Source: Energy News Network

Reprinted from E&E News with permission from POLITICO, LLC. Copyright 2023. E&E News provides essential news for energy and environment professionals. 

For years, Delaware has been on the sidelines as the emerging offshore wind industry flocked to neighboring states, but a new law could transform the industry in the state — if it’s not too late.

Delaware’s Democratic-led Legislature recently ordered a study of the state’s offshore wind potential to be reported back by the end of the year. The move, which was signed by Gov. John Carney (D) this month, adds momentum for the state to set its first target for offshore wind, a goal of many lawmakers and environmental groups.

“We’re alone among our neighbors of not really having wind targets,” said state Sen. Stephanie Hansen (D), who has spearheaded the state’s reassessments of offshore wind to meet its climate targets as chair of the state Senate Environment and Energy Committee. “Delaware, as of now, I think, is really firing on all cylinders to move into the next phase of energy planning and implementation.”

If the study leads to a state offshore wind goal, it would bring Delaware in line with neighboring states and give it an opportunity to compete for industry jobs and businesses emerging along the East Coast. Power grid operator PJM Interconnection LLC is assisting with the study in looking at transmission impacts. But concerns about the cost of offshore wind still linger from a 2018 analysis that effectively tabled wind ambitions in the state for years.

Meanwhile, a movement against offshore wind along coastal communities has begun to capture the sentiment of Delaware towns and some lawmakers.

“I think it is harmful,” said state Sen. Bryant Richardson (R), the only senator to vote against Hansen’s study. He opposes the offshore wind industry due to its potential costs and what he says are negative impacts to the ocean environment and views from the shore.

“It’s an eyesore,” he said of the industry.

Delaware is juggling its offshore wind future as the industry reaches a turning point in the U.S.

Thousands of turbines are expected to go up in the northeast Atlantic in the coming years, spurred by state commitments and subsidies from Maine to Virginia. That comes alongside millions of dollars of promised state and private investments to beef up aging ports, build manufacturing and steel fabrication facilities, and make job programs to create a workforce capable of building and maintaining the new industry.

The wave of new proposals is partly thanks to the Biden administration’s commitment to raise enough wind farms in the ocean to power 10 million homes by 2030. The White House on Tuesday approved the nation’s fourth commercial-scale offshore wind farm off the coast of Rhode Island and has said it remains “on track” to reach 16 offshore wind environmental reviews by 2025.

The administration also announced last month potential new lease areas in the central Atlantic, including a swath of ocean about 30 miles off the coast of Delaware Bay. If developed, that area would add to two planned offshore wind farms that sit off the Delaware coast in federal waters.

Delaware’s grid may not reap the power of those two offshore wind projects, which are helping Maryland meet its offshore wind target. But experts say the new offshore wind areas could offer electricity to help Delaware reach its renewable portfolio standard of 40 percent renewable power by 2035.

Chelsea Jean-Michel, a wind analyst at BloombergNEF, said local opposition and limited space has made it difficult for the state to grow its renewable sector onshore, making offshore more attractive.

“Offshore wind projects can help decarbonize Delaware’s energy system by providing bulk renewable energy capacity in one go,” she said in an email.

A long history

For years, Delaware has flirted with the idea of offshore wind to help it decarbonize. It was poised to be the first U.S. state with an offshore wind farm when the proposed Bluewater Wind offshore wind project secured a long-term contract more than a decade ago with the state’s utility. The proposal later fell apart, largely because of cost concerns and investment uncertainty amid the recession.

Offshore wind got a second look largely thanks to Carney, who in 2017 ordered a study of the industry’s potential role in reaching state clean energy goals.

That analysis found that the cost of offshore wind energy would be high, prompting many lawmakers to shy away from supporting turbines off the coast.

One reason why offshore wind is getting another look in the state now is that costs have fallen significantly as projects have advanced in the U.S.

An updated report from Delaware’s Special Initiative on Offshore Wind (SIOW)  last year found the cost of a Delaware offshore wind project — if it was large enough to capture economies of scale — would cost the same as existing sources of electricity in the state like natural gas and solar. That would be the case without state subsidies or tax breaks, researchers said. The study considered federal incentives that were expanded in the Inflation Reduction Act giving developers a 30 percent tax credit for offshore wind.

“There’s enough time, plenty enough time, for Delaware to do one project, maybe two, and still get advantage of that tax credit,” said Willett Kempton, a professor at the University of Delaware’s School of Marine Science and Policy and a leader of SIOW.

Kempton’s report also weighed how fossil fuels negatively impact human health and the environment, driving up the overall cost of using those sources for power. When those factors were considered, offshore wind became cheaper than existing sources like natural gas in the study’s models.

Hansen said Delaware hired analysts to interpret the report. When executive action did not occur, she said she wrote the legislation that passed earlier this year tasking the governor’s office and state regulators to review and report back to the Legislature on offshore wind’s potential.

“We need to hear from the administration on this, is this a direction that we ought to go?” she said. “I can tell you that there is the legislative will to move this forward. But we also aren’t experts.”

Carney’s office declined to comment for this story.

‘A significant premium’

Hansen said that Delaware’s tardiness on offshore wind could lead it to lose out on benefits from the industry, such as jobs and manufacturing.

Jean-Michel, with BloombergNEF, noted wind developers have forged relationships with nearby state lawmakers that give those states an advantage.

“Given that it’s entering the market later and it is likely to be a smaller market, Delaware may not benefit as much economically through offshore wind in terms of green growth or jobs, or it may have to pay a significant premium for offshore wind projects if it wants to stimulate that local manufacturing sector,” she said.

However, Kempton, with the University of Delaware, said he would warn lawmakers, if they proceed with a procurement target in Delaware, against tying offshore wind projects to local investment.

Other states have encouraged offshore wind developers to bundle economic development plans into their wind proposals, leading to manufacturing projects planned in states like New York and Maryland.

But those investments mean the price of electricity for those projects is higher, Kempton said, noting that wind developers may not be the most effective planners for associated supply-chain businesses. They also may not have long-term commitments for jobs in mind onshore.

Offshore wind supporters are hoping when the Delaware Legislature meets again in January, lawmakers will have offshore wind on their minds.

Hansen said she couldn’t disclose some of the conversations happening now on offshore wind but that Delaware leaders could make progress even before the session convenes.

But as the state weighs a greater role for offshore wind, industry opponents may also be growing.

It’s a pattern that has played out in other coastal states as offshore wind proposals draw pushback from beachfront homeowners who don’t want steel marring their ocean views and town councils concerned the industry could hurt tourism. Conservative groups such as the Delaware-based Caesar Rodney Institute also are supporting the opposition movement.

Richardson, the Delaware Republican, said he’s been reading material put out by the institute on offshore wind and connecting with opponents who share his skepticism about the industry, its costs and its impacts.

“I hope it will fail,” he said of the state’s plan on offshore wind.

Delaware eyes its first offshore wind target, but trouble looms is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

Full Article: Read More