US to lease offshore Maryland

The US Interior Department (DOI) will hold a commercial wind energy competitive lease auction in 2014 for two areas in Atlantic Ocean federal waters off Ocean City, Maryland.

Interior Secretary Sally Jewell on Tuesday announced the proposed “notice of sale” for the 132.3sq km North Area and 190.1sq km South Area. Each area contains five whole blocks and some partial ones.  The areas are located between 18.5km and 42.5km from shore.

Based on an analysis done by the National Renewable Energy Laboratory (NREL), both areas if fully developed, could support 850MW and 1.45GW of commercial wind generation - enough electricity for 300,000 average-sized Maryland homes.

The notice of sale will be published in the Federal Register today, triggering a 60-day public comment period ending 18 February.  Comments received will be made available to the public and considered before the publication of a “Final Sale Notice,” which will announce the time and date of the lease sale.

It will be held no earlier than 30 days after the publication of the Final Sale Notice in the Federal Register.

Earlier this year, Maryland Governor Martin O’Malley signed a bill into law that provides a 20-year taxpayer subsidy for development of a 210MW offshore wind farm.

Under the law, household electric rates will increase by up to an estimated $1.50 per month, with most businesses paying a 1.5% monthly surcharge on their bills. The rate hikes would not take effect until after the wind farm is operational, which O’Malley’s administration hopes will be in 2018.

Maryland already requires that 20% of its electricity come from renewable sources by 2022. The law creates a carve-out within the RPS for offshore wind.

The law also creates offshore wind renewable energy credits, or ORECs, that will be awarded to offshore wind farm operators on a megawatt-hour production basis.  It obligates the state’s investor-owned electric utilities to purchase both the project’s electricity and ORECs, which they can use to help meet RPS compliance. The state Public Service Commission will launch and supervise the programme.

Project investors would need to show that any wind farm would generate a net economic benefit for Maryland.

Earlier this year, DOI auctioned wind energy area off the coasts of Massachusetts-Rhode Island and Virginia.  Deepwater Wind submitted a winning $3.8m bid for the Massachusetts-Rhode Island acreage and Virginia Electric and Power Company provisionally won the Virginia lease with a $1.6m bid.