On October 28, 2009, FERC entered into a Memorandum of Understanding with nine federal agencies to…coordinate transmission siting. Among other things, the MOU will coordinate scheduling of each agency’s permit processing and will create one point person for an applicant’s submission so that the applicant can deal with one entity rather than nine separate groups (not to mention whatever other agencies are involved on the state and federal level).

Wouldn’t it be nice if FERC and the other federal agencies could craft similar relief for marine renewables?  After all, if visiting nine different permit agencies to file applications is too cumbersome for a multi-million dollar transmission project developer, imagine the burden on marine renewables?  Yet, marine renewables do not have a unified licensing process and must trudge from agency to agency to coordinate licensing.

Moreover, the need for a coordinated marine renewables process is more acute than for transmission siting.  While there are several marine renewables projects in various stages of permitting and licensing,  by contrast, FERC has received only one preliminary request to utilize the FERC transmission siting process which has since been withdrawn.  So essentially, FERC and the agencies went to the trouble of executing an MOU to address projects which haven’t yet been filed.

Don’t get me wrong – I don’t begrudge transmission developers this MOU.  As the New York Times recently pointed out, our nation needs to beef up its transmission infrastructure and a national, coordinated process may be the only solution.  A coordinated process makes life easier for all involved – not just the developer but also the stakeholders which include local resource groups not to mention property owners who will be impacted by the lines.

Still, if we’ve acknowledged that an MOU is necessary for a multi-million dollar, readily-finance-able transmission siting proceeding, surely, the same arguments apply to marine renewables.

Again, playing catch up, here’s a quick round up on offshore wind developments. Last month, the US Offshore Wind Collaborative released this excellent report, US Offshore Wind, Next Steps Forward. The Report summarizes the state of offshore wind around the world and identifies the challenges that the industry faces here in the United States, including regulatory delay, supply chain back-ups and the prospect of marine spatial planning over the horizon. We’ve already ceded the offshore wind turbine industry to Europe, a mistake that’s inflicting further unintended consequences due to the fact that the Jones Act requires ships traveling between US ports to be US owned, thus making use of European ships impossible. But the offshore wind energy industry is committed to moving forward as are several states – and adequate political will is more than half the battle.

On the topic of state interest in offshore wind, here’s a quick summary. On December 1, 2009, New York issued a request for proposals from wind developers to build offshore wind farms on the Great Lakes, reports CNET . Meanwhile, back on November 10, 2009 the states of Maryland, Virginia and Delaware agreed to a tri-state partnership to deploy offshore wind energy off the Mid-Atlantic coast and importantly, to collaborate on offshore transmission, as described in one of many Press Releases. But as is the case with offshore renewables, each step forward brings a counter-current. Less than a month after the MOU, on December 3, 2009, the Washington Post reports that the military has expressed concerns about Maryland’s plans for offshore wind, specifically the fear that the turbines could disrupt flight and weapon test ranges or erroneously appear on radar as unidentifiable aircraft.

Virginia continues to move forward with its efforts through the Virginia Coastal Energy Research Consortium. My friend and colleague George Hagerman, a director of the Consortium commented to the New York Times that the US will need to be creative to keep down the costs of offshore wind since many of the lessons from Europe may not yield the most cost effective results. If you’re interested in what’s happening in Europe with respect to offshore wind, read the entire NY Times articles.

ocean wave

Yes, I’ve been gone for a while again.  There are so many exciting developments that I’ve wanted to cover, but my schedule has precluded doing so.  In any event, enough apologies – here’s a quick wrap up on wave and tidal energy developments from the past few weeks, around the world.

First, congratulations are in order for Ocean Power Technologies, which on December 4, 2009, announced that it will begin construction of a 150 kw power buoy slated for deployment as part of the Reedsport Project in Oregon. Given that the preliminary permit issued for the project in February 2007, this announcement is a welcome, not to mention long awaited development.

Across the pond, the Oyster has deployed at EMEC according to the Maritime Journal (12/03/09). According to the story, the project is It is currently the world’s only hydro-electric wave energy device producing power and is now producing power by pumping high pressure water to its onshore hydro-electric turbine. By keeping the power generating parts of the project on shore, my guess is that project maintenance costs are lower than traditional wave technologies deployed several miles out at sea. In any event, at least this project will have a chance now to test in real water conditions. Finally, down under in Australia, wave energy developer, Carnegie has riased $3.5 million for its project, reports Perth Now.

Tidal energy is churning along as well at EMEC. From Tidal Today comes news that the Atlantis Resources Corporation, an international marine energy company, has unveiled its ground-breaking AK-1000™ tidal turbine and has agreed a commercial scale deployment of the technology at the European Marine Energy Centre (EMEC) in Orkney.

On August 19, 2009, the Federal Energy Regulatory Commission announced the execution of a Memorandum of Understanding between FERC and the state of Maine to coordinate procedures and schedules for review of tidal energy projects off the coast of Maine.  Although FERC characterizes the Maine MOU as similar to those signed with Oregon and Washington State, in my view, the MOU with Maine makes a more aggressive commitment to getting pilot projects in the water and provides a more specific procedure for speeding the path to deployment. By contrast, the Washington and Oregon MOUs are somewhat generic in nature; more of a general expression of good will (which is an important benefit, and one which I don’t mean to minimize) than a tangible path to commercialization.

Highlights of the FERC-Maine MOU include:

Support by Maine for FERC’s efforts to establish expedited procedures for short term demonstration projects. This is a significant benefit, because FERC’s ambitious pilot license process (which aspires to issue short term licenses (five years with option to renew) for small, early stage projects within a year) can’t work without cooperation from the states.

An agreement that pre- and post-licensing studies for pilot projects will be reasonable in scope and commensurate with the limited size and duration of the projects. The marine energy industry has long sought to incorporate priniciples of proportionality into licensing, recognizing that a small array of buoys or turbines won’t have the same impact as a hundred megawatt dam and thus, shouldn’t be subject to the same study requirements.  The MOU adopts the proportionality principle and indeed, is one of the first official documents to do so that I’ve seen.  Mega-kudos to Maine and FERC for this provision

An understanding that FERC will take into account offshore wind sites designated by Maine in issuing preliminary permits. Again, another win here. In the past, some companies have applied for hydro-kinetic permits on prime wind real-estate merely to hold the sites hostage and extract a payoff from a wind company to develop them. FERC’s willingness to take a broader view when issuing permits promotes coordinated development of all offshore renewable resources.A commitment by Maine and FERC to develop a schedule and milestones for processing hydro-kinetic tidal applications and to abide by it to the extent feasible. A uniform schedule should be a no brainer, yet many agencies are reluctant to accept any firm deadlines.   So, good for Maine for its willingness to at least make a good faith effort to stay on schedule in processing applications.

An agreement that pre- and post-licensing studies for pilot projects will be reasonable in scope and commensurate with the limited size and duration of the projects. The marine energy industry has long sought to incorporate priniciples of proportionality into licensing, recognizing that a small array of buoys or turbines won’t have the same impact as a hundred megawatt dam and thus, shouldn’t be subject to the same study requirements. The MOU adopts the proportionality principle and indeed, is one of the first official documents to do so that I’ve seen. Mega-kudos to Maine and FERC for this provision.

An understanding that FERC will take into account offshore wind sites designated by Maine in issuing preliminary permits. Again, another benefit for all parties involved.  In the past, some companies have applied for hydro-kinetic permits on prime wind real-estate merely to hold the sites hostage and extract a payoff from a wind company to develop them.  FERC’s willingness to take a broader view when issuing permits promotes coordinated development of all offshore renewable resources.

A commitment by Maine and FERC to develop a schedule and milestones for processing hydro-kinetic tidal applications and to abide by it to the extent feasible. A uniform schedule should be a no brainer, yet many agencies are reluctant to accept any firm deadlines.  So, good for Maine for its willingness to at least make a good faith effort to stay on schedule in processing applications.

An agreement to issue a Section 401 water quality certificate (WQC) within 60 days. Quite frankly, a provision to cap the amount of time for issuing a Section 401 WQC is unprecedented.  Usually, the issuance of a WQC bogs down a proceeding but there was little that could be done to remedy this problem because even federal law provides agencies with up to a year to render a decision on a WQC.  Here, Maine’s willingness to accept less time to issue a WQC (pursuant to state legislation) represents a new approach and removes a huge obstacle to expeditious deployment of pilot projects.

Designation of management contacts. One of the hardest aspects of siting projects for a developer is coordinating all of the moving parts at the different agencies and resolving disputes.  Under the MOU, FERC and Maine will designate contacts to resolve procedural issues which will ensure that processes don’t get bogged down through disagreements.

In spite of these benefits, there’s one aspect of the FERC-Maine MOU that concerns me.  Specifically, the MOU focuses exclusively on tidal power and does not mention the wave resource at all.  It may be that Maine’s wave resources are not currently viable, but at the same time, it doesn’t make sense to go to the trouble of developing an MOU that applies to one type of marine renewable technology (tidal) but not another (wave).

In addition, the MOU applies only in state waters up to three miles offshore and not further out on the OCS. Of course, given that the MOU covers tidal resources, the geographic limitation makes sense since tidal resources are near shore.   Though originally, I criticized Oregon MOU for not covering waters further offshore or involving MMS in the MOU, I’ve since reconsidered. The licensing process has to start somewhere and it’s far more manageable to negotiate an MOU in state waters where FERC and the states are the main players than to go further offshore and figure out how to work MMS into the agreement.

Still, at the end of the day, the proof is in the pudding – or more accurately, the putting. Ultimately, we won’t know if the FERC-Maine MOU is a success until we see whether it results in putting projects in the water.

Note:  For more about some of the projects and developers hoping to capitalize on the FERC/Maine MOU, see here.

Oregon: Oregon is about to set sail on mapping its oceans, reports the Press Enterprise. According to Governor Kulongoski, who is quoted in the story, the data collected from the surveys will help identify marine habitats and select alternative energy sites, including wave energy sites. The mapping project is expected to take 2 years, and is being funded by a $5 million grant from NOAA and $1.3 million in state money.

Resolute Marine (Massachusetts): There’s an interesting story at CleanTech about Boston based Resolute Marine Energy, an early stage company developing a wave energy coverter
that is expected to be used specifically in offshore agriculture and fish farming. The company is also developing a second technology, known as the SurgeWec, which will be used to power desalinization systems.

Hawaii: Hawaii will be home to a new Renewable Energy Resource Center, funding by a grant from the United States Department of Commerce. [Source: KGMB 9. The center will include wave energy along with other renewables.

Chile: Looks like Chile is a hotspot for tidal power. According to a United Press International story, a tidal power feasibility study for Chile found the country had a “unique” wealth of natural tidal sites that, if harnessed only up to 10 percent of available tidal power, could exceed the installed capacity of Chile’s central grid. The study was conducted for the Inter-American Development Bank by Garrard Hassan energy consultancy, based in Bristol, England.  Potential tidal sites include the ports of San Antonio, Puerto Montt and San Vicente, the Corcovado Gulf and the Magellan Straits.

United Kingdom: The UK is considering a tidal barrage project, according to the New York Times, but it’s not clear how far the project will get in light of environmental opposition. Here in the U.S., tidal barrage projects are, in my view, a non-starter.
Even without the barrage project, the UK has a competitive edge in wave power. According to the Guardian:

Analysis also shows that, with 25% of the world’s wave technologies already being developed in the UK, Britain could be the “natural owner” of the global wave power market, generating revenues worth £2bn per year by 2050 and up to 16,000 direct jobs.

Australia: On August 13, 2009, Australia passed a law requiring that 20 percent of electric generation come from renewables by 2020, reports Reuters. The law is expected to spur development of renewables, including wave energy.

International Reports: In July 2009, the World Energy Council issued an interim report updating its survey or world energy resources. The Council report includes a chapter on wave energy and tidal energy resources.

Call it a case of old meets new. Shipyards, which sustain one of the world’s oldest industries are seeing new business these from a modern day technology, marine renewable energy.

As Renewable Energy World reports, shipyards are serving as a home to production of components necessary for offshore wind and hydrokinetic projects. For example, the Harland and Wolff shipyards in Belfast are completing the steel foundations for 60 Vestas offshore wind turbins, and have won a contract for “jackets” for an offshore transformer platform that will be part of another wind farm. The shipyard also constructed the Sea Gen turbine by Marine Current Turbines, which we last posted about here.

UK shipyards aren’t the only beneficiaries of this new work, though. Orecon, a UK company, just signed a contract with a shipyard in Portugal to build Orecon’s 1.5MW MRC wave energy devices for the Portuguese market.

Of course, other industries are benefiting from offshore wind and hydrokinetic projects. Fishing fleets are gaining employment from running maintenance crews and survey teams out to the construction sites, while companies that provide under sea cabling and software for risk assessment and project design are also getting a bump.

In my view, the United States hasn’t yet fully recognized the potential for marine renewables to drive industry in non-energy sectors. Maybe articles like these from overseas will offer a reminder.

On August 11, 2009, the Department of Energy’s Wind and Hydropower Technologies Program unveiled a new database containing information on the test capabilities and services of a variety of U.S. hydrodynamic test facilities, according to this Press Release. The database, which can be accessed here encompasses 81 commercial, acaademic and government facilities and offshore births in 18 different states. The database is expected to improve communication and collaboration to testing facilities within the hydro-kinetic research community and provides potential users information on the costs and personnel of each site. Testing facilities are an important link in the chain to commercialization, so the DOE project will help move the industry forward.

In the words of the Grateful Dead, what a long, strange trip it’s been for FERC, MMS and the marine renewables industry. With the August 4, 2009 issuance of this Joint FERC-MMS Guidance Document for Hydrokinetic Projects on the OCS , the dramatic jurisdictional smack-down between the FERC and MMS which I covered in blow-by-blow detail, here, here and here has officially ended.

Unfortunately, even with jurisdictional hurdles out of the way, I’m not all that hopeful for expeditious development of marine renewables on the OCS.  While it’s apparent that FERC and MMS tried mightily to avoid any duplication of effort in the guidance document, the reality is that they’re both behemoth federal agencies with their own respective statutory mandates and regulatory obligations to abide.   As a result, the guidance document creates a framework for siting projects on the OCS that even in the best case scenario takes three years, worst case scenario, up to five years.  Below the jump are a couple of quick highlights from the Guidance document:

1. Get the lease first The Guidance document flips the traditional hydroelectric licensing process on its head for competitive projects. With conventional hydro projects, FERC issues a license which includes Standard Article 5 which requires license holders to procure property interests for the project within a certain time frame. Here, in a competitive license proceeding, developers must first obtain a lease and once the lease is in hand, then proceed to licensing.

MMS predicts that it will need 2-2.5 years to complete competitive lease sales, and FERC will require 1-2 years to process a license application. You do the math on the amount of time required.

2. Trade-offs for non-competitive process For non-competitive projects (i.e., where only one applicant expresses interest), the applicant can initiate the lease and license process simultaneously. However, the Guidance Document cautions (at #5) that:

You should be aware that by proceeding with both the lease and licensing processes simultaneously, you risk incurring costs prior to knowing whether you will receive a lease and what conditions will be part of the lease. Nevertheless, by streamlining the two processes, your overall process may be completed more quickly and efficiently. We encourage you to discuss with MMS and FERC early in the process what approach might
be best for your proposed project.

Fortunately, MMS believes that it can process a lease sale for a non-competitive site within 1-2 years (Guidance Doc., #10) so that means that projects which lack competitive interest face a “mere” 2-4 year license process.

3. What happens to the University test facilities? DOE has awarded significant amounts of funding to universities to establish test centers for marine renewables projects, which might include test beds for developers to site demonstration projects and connect them to the grid (somewhat like EMEC in Scotland). But how useful will these test beds be for companies trying to get in the water now if it’s going to take up to four years just to site them? Perhaps MMS and FERC could create special guidance or regulations for test beds so that universities seeking to build them can get the test sites up and running. Test sites can help speed development by providing an opportunity for companies to test projects in real world conditions.

4. How attractive are straddle projects? With uncertainty looming over MMS and FERC jurisdiction, most developers limited the scope of wave energy projects to waters over state submerged lands (i.e., up to 3 miles offshore) to avoid the jurisdictional question entirely. But most developers starting a project on the state-side of the OCS aspired to build it out to the OCS once jurisdiction issue were resolve.

That strategy, however, may prove to be risky business. The Guidance document makes the following clear:

If I have a licensed project in state waters next to the OCS, do I have any priority to
develop the neighboring site within the OCS?

No. The neighboring OCS waters are subject to the competition requirements of the Energy Policy Act of 2005.

In short, a developer who eventually wants to build a project out from state waters to the OCS should embark on the project as a single unit of development, which is what the Guidance document recommends:

Early process planning will be essential for the successful execution of straddle projects. FERC would prefer to license the entire project as a whole, which is feasible if the applicant consults with FERC and MMS early in the planning process.

5. Hybrids subject to FERC and MMS regulation Hybrid projects, such as combined wind and wave projects are subject to FERC and MMS regulation, with FERC taking jurisdiction over the hydroelectric component. I’m not exactly sure how this would work in practice, where, for example, the hydro component is a small aspect – for example, a few small buoys latched on to a wind platform. Given that MMS would be reviewing the larger wind energy component, it doesn’t make sense to involve FERC for such a small piece. However, as a practical matter hybrids are still a bit far down the road; it doesn’t make sense to talk about integrating wave energy into an offshore wind plant design until the wave technology is proven to operate on its own.

6. The Muni Issue Section 7(a) of the Federal Power Act provides that in choosing between two otherwise equal competitive permit or license proposals, FERC is required to favor the one submitted by a municipality or state. However, MMS is not similarly restricted. The Guidance document effectively leaves the choice to MMS, by requiring a municipality in a competitive proceeding to obtain a lease from MMS before applying for a FERC license (as described above in #1, this same procedure applies in all competitive proceedings). Consequently, the decision between the municipality and another applicant is made at the leasing phase (where MMS makes the choice) as opposed to under the FPA process, where FERC would otherwise be required to apply municipal preference to break the tie between two applications.

The long strange trip to resolve the FERC-MMS jurisdictional conflict may be over.  But the end of the song doesn’t mean that the fat lady is singing.  Instead, we’re on to the next tune:  the long and winding road through FERC’s and MMS’ regulatory process is just beginning for marine renewables.

Do you have any thoughts on the MMS/FERC Guidance document, or questions. Feel free to contact me at carolyn@carolynelefant.com .

I’m a little late in posting this, but on June 12, 2009, the Obama Administration created a Task Force to develop recommendations on a national policy that ensures protection and restoration of the health of ocean, coastal and Great Lakes ecosystem and resources and a framework for coastal and marine spatial planning.  The memo announcing creation of the task force can be downloaded here. The Task Force must issue recommendations on national ocean policy within 90 days and a framework for marine spatial planning within 180 days. Interested parties can chart the Task Force’s progress or submit comments at the Ocean Task Force Website.

The Task Force has been reaching out to stakeholders and other interest groups which might be affected by marine spatial planning.    A few weeks ago, I attended one of these meetings on behalf of the Ocean Renewable Energy Coalition and found that the Task Force was extremely receptive to the needs of the fledgling marine renewables industry.   But marine spatial planning (MSP) is a daunting task and I question how much can be accomplished within the 180 day time frame.

Other countries already lead the United States on the MSP front.  UNESCO (United Nations Educational, Scientific and Cultural Organization) has created an MSP resource page to aggregate information on different programs around the world. In June 2009, UNESCO also released this very practical step by step guide to marine spatial planning which is worth a read to gain familiarity with the basic concepts.

MSP poses another challenge – and opportunity – for the fledgling marine renewables industry.  If done correctly, MSP can expedite siting of marine renewables projects since advance planning upfront can minimize disputes over projects and their impacts down the road.   At the same time, data on ocean ecosystems and alternative uses is needed to facilitate meaningful MSP.  Otherwise, an MSP program could wind up excluding potentially beneficial uses like marine renewables from certain areas even though marine renewables projects might be fully compatible within those regions. The important aspect of MSP is that it must be a fluid process that allows for changes as additional information emerges. For example, an area previously designated as “off limits” to avoid damage to habitat of a certain species could potentially be opened up to projects that are compatible with a sensitive environment. There’s a more detailed discussion of some of these issues in this testimony that I gave on the Hill last year on coastal zone management legislation.

In addition, as noted in this earlier post, other states such as Massachusetts and Rhode Island are engaging in their own coastal planning initiatives. Federal MSP efforts need to coordinate closely with ongoing state initiatives to avoid duplication of effort or worse, potential conflicts.