Wind Energy

Blow the Man Down. US Offshore Wind Farm Leasing Takes a Big Step Forward

February 3, 2012 07:47
by J. Wylie Donald
Yesterday was a banner day for offshore wind farms in the mid-Atlantic.  Promoters and advocates received a favorable environmental assessment, a new form and two calls for nominations.  The Environmental Assessment.  Secretary Ken Salazar of the Department of the Interior gave wind developers a big boost when he announced the Department's decision to move forward with government leases of offshore areas for wind farms. This comes at a crucial time for wind turbine manufacturers; Danish turbine giant Vestas A/S announced last month that it would be closing one factory, laying off ten percent of its work force in light of the recession and increased competition from China, and considering additional layoffs in the United States.  The Department's finding of "no significant impact" from activities related to site assessment such as geotechnical surveys or the installation of meteorological towers opens the door to the gathering of data without completion of a further environmental impact statement.  Completion of the environmental assessment is not a green light for all projects, but it is estimated that it will take two years off the planning and construction schedule.  Specific projects still will need to complete an environmental impact statement.  One issue, for example, may be birds. The red knot, an intercontinental migrating species of sandpiper, flies almost twenty thousand miles each year from Brazil to Canada and back, stopping off for saltwater taffy along the Delaware Bay. Birdkill is a substantial problem for wind farm operators. Efforts to put the red knot on the federal endangered species list will only make solving that problem harder. New Jersey, Delaware, Maryland and Virginia are all excited about the potential opportunities. Governor McDonnell (a Virginia Republican) wants to make Virginia the Energy Capital of the East Coast.   Governor O'Malley (a Maryland Democrat) noted:  “We need the energy. We have the resources. We need the jobs, and we need a more renewable and cleaner, greener future for our kids.”   The Lease Form.  To streamline the issuance of wind farm leases on the Outer Continental Shelf the Department's Bureau of Ocean Energy Management put together a "first-of-its-kind" lease form, BOEM Form 0008.  Comments were solicited last fall and they were limited.  One that was significant was that lessees should make available data they collect.  Certain wind data could be kept as proprietary and confidential.  The Form is silent on that subject.  Notwithstanding, the wind energy industry is enthusiastic about the Form.  Comments by The Offshore Wind Development Coalition felt that with 15 offshore wind projects on the blocks in the U.S., the Form "will provide an essential ingredient for continued progress."      The Calls.  The Department of Interior also issued a "Call for Information and Nominations" for almost 80,000 acres approximately 10 miles off Ocean City, Maryland, and for a little more than 110,000 acres 23 miles off Virginia Beach, Virginia.   The Calls solicit any additional lease nominations and request public comments about "site conditions, resources and other existing uses of the identified area that would be relevant to BOEM’s potential leasing and development authorization process."  An earlier solicitation of interest for Maryland obtained nine "indications of interest" for commercial leases.  This interest is local, interstate and international.  The achievement of Maryland is the result of sustained effort to get to this point.  Since 2009, in a "state interagency marine spatial planning process" the Maryland Department of Natural Resources (DNR) worked  with "resource experts, user groups, The Nature Conservancy (TNC), Towson University and the Maryland Energy Administration (MEA) to compile data and information about habitats, human uses, and resources offshore Maryland." Offshore wind farms are coming. "Blow the man down" is a 19th Century sea shanty chronicling the rough life of a mate aboard sailing packets plying the North Atlantic.  It may be time to update the reference.

Regulation | Renewable Energy | Wind Energy

2010 Hurricane Season: A Product of Climate Change, or Not?

May 28, 2010 04:13
by J. Wylie Donald
On Monday night on the last day of May we will make our way home from our various Memorial Day activities and on Tuesday welcome the 2010 Atlantic hurricane season.  It looks ominous.  The National Oceanic and Atmospheric Administration reports that this year could be “one of the more active on record.”  A few things form the basis for this prognostication. First, wind shear in the upper atmosphere is deadly for hurricanes.  In 2009 El Niño in the eastern Pacific was strong, and so was the wind shear it generated.  This year El Niño has dissipated.  Second, sea surface temperatures are higher than average.  Low wind shear and high sea surface temperature support hurricane formation.  Third, favorable wind flows off the west coast of Africa are expected.  Scientists refer to the pattern of warm waters and favorable winds over decades as the “tropical multi-decadal signal.”  A component of the tropical multi-decadal signal is the “Atlantic multi-decadal oscillation” or AMO, which is primarily identified with Atlantic sea surface temperatures.  The current state of the oscillation favors the formation of hurricanes and began in 1995. It is worth noting that the AMO arises independently of climate change.  The IPCC includes a discussion of the AMO in its 2007 report.  The language is dense but the graphs are not and I commend them to you. Click here.  To even a lay reader like myself, it is quite apparent that something is cycling and that, whatever it is, we are in the middle of the hot portion. So the interesting question is whether the AMO and climate change together will lead to more severe and more frequent hurricanes.  A working group of the World Meteorological Organization addressed this question in a statement published in 2006. Click here.  To quote the WMO:  “The scientific debate … is not as to whether global warming can cause a trend in tropical cyclone intensities. The more relevant question is how large a change:  a relatively small one several decades into the future or large changes occurring today?” This is no small question.  If climate change will increase the severity and frequency of hurricanes today, then many of the steps society is taking right now may be inadequate.  Building codes, zoning decisions, and emergency response planning are all based on the likely scenarios to be encountered.  But it just may be that we don’t know the likely scenarios.  By the same token, if the climate change effect will not be noticed for decades, strategies for adaptation can be successful. The WMO working group meets again at the end of hurricane season in November.  For planning purposes, let’s hope they can provide more guidance.  In the meantime, maybe a trip to Kansas is in order.

Climate Change | Wind Energy | Weather

Wind Projects and Insurance - CAPE WIND Approval Makes This Even More Important

April 29, 2010 02:29
by J. Wylie Donald
Movie production or distribution is not something I get to do every day.  Or even at all.  But this opportunity is proving hard to pass up.  What happens when a windmill fails?  Let’s watch what happened in Denmark in February 2008.  http://www.windaction.org/videos/14294.  Can you get insurance for this?  And what about other problems that wind farm owners and operators might face?  This is not of obscure interest.  Last night Interior Secretary Salazar made a decision on whether the Cape Wind wind farm project in Nantucket Sound can move forward:  he approved it.  Proponents assert this is the harbinger of a $270 billion industry and can be the source of 75% of the energy needed by Cape Cod, Nantucket and Martha’s Vineyard.  Critics point to desecration of Native American sites and rituals, as well as the destruction of unique and beautiful views.  (It seems hard to believe that nine years have passed since the project was announced. But that is due process. In the end the Secretary’s decision coincided with the views of Mass Audubon, the NRDC, the Conservation Law Foundation, the governors of Maryland, New Jersey, Massachusetts, Rhode Island, Delaware and New York, national policy and national opinion polls.). But let’s return to our exploding wind turbine.  It goes without saying that there must be insurance for these projects.  The key is in identifying the risks and recognizing what can be insured, what requires indemnification or hold harmless agreements, and what risks must be minimized because they cannot be eliminated or transferred.  This is no more than the usual risk management paradigm. A failed wind turbine is an obvious risk and we can be confident that our Danish wind entrepreneurs procured property insurance.  The description accompanying the video identifies high winds during a storm and a failed braking mechanism as the cause of the calamity. Two technicians barely managed to escape. Debris was hurled 500 meters. While the cause of the loss might seem obvious (high winds and covered), one can be sure the applicable policy was reviewed closely to ensure a "wear and tear" exclusion was not applicable or an anti-concurrent causation clause did not apply. Less certain is the scope of business interruption insurance available.  While certainly the output of one turbine is now absent, is that enough to trigger business interruption coverage, which often requires a “necessary interruption” of one’s business?  Perhaps more significantly, who bears the risk if the wind does not blow, or the design is not as efficient or productive as anticipated.  Similarly, what are the implications for promises of startup by a certain date or contractual obligations to deliver a certain quantity of power or that certain tax credits will be available.  Another side of the operation is liability exposure.  Are individuals or property likely to be injured by a failure?  What is the kind of injury?  Again, it is highly unlikely the Danes did not obtain coverage for an individual or vehicle injured or damaged by the failing structure (whether it was the turbine, the blades or the mast).  Other issues are not so obvious.  In England claims have been asserted that infrasonic waves are dangerous.  Low frequency noise complaints or “strobe effects” are claimed to cause injury.  We may expect assertions of loss of property values when windmills disturb high-priced views.  Will a general liability policy pick up these claims?  The decision on Cape Wind is laudable and necessary for wind energy to become a robust contributor to the nation’s energy mix.  Coverage needs to keep up.

Wind Energy | Weather

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The business case for the development of renewable energy projects, from biodiesel and ethanol to wind, solar, and distributed generation, is more compelling than ever as tax and regulatory incentives combine to attract investments. Emerging issues in environmental law and increasingly recognized principles of corporate social responsibility are encouraging public companies to voluntarily reduce greenhouse gas emissions, install clean energy alternatives, and invest overseas in projects under the Kyoto Protocol to respond to climate change concerns.

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