43 Companies to Compete For Five California Offshore Wind Leases

On Tuesday, the U.S. Bureau of Ocean Energy Management, or BOEM, will auction off five leases for the development of offshore wind energy facilities along the California Coast – the first such lease sale on the West Coast of the United States. Two of the sites are located off the coast of Humboldt, California, while the other three are located near Morro Bay. Combined, the five areas to be leased encompass over 500 square miles of ocean – an area larger than the City of Los Angeles.

Competing for these five leases are 43 companies including BP U.S. Offshore Wind Energy LLC, a subsidiary of BP, and Shell New Energies U.S. LLC, a subsidiary of Shell. However, winning one of these leases will not give companies the ability to dive straight into constructing offshore wind facilities along the California coast. Instead, winning a lease simply marks the beginning of a series of regulatory hoops each company will have to go through before getting a green light to construct the facilities – a process East Coast lessees and agencies alike have already started to navigate.

Many East Coast Leases, Few Offshore Wind Farms

The first offshore wind leases were auctioned off by the BOEM in 2012. Since then, 30 offshore wind leases (including 27 commercial leases) have been issued for the Eastern Seaboard. Yet only two leased areas are currently operating offshore wind facilities: Rhode Island’s Sea2Shore: The Renewable Link Project and Virginia’s Offshore Wind Pilot Project.

Rhode Island’s Sea2Shore Project

The Sea2Shore Project allowed the Block Island Wind Farm, located in state waters, to lay down connection lines in federally regulated waters to connect the wind farm to mainland Rhode Island. Using the transmission lines authorized by the Sea2Shore Project, the Block Island Wind Farm began delivering electricity to the Rhode Island grid in December 2016, making it the United States’ first offshore wind facility.

The Coastal Virginia Offshore Wind Project

Unlike Rhode Island’s Block Island Wind Farm, whose primary infrastructure was constructed in areas regulated by the state of Rhode Island, Virginia’s offshore wind pilot project represents the U.S.’s first offshore wind project to be constructed in federal waters. Undertaken by Virginia’s primary utility company, Dominion Energy, in collaboration with the state of Virginia, the Coastal Virginia Offshore Wind Project allowed Dominion to construct two offshore wind turbines 27 miles offshore of the Virginia coastline for research purposes. The pilot project’s wind turbines began turning in May 2020. Today, the two wind turbines built by project remain the U.S.’s only two wind turbines located in federal waters.

Lessons learned from the pilot project will be incorporated into the design of Dominion’s Coastal Virginia Offshore Wind Project, which aims to construct 176 wind turbines that are expected to produce enough energy to power more than 600,000 homes. However, almost 10 years after Dominion was awarded an offshore wind lease for the Coastal Virginia Offshore Wind Project, the project remains unbuilt with public criticism leaving the project’s future uncertain.

Under Construction: The South Fork Wind Farm and Vineyard Wind

Two other offshore wind projects are currently under construction on the East Coast: the South Fork Wind Farm, located off the coast of Rhode Island, and Vineyard Wind 1, located off the coast of Massachusetts. The projects were awarded federal leases in 2013 and 2015, respectively, and have each since received all federal permits needed to begin construction.

By the time each is expected to come online, it will have been about a decade since their leases were awarded.

However, neither the South Fork Wind Farm nor Vineyward Wind 1 are in the clear yet.

Massachusetts’ Vineyard Wind 1 Project in particular has faced a number of legal challenges, including a recent legal filing against the project from the Responsible Offshore Development Alliance, or RODA, a group representing the commercial fishing industry. As part of the filing, RODA argues various federal agencies, including the BOEM, the U.S. Army Corps of Engineers, and the National Marine Fisheries Service (NMFS) issued permits for the project without completing an assessment of the project’s potential to impact the endangered North Atlantic Right Whale (concern over which recently caused the Maine lobster fishery to lose its coveted sustainable seafood certification from the Marine Stewardship Council).

RODA also claims federal agencies failed to adequately assess alternative, non-water-dependent projects (i.e., land-based wind farms) and that the Vineyard Wind 1 project would result in the illegal exclusion of commercial fisherman from the area.

Similar litigation was filed against both the South Fork Wind and Vineyard Wind 1 projects in February 2022 by Allco Renewable Energy Ltd, a solar energy company. In its litigation, the company argues that, among other things, the project could jeopardize endangered species and release oil into the ocean should the turbines topple over during hurricane-level wind events and that the project would result in the “decimation of the commercial fishing industry”.

Since the filing, Allco’s complaints against the two projects have been separated into two separate cases. In addition, a number of Allco’s claims have been dismissed because Allco failed to provide federal agencies with timely notice prior to filing its litigation. Allco is expected to re-file the dismissed claims.

BOEM’s First California Offshore Wind Leases

Despite the many unresolved legal actions plaguing the growth of offshore wind on the East Coast, the BOEM is continuing to evaluate new potential offshore wind locations and auction off commercial leases. Already this year the BOEM has issued eight leases for areas off the coast of New York and North Carolina. Following Tuesday’s scheduled lease auction, the total number of BOEM-issued commercial offshore wind leases will go up to 31 leases. Together, the 15 leases issued this year represent a nearly 70% increase in offshore leases in 2022 alone.

The rapid growth in federal offshore wind leases has been made possible, in large part, by the Biden ministration, which in 2021 set a goal of obtaining 30 gigawatts of energy from offshore wind by 2030. In September 2022, the Biden ministration expanded this goal to include an additional 15 gigawatts of energy from floating offshore wind by 2035 – the type of offshore wind technology that will be deployed off the California coast.

However, even with the Biden ministration’s support, it’s likely to be at least a couple years until any offshore wind facilities are constructed in the west.

Even without delays related to litigation or public criticism, the entities awarded the five new California offshore wind leases will have many regulatory obligations to fulfill before offshore wind will become a reality for the golden state, including requirements from the California Coastal Commission.

The Long Road from Lease to Construction

Based on the requirements outlined in each of the BOEM’s draft leases, each of the California offshore wind leases will have an initial term of just one year. To extend the lease term, each company will need to submit a Site Assessment Plan (SAP) to the BOEM and the California Coastal Commission for review or obtain authorization for an extension.

Each Site Assessment Plan will need to describe how the lessee plans to survey the leased area. The data collected during the initial site assessment stage will be used by each company to inform their offshore wind designs. While these surveys are a necessary component of offshore wind development, they often use loud, repetitive sound waves that can hurt or even kill marine life. In addition, the vessels operating the survey equipment are at risk of colliding with marine life, particularly whales.

However, to minimize potential impacts to marine life, each of the BOEM’s draft leases already include a number of survey requirements, including a maximum survey vessel speed limit of 10 knots, mandated third-party marine life observers on each survey vessel, and reporting requirements so that agencies like the BOEM can assess the impacts of the survey efforts. Through its survey plan review process, the BOEM and the California Coastal Commission will have the opportunity to ensure each company’s survey plan will comply with lease requirements and to provide the two agencies with the opportunity to introduce additional environmental protections.

Once a lessee has obtained agency approval of their Site Assessment Plan, completed all authorized surveys, and developed an offshore wind design, they will then prepare and submit a Construction and Operations Plan (COP) to the BOEM and the California Coastal Commission. After each agency has conducted an initial review of the Plan, and after any requested modifications are addressed, the COP will undergo formal evaluation under the National Environmental Policy Act (NEPA) before receiving final federal approval.

The NEPA process requires a federal “lead agency” – in this case, the BOEM – to prepare a report that assesses each offshore wind facilities’ effects on the environment. The public is then invited to provide comments on the draft report. Depending on the nature of the comments received, the BOEM may then ask the lessee to conduct additional studies. Once all comments on the draft report have been considered, a final report is published. If no new, substantive comments are provided on the final report, the BOEM can issue a final decision, completing the NEPA process.

Once a final decision is published for a project’s Construction and Operations Plan, the project can obtain permits from the many other agencies, like the U.S. Army Corps of Engineers and the National Marine Fisheries Service, which oversee the U.S.’s coastal waters and the species that reside within them. Only after all agency approvals are obtained and the BOEM issues a “record of decision” may construction in any of California’s five leased areas begin.

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