Ocean bureau readies sale on wind tracts off New Jersey

The U.S. Bureau of Ocean Energy Management (BOEM) will publish in the July 21 Federal Register a Proposed Sale Notice (PSN) for the sale of commercial wind energy leases on the Outer Continental Shelf (OCS) offshore of New Jersey.

BOEM proposes to offer for sale two leases in the New Jersey Wind Energy Area (WEA). The total area for the two lease areas is smaller than that described in the Call for Information and Nominations that was published in April 2011.

BOEM proposes to use a multiple factor auction format for the lease sale. BOEM is inviting comments on auction details during a 60-day comment period following this notice. The issuance of the proposed leases resulting from this sale would not constitute an approval of project-specific plans to develop offshore wind energy. Such plans, expected to be submitted by successful lessees, will be subject to subsequent environmental and public review prior to a decision to proceed with development.

In February 2012, BOEM published the Notice of Availability (NOA) for the final Environmental Assessment (EA) and Finding of No Significant Impact (FONSI) for commercial wind lease issuance and site assessment activities on the Atlantic OCS offshore of New Jersey, Delaware, and Virginia. In October 2012, BOEM initiated consultation with the National Marine Fisheries Service under the ESA for geological and geophysical (G&G) activities in support of renewable energy development offshore New Jersey, New York, Massachusetts, and Rhode Island. Formal consultation concluded in April 2013, with receipt of a Biological Opinion that, along with the previous informal consultation, informed the development of the New Jersey commercial wind lease package.

BOEM noted that in 2011, Atlantic Grid Holdings LLC submitted a right-of-way application in this New Jersey offshore area. The bureau didn’t get any offer of competitive interest in the right-of-way area. BOEM anticipates that the New Jersey lease sale will occur prior to a decision regarding the granting of a ROW to Atlantic Grid Holdings, as a result of the required environmental compliance documentation that is still needed. BOEM does not foresee the activities under the ROW grant interfering with any lessee’s ability to develop the lease areas.

Also, in November 2009, BOEM executed two Interim Policy leases within the New Jersey WEA authorizing the construction, installation, and operation of meteorological towers or buoys for a term of five years, to two developers: Deepwater Wind LLC and Fishermen’s Energy LLC. These leases do not confer a right to develop a commercial offshore wind project. Rather, the leases grant the exclusive right to install and operate facilities to characterize wind and environmental resources. Interim Policy lease holder’s rights are preserved until the leases expire on Nov. 1, 2014. BOEM anticipates the New Jersey lease sale to occur after the Interim Policy leases have expired.

Bureau expects to issue two leases under this auction

In this auction, approximately 160,480 acres would be offered for sale as Lease OCS-A 0498 and approximately 183,353 acres would be offered for sale as Lease OCS-A 0499. BOEM proposes a minimum bid of $2.00 per acre for this lease sale. Therefore, the minimum acceptable bid will be $320,960 for all of Lease OCS-A 0498 and $366,706 for all of Lease OCS-A 0499. If there are adequate bids, two leases will be issued pursuant to this lease sale.

The primary reason for the reduction in the original lease areas is the navigation concerns raised by the U.S. Coast Guard (USCG) at a December 2012 BOEM New Jersey Renewable Energy Task Force meeting. The USCG presentation provided its analysis of vessel traffic transits through the New Jersey WEA and described the implication of allowing offshore wind development in the area. The Coast Guard explained that these OCS blocks are located directly south of the Ambrose-to-Barnegat traffic lane, creating a navigational obstacle.

The bureau pointed out that in 2010, New Jersey Gov. Chris Christie signed the New Jersey Offshore Wind Economic Development Act (OWEDA), directing the New Jersey Board of Public Utilities (NJ BPU) to develop an Offshore Renewable Energy Certificate (OREC) program to require that a percentage of electricity sold in the state be from offshore wind energy. While the percentage was not mandated by OWEDA, at a minimum, the percentage adopted by the NJ BPU must support at least 1,100 MW of generation from “qualified” offshore wind projects.

BOEM aims to provide an optimal opportunity for each project to be of sufficient size to pass that state legislation’s “net benefits test.” Based on input from the state that is supported by feedback from the offshore wind development community, BOEM is of the understanding that an offshore wind project of at least 1,000-1,100 MW would be needed to entice a turbine manufacturer or foundation supplier to set up manufacturing in New Jersey.

Any potential bidder that has not already submitted a complete set of qualification materials must do so by the end of the 60-day comment period of this PSN.

Secretary of the Interior Sally Jewell and BOEM Acting Director Walter Cruickshank on July 17 announced this proposed sale of leases.

“Responsible offshore wind energy development has the potential to create jobs, expand our domestic clean energy resources, and strengthen our nation’s economic competitiveness,” said Jewell. “Today’s announcement is a testament to the true collaboration and commitment from New Jersey for harnessing clean energy, and it reflects extensive consultations with a number of local communities and stakeholders to minimize conflicts and bring clarity and certainty to potential wind energy developers.”

“New Jersey has the offshore wind resources to be a national leader in clean energy generation and this announcement is an important step in that direction,” said U.S. Senator Robert Menendez, D-N.J.

The Wind Energy Area begins about seven nautical miles off the coast from Atlantic City. Based on an analysis prepared for BOEM by the Department of Energy’s National Renewable Energy Laboratory, the area as currently delineated, if fully developed, may be able to support up to 3,400 MW of commercial wind generation, enough to power about 1.2 million homes.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.