RenewNewEngland.com

Testing the Wind

Today, in accordance with LD 1465 (pdf), “An Act To Facilitate Testing and Demonstration of Renewable Ocean Energy Technology,” Maine’s Governor Baldacci announced the final selection of three offshore wind energy demonstration areas in Maine.  (The four site finalists were announced in October 2009, as discussed in this previous post.)

One of the three sites, located near Monhegan Island, is designated as the “Maine Offshor Energy Research Center,” which will be used for research and development projects run by (or in cooperation with) the University of Maine.

The other two sites – off Boon Island near York and off Damariscove Island near Boothbay - are available for R&D projects by commercial entities.  To obtain a permit for a project in one of these sites, a company must first apply for a general permit for offshore wind energy demonstration project under 38 MRS §480-HH from the Department of Environmental Protection.

With a MDEP general permit approval in hand, the company must then apply for a submerged lands lease from the Department of Conservation.  Because these sites are designated for research and development uses rather than permanent, commercial installations, permits for the Boon Island and Damariscove Island sites will good for five years from the date they were granted or three years from the date construction starts (with certain term extensions available); in applying for the permit, applicants must provide a project removal plan that details how they will remove the project at the end of the permit period.

More details about the demonstration areas, including interactive maps of the designated areas, are available at the Department of Conservation site.

This site selection process complements the work of the Ocean Energy Task Force and its recommendations concerning legislation to make near-shore and off-shore sites available for both R&D and ultimately commercial renewable energy projects.  The draft final report of the OETF can be found here. 

Offshore (Data) Mining

Together with Senator Mark Begich of Alaska, Maine Senator Olympia Snowe has introduced the Renewable Energy Environmental Research Act of 2009 (pdf).  The proposed legislation aims to coordinate the collection and dissemination of environmental data so crucial to the development of marine energy resources.  Under the proposed bill, $100M would be appropriated to NOAA each year 2010 through 2014, with the requirement that up to 50% of the funds would be made available to educational institutions and to states with federally-approved coastal zone management programs (pdf). 

As shown on this interactive map, every New England state (other than Vermont,  which lacks a seacoast) is already working with NOAA on coastal and ocean management issues.  Of course, as Senator Snowe’s press release suggests, the University of Maine’s Advanced Structures and Composites Center, which has partnered with Norway’s StatoilHydro to investigate the potential of off-shore wind, would be a natural recipient for this kind of funding.  (For more on this program, see our previous post.)  But with multiple off-shore energy projects in various stages of development in Maine, Massachusetts and Rhode Island, the impact of this bill would be felt throughout the region.

The environmental data covered by the proposed legislation is of great interest to environmental advocates, who want to make sure off-shore development won’t cause unreasonable harm to the habitats where they’re built.  The data is also of critical importance to developers – and their potential investors - who have been calling (pdf) for the refinement, integration and standardization of this kind of environmental data in order to minimize the risks associated with both permitting these projects and their eventual productivity. 

Patent Office Institutes Pilot Program for Green Technologies

On Monday, the Commerce Department announced that the Patent and Trademark Office will institute a Pilot Program for Green Technologies Including Greenhouse Gas Reduction, which will accelerate the examination of certain “green” technology patents.  The Pilot Program will allow inventors who have already submitted patent applications for green technologies to petition to have their applications receive an expedited review.  

As detailed in the Federal Register (pdf), applications eligible for the program include inventions that materially contribute to:

• Enhancing environmental quality;
• The more efficient utilization and conservation of energy resources;
• The discovery or development of renewable energy resources; and
• Greenhouse gas emission reduction.

The PTO estimates that there are approximately 25,000 currently pending patents that would be eligible for the Pilot Program.  However, accelerated examination will only be available to the first 3,000 applications related to green technologies in which a proper petition to make special (pdf) is filed, so parties interested in taking advantage of the Pilot Program should move quickly.  As part of this new program, the PTO has waived the $130 fee normally associated with petitions to make special.

According to PTO statistics, an average patent application receives a first office action in approximately 25 months and reaches a final determination in an average of 32.  Inventions in the Green Technology area have a larger backlog, waiting an average of 30 months to receive a first office action and 40 months to a final decision.

Applicants who successfully petition to enter the Pilot Program will enjoy shortened prosecution times, securing potentially valuable intellectual property rights sooner.  Obtaining patent rights faster will provide additional opportunities for financing and open doors to new projects, a valuable prospect for any company.

Cape Wind and National Grid to Negotiate PPA

Last week, we learned that Cape Wind will enter into negotiations with National Grid for a long term power purchase agreement for power from the long-awaited Nantucket Sound facility.  This is only "an agreement to enter negotiations," so key details remain vague: it's unknown, for example, whether National Grid will buy all or some of the power, or (crucially) how much they will pay for it. In November, National Grid again rejected a long term PPA with Rhode Island's Deepwater Wind, required pursuant to Rhode Island law, when the utility was unwilling to pay Deepwater's price of between 25 and 30 cents per kWh (see our previous post on that project here).  Costs should be lower for Cape Wind, which is in shallower water, (the economic model used in Cape Wind's environmental impact statement estimated a cost of energy of 12.2 cents per kWh) but still higher than its fossil-fueled powered competitors, most importantly natural gas, which sets the market clearing price in New England.  National Grid will need approval from the Massachusetts Department of Public Utilities before it can enter into any long term contract for energy.

What's telling is the source of the announcement: the office of Massachusetts Governor Duval Patrick.  Energy--in particular renewable energy and energy efficiency--has been a central focus of the Patrick administration, as exemplified by the Green Communities Act, and the Oceans Act, both passed in 2008.  The former statute, along with Patrick's continued support, are responsible for the state's climb up the nation's energy efficiency rankings (Massachusetts is currently ranked number two, behind California).  Construction of Cape Wind, potentially the country's first offshore wind project, would be the jewel in the crown of Governor Patrick's renewable energy efforts.  It's not surprising that the Governor would take a special interest in the project.

While some are taking the announced negotiations as a sign that the project is viable, the active role of the Governor's office confirms what we already know: offshore wind— even in relatively shallow water—is very expensive, and the existing incentives (RECs, tax credits, etc.) are not enough to make it economically viable.  To obtain financing, wind projects need long term PPAs that the market is slow to provide, and state governments will need to step in.  Ultimately these projects are only as viable as the strength of their state-level support.