind lease of Wilmington East, an ocean-bound area 15 nautical miles from Bald Head Island.

The development of wind turbines in this 127,865-acre space could generate billions in economic development opportunities for North Carolina, latest estimates project. Installation is still up to seven years out if the project continues to move forward, according to the Bureau of Ocean Energy Management’s (BOEM) tentative timeline.

In written responses to BOEM’s proposed sale notice issued in November, a handful of the globe’s most prominent wind energy companies signaled their interest in participating in the upcoming auction. Duke Energy, BP, Equinor, Ørsted and more weighed in on the potential auction format, showing early interest in potentially submitting a bid for the space.

The companies’ questions and comments were part of the proposed sale notice’s public comment period, which ended in January.

With the auction tentatively planned for May, the bid winner or winners won’t automatically earn the rights to construct plans; those must be approved by BOEM before installation work begins.

Recent federal and state directives for clean energy have expedited work on Wilmington East, last studied in 2015. Under the Trump administration, the project remained shelved, and in the fall of 2020, the former president issued a moratorium that begins this summer on new offshore leases in the area. A five-month window of opportunity remains before Trump’s 10-year ban kicks in.

The potential for a new offshore wind energy lease in the Wilmington East Wind Energy Area has summoned widespread environmental, business and labor interest and support, recent public comments show.

“Time is of the essence,” Gov. Roy Cooper said in his opening remarks at the inaugural N.C. Taskforce for Offshore Wind Economic Resource Strategies (NC TOWERS) meeting held in Wilmington on Thursday. “The earlier we can get into this, the more we can reap the economic benefits from it. It is astounding the amount of clean energy that we can produce and the amount of money that can go in the pockets of North Carolinians.”

Wilmington Mayor Bill Saffo told the taskforce he had seen the recent visualizations and was satisfied. “I think it’s appropriate, and I think it’s time for us to get it done,” he said. “Good luck and Godspeed.” 

N.C.’s biggest player chimes in 

In a Jan. 2 letter, Duke Energy – whose CEO first indicated the utility’s interest in the space in a third-quarter 2021 earnings call – asked BOEM to consider moving turbines farther than 15 nautical miles (nm) offshore.  

This request mirrors what a consortium of local governments in Brunswick County rallied for in resolutions passed this past summer, calling on BOEM to keep turbines at least 24 nm at bay to avoid any viewshed impacts. In pointed letters, Village of Bald Head Island leaders chided BOEM for what they describe as failing to keep promises to keep local governments in the loop and not heeding to their request to push back the leasing zone. (BOEM extended the Kitty Hawk threshold to 33 nm from shore to protect the viewshed of the Bodie Island Lighthouse after concerns from the local town and National Park Service.) 

On Jan. 28, the nonprofit Southeastern Wind Coalition released visual simulations of the proposed Wilmington East wind farm at full build-out. The turbines were not visible in the renderings if viewed as intended, according to a nonprofit representative, and Bald Head Island’s mayor, Peter Quinn, told the Business Journal his previous viewshed concerns were personally quelled, though the island’s full council has yet to formally weigh in. The village continues to have questions about construction logistics and how it would impact the island, Quinn said.  

Brunswick County manager Steve Stone expressed skepticism about the credibility of the renderings, according to Coastal Review.   

After the visualizations were released, a Duke Energy spokesperson said the company is reviewing all relevant materials. “Duke Energy maintains its stance that 15 nautical miles is too close but continues to evaluate,” the spokesperson said Tuesday.

As part of its proposed notice, BOEM is considering allowing up to three leases in the area and prescribing pre-arranged turbine layouts. In its letter, Duke Energy told BOEM it does not support turbine layouts and more than one lease could increase environmental and project costs. 

Each lease would potentially mean up to three submarine cabling systems before connecting to the grid, as opposed to one.

“... it is indisputable that the issuance of multiple leases will have substantially more impacts during the construction and operations phase,” Duke’s letter states. Kitty Hawk, roughly the same size as Wilmington East, was leased exclusively to Avangrid in 2017, Duke Energy pointed out.

Avangrid secured the highest bid out of three other auction participants, at $9 million for the rights to lease the Kitty Hawk Wind Energy Area’s 122,405 ocean acres.  

Connecting to the grid 

Developers of the Kitty Hawk project could sell power to either North Carolina or Virginia, given its location near the state border, according to Katharine Kollins, president of the Southeastern Wind Coalition.

The physical connection to North Carolina’s grid by Wilmington East is also undetermined and will be proposed and reviewed as part of BOEM’s review process after a bidder is chosen. 

Whether construction takes place in Wilmington East depends on: 1) Federal approval 2) The developer finding a buyer of the energy generated and 3) The N.C. Utilities Commission approving the buyer's (in this case, likely Duke Energy) expenditure in purchasing the new power. 

“The developers can’t build these multibillion-dollar projects until they have a buyer,” Kollins said. “And so far, every buyer up and down the East Coast to date, has been a state, or it’s been a utility but at the behest of a state.” 

Leasing and negotiating of power purchase agreements are “... the two critically important indicators of future” offshore wind development in the U.S., according to a N.C. Department of Commerce report released last year. Once a purchase agreement is obtained, it will be “followed by a challenging phase to secure interconnection, permitting and a competitive supply chain, enabling a final investment decision and construction start,” the report states.

In October, Cooper signed House Bill 951, directing the N.C. State Utilities Commission – which approves rate changes for public utilities – to take the steps necessary to reduce 2005 carbon emissions levels by 70% by 2030. Cooper’s creed mandates the commission and Duke Energy to come up with the least cost-prohibitive plan to accomplish this carbon reduction by the end of this year.

It’s possible that purchasing and developing wind energy would necessitate an electric rate increase, Kollins said. How exactly the utilities commission would analyze a potential rate increase or weigh whether the project’s economic and carbon-free benefits warrant one, is yet to be determined. Last month, the Southeastern Wind Coalition released a cost-benefit analysis that estimates a 2.8-gigawatt wind project could bring in up to $4.6 billion in net economic benefits for the state. 

“Let’s say the project is on the fence in terms of cost recovery,” Kollins said. “What this analysis aims to do is to give people the understanding of … you're looking at a bigger picture.”

Additional legislative action might be necessary for the utilities commission to approve rate changes prompted by either offshore wind project in North Carolina, according to Kollins.  

Renewables companies bite 

The largest private renewables company in North America, Invenergy, provided among the lengthiest comments from businesses interested in Wilmington East, sharing detailed suggestions for how BOEM ought to conduct its auction. It asked for a maximum of two lease areas, to avoid a maritime transit corridor within the leased area; that BOEM establish multi-factor bidding criteria; and avoid pre-determined layouts for turbines, which could restrict flexibility. Invenergy is set to be infused with $3 billion from the investment firm Blackstone, the companies announced earlier this month.

RWE Renewables Americas asked BOEM to divide the lease into at least two areas to encourage competition. The company teamed up with National Grid last May to bid on New York Bight, an offshore lease auction taking place next month. 

Mainstream Renewable Power, which accounts for 20% of the U.K.’s offshore wind capacity in operation or under construction, told BOEM it supports a single lease area.

The Danish renewable energy company Ørsted, which operates the only offshore wind project in U.S. federal waters (Block Island, a five-turbine farm off the coast of Rhode Island), told BOEM it would prefer at least two leases for Wilmington East. Aside from Block Island, Ørsted also assisted in the Coastal Virginia Offshore Wind two-turbine demonstration, owned by Dominion Energy. The two projects represent the nation’s only active offshore wind farms to date, though several others are working their way through the development pipeline. 

Ocean Winds, a joint venture of EDP Renewables and ENGIE, also weighed in, requesting at least two leases to ensure robust competition. The company is a 50% investor in the Mayflower Wind project off the coast of Massachusetts, which is negotiating power purchase agreements, according to its Jan. 2 letter. 

BP America Inc. and Equinor Wind US submitted a joint comment, encouraging BOEM to issue a single lease rather than the up to three the bureau has proposed. Together, the companies are developing up to 4.4 gigawatts of offshore wind in two projects: Empire Wind off the coast of New Jersey and Beacon Wind off Massachusetts. 

The companies asked BOEM to consider just one lease and to maintain a monetary-only auction format to provide bidders certainty and transparency. As part of its notice, BOEM is considering weighing multiple nonmonetary factors in its auction consideration process that would be judged by a panel of BOEM employees. Bid credits include up to 20% off the winning bid price for financial commitments to a workforce training program or to develop a domestic supply chain, according to the proposed lease notice. 

Though BP and Equinor wrote they support the principle of the idea, the companies told BOEM, “the states are well versed and in a better position to run and manage robust incentivization programs.” 

Considering multiple factors could also slow the approval process, the companies wrote, which is on a quickly approaching deadline.  

Ticking clock 

Trump’s impending moratorium prohibits any new offshore leases from being issued starting July 1 through June 30, 2032. 

The approaching deadline explains why BOEM is moving forward with Wilmington East now, Kollins said. Only new Congressional action can unwind the moratorium, according to Kollins; proposed bills are in the works, but none have passed. 

Republican Congressman David Rouzer, whose district encompasses Southeastern North Carolina, said he’s had conversations with top BOEM officials regarding potential benefits and viewshed concerns Wilmington East presents. He said he’s asked that Wilmington East receive similar consideration as Kitty Hawk, with a 24 nm installation barrier to shore and 33.7 nm viewshed protection length for the closest historic lighthouse (Old Baldy is the state’s oldest standing lighthouse).

Given North Carolina’s already available raw materials, the state is “in a unique position to be a leader in offshore wind energy,” Rouzer wrote in a statement.

“Done correctly with input from all stakeholders, strategically placed wind projects offshore can be a win-win for everyone – benefiting tourism, enhancing the fisheries, while also creating badly needed new industries and jobs throughout Southeastern North Carolina,” he wrote. “Additionally, a portion of the revenues from this energy generation could be used to fund our infrastructure needs for years to come, including the replenishment of our beaches and the dredging of our inlets and waterways.” 

Local thorns 

There are, however, some skeptical voices. A handful of locals, including one Brunswick County real estate agent who described the turbines as “monstrosities” to BOEM, remain apprehensive about ocean views.

A tugboat and barge coalition, the American Waterways Operators, asked BOEM to avoid the U.S. Coast Guard’s St. Lucie to Chesapeake Bay Nearshore Fairway. 

The McEntire Joint National Guard Base’s commander flat-out objected to the proposal: “Do not allow wind turbines to be built in the Wilmington East [Wind Energy Area],” the commander wrote to BOEM in a Dec. 29 letter. Wind turbines create radar clutter, according to the letter, which could impede air traffic control’s ability to assist aircraft that use the space – “the only local airspace that is approved for supersonic flight” with range to conduct air tactics. 

Before BOEM can auction the area, it must first issue a final lease notice, which will cement many of the lease and bidding options the bureau is considering. It’s not clear when that may happen; BOEM did not respond to requests to comment.  

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