Feeds:
Posts
Comments

Archive for the ‘Wind Energy’ Category

Wind energy rule codifies increased financial risk for taxpayers

Posted in decommissioning, energy policy, hurricanes, Offshore Energy - General, Offshore Wind, tagged , , , , , , on May 13, 2024| Leave a Comment »

Decommissioning Vindeby wind project, Denmark

BOEM’s “Rule to Streamline and Modernize Offshore Renewable Energy Development” is intended to “make offshore renewable energy development more efficient, [and] save billions of dollars. Unfortunately, the savings associated with relaxed decommissioning financial assurance requirements translates to increased risk for customers and taxpayers.

BOEM signaled their intentions on offshore wind (OSW) decommissioning three years ago when they granted a precedent setting financial assurance waiver to Vineyard Wind. Despite compelling concerns raised by commenters, the “streamlining” regulations have codified this decision.

Cape May County, New Jersey, was among the commenters objecting to BOEM’s departure from the prudent “pay as you build” financial assurance requirement. The County commented as follows (full comment letter attached):

“[e]nergy-utility projects are in essence traditional public-private partnerships where technical and financial risks are transferred to the private sector in exchange for the opportunity to generate revenues and profit. Under the proposed rule, the Federal government is instead transferring risks associated with decommissioning to the consumer rather than to the private sector.”

Cape May added:

“[w]hile BOEM believes that if a developer becomes insolvent during commercial activity that a solvent entity would assume or purchase control, the County believes this is a risky assumption as the most likely reason for default is that a constructed wind farm developer is unable to meet its contractual obligations set forth under a Power Purchase Agreement (PPA) because its energy production revenues are not in excess of its operating costs. A change of hands would not remove these circumstances or make the project profitable.”

Cape May and others also commented on the threat of premature decommissioning as a result of storm damage. In response, BOEM asserts that these risks have been addressed in the latest standard for North American offshore wind turbines (Offshore Compliance Recommended Practices: 2022 Edition (OCRP-1-2022)). However, design standards, particularly those for offshore facilities, are not static. The recommended practice for OSW is likely to change multiple times in the coming years as storm, operating, and turbine performance data are updated and analyzed. The design standard for Gulf of Mexico platforms has been repeatedly refined and improved and is now in its 22nd edition.

In their response to public comments on the decommissioning risks, BOEM repeatedly asserts that they can adjust the amount and timing of required financial assurance as they monitor a lessee’s financial health. Unfortunately, a company’s finances can change quickly and BOEM’s options will be limited when it does. Increasing the financial burden on a struggling company that is providing power to a regional power grid will not be a simple proposition.

Strong comments from Cape May County:

boem-2023-0005-0138_attachment_1Download

Read Full Post »

Climate change is happening today! 😉

Posted in climate, energy policy, Gulf of Mexico, Offshore Energy - General, Wind Energy, tagged , , , , on April 8, 2024| Leave a Comment »

… and you deniers are fully responsible. There’s a reason why Texas is the most affected state 😉

But fear not, we will line our shores with wind turbines, restrict offshore oil and gas leasing, and subsidize carbon disposal in the Gulf of Mexico. All of this “help” will have a negligible effect on the climate, which will continue to change as it always has and always will.

Read Full Post »

Dunkelflaute: kryptonite for wind and solar power?

Posted in climate, energy policy, natural gas, Wind Energy, tagged , , , , , on April 4, 2024| Leave a Comment »

Add Dunkelflaute to the list of interesting and expressive compound German words. Die Dunkelflaute is a dark lull, a period of time in which minimal energy can be generated by the sun or wind. More specifically in German:

Die Dunkelflaute als sogenanntes Kofferwort beschreibt das gleichzeitige Auftreten von Dunkelheit und Windflaute. Diese Wetterlage entsteht typischerweise im Winter und sorgt für geringe Erträge aus Solar- und Windenergie bei gleichzeitig saisonal hohem Strombedarf. Eine Dunkelflaute kann mehrere Tage andauern. Kommen zu Dunkelheit und Windflaute noch niedrige Temperaturen hinzu, die für gewöhnlich den Strombedarf weiter ansteigen lassen, spricht man auch von “kalter Dunkelflaute.”

Note the prolonged Dunkelflaute (below) during which renewables provided minimal power in the middle of winter.

Unsurprisingly, wind and solar output are the lowest when the temperatures are the coldest. See the Danish summary for 2023 below. Note that wind output was also low when temperatures were above 15 deg. C.

Regional wind energy grids are not always an effective solution as Danish physicist Jens Christiansen, a nuclear energy advocate, has illustrated:

‘The wind always blows somewhere.’ Is that really true though? Here I’ve looked at the capacity factors of wind from five northern European countries in August The winds seem highly correlated, and there is almost a week-long period without significant wind anywhere.

Christiansen illustrates Denmark’s reliance on imported electricity:

Paraphrasing Margaret Thatcher: “The problem with electricity imports is that you eventually run out of other people’s electricity.” In the U.S., California imports more electricity than any other state and typically receives between one-fifth and one-third of its electricity supply from outside of the state.

Given that massive battery storage is well beyond current capabilities and restrictions on electricity consumption and economic growth are undesirable, redundant or complementary power sources are essential for a reliable grid. Natural gas power generation is most responsive to variable demand, and is thus a good complement to variable sources like wind turbines and solar panels.

Read Full Post »

A US offshore wind lease may NOT be issued after 12/20/2024 unless an oil and gas lease sale is held prior to that date.

Posted in energy policy, Offshore Energy - General, Offshore Wind, Regulation, tagged , , , on March 12, 2024| Leave a Comment »

(2) the Secretary may not issue a lease for offshore wind development under section 8(p)(1)(C) of the Outer Continental Shelf Lands Act (43 U.S.C.1337(p)(1)(C)) unless—
(A) an offshore lease sale has been held during the 1-year period ending on the date of the issuance of the lease for offshore wind development; and (B) the sum total of acres offered for lease in offshore lease sales during the 1-year period ending on the date of the issuance of the lease for offshore wind development is not less than 60,000,000 acres.

‘‘Inflation Reduction Act of 2022,” p. 646

Lease Sale 261 was held on 12/20/23. Absent legislative action, no wind leases may be issued after 12/20/24 unless another oil and gas lease sale is held prior to that date. Given that the minimalist 5 year oil and gas leasing plan, which is being challenged, does not propose a sale until 2025, wind lease issuance will likely be suspended at the end of the year. (Note: I wonder if the legislative restriction also applies to lease assignments from existing owners to new owners? Probably not, but that would be very significant given the current state of the offshore wind industry.)

The legislative restriction may be a partial explanation for the apparent rush to issue wind leases. 16 new wind leases were issued in 2022 and 2023, bringing the total number of active leases to 36. The philosophy seems to be this: issue as many leases as you can, as fast as you can, wherever you can (ala James Watt’s failed strategy for the oil and gas program.) Coastal residents are not entirely thrilled.

Perhaps the wind program should be required to develop 5 year leasing plans, as is the case for the oil and gas program. This might facilitate a more holistic approach to wind energy development and ease concerns about cumulative impacts.

Morro Bay protest

Read Full Post »

GAO: “Interior Needs to Improve Decommissioning Enforcement and Mitigate Related Risks”

Posted in California, decommissioning, Gulf of Mexico, Offshore Energy - General, Offshore Wind, Regulation, tagged , , , , , , , , , , on February 27, 2024| Leave a Comment »

Offshore facility decommissioning is a frequent target of Federal auditors given the complex financial and regulatory challenges. Unfortunately, the reviews have done little to better protect the public interest. As have previous inquiries, the new GAO report (attached for your convenience) calls for improved regulations and enforcement practices. That, of course, has been the objective for decades, but the problems have only worsened.

While the GAO recommendations are unsurprising, the body of the report is informative. Most notably, GAO (p. 29) raises a significant inconsistency on a key provision in the proposed decommissioning financial assurance regulations published last year:

One of the five criteria BOEM would no longer use under the proposed rule is demonstrated reliability, as shown by record of compliance with laws, regulations, and lease terms, among other factors. BOEM’s June 2023 regulatory analysis concluded this criterion is not a good predictive indicator of default on decommissioning obligations. However, BOEM and BSEE officials we spoke with told us that poor compliance records—such as safety and maintenance issues or delayed decommissioning obligations—can be an indicator of potential decommissioning noncompliance or financial stress.

Why was there such a disconnect between the opinions of BOEM and BSEE officials (who are directly involved with decommissioning) and BOEM’s decision not to include a company’s compliance record among the factors to be considered in determining the need for supplemental financial assurance? As pointed out here and here, safety performance is arguably the most important predictor of financial failure and decommissioning noncompliance.

The GAO report correctly acknowledges the difficulties in disqualifying operating companies. However, the regulations at 30 CFR § 250.135 specifically provide for disqualification for poor performance. While the regulations could be tighter, enforcing disqualifications regulations is dependent on persistence and strong support from management and DOI attorneys. Given the political risks associated with disqualifying operators, that support is often lacking.

Disqualification difficulties make it imperative that BOEM carefully consider past performance before approving lease assignments or determining financial assurance amounts. Provisions in 30 CFR §585.408 and §585.107 could have been used to disapprove assignments to Signal Hill, Fieldwood, Cox, and other problem operators. The failure to do so has significantly delayed decommissioning and increased public exposure to financial risks.

In some cases, lease assignments to unqualified companies have not only been approved but they have been facilitated by BOEM/MMS. The case of Platforms Hogan and Houchin, in the Santa Barbara Channel, is a particularly good example. (Did GAO inquire about the Inspector General report on this matter or ask why that report has still not been released?)

Most operating companies are responsible about planning for and fulfilling their decommissioning obligations. The problem is the exceptions, and they are not difficult to identify if you look at compliance data and obtain input from BSEE inspection personnel.

Other important decommissioning questions that need to be considered:

Additional comments on the GAO report from decommissioning specialist John Smith will be posted tomorrow.

gaodecomDownload

Read Full Post »

OCS wind program: unrealistic power generation deadlines should not be the focus

Posted in climate, energy policy, Offshore Wind, tagged , , , , , , on February 21, 2024| 1 Comment »

As concerns about wind leasing mount, it is becoming increasingly apparent that the rush to hold auctions may not be in the best long-term interest of the wind program. The primary objective should be cost-effective and responsible development, not gigawatt deadlines. The administration’s vision for wind energy capacity, particularly the 15 GW goal for floating turbines by 2035, is unlikely to be achieved and rushing the process is not helpful.

The current wind program is reminiscent of James Watt’s ill-fated approach to oil and gas leasing. Watt’s “lease-everything now” agenda had the opposite effect of that which was intended, the result being that 96.3% of our offshore land is now off-limits to oil and gas leasing.

Affected parties in Oregon have not held back in voicing their displeasure with BOEM’s wind energy announcement.

BOEM wants offshore wind come hell or high water and they don’t care who they harm to get it.

Heather Mann, executive director of Midwater Trawlers Cooperative

The Confederated Tribes of Coos, Lower Umpqua and Siuslaw tribal council unanimously passed a resolution opposing offshore wind energy development off the Oregon coast.

The federal government states that it has ‘engaged’ with the Tribe, but that engagement has amounted to listening to the Tribe’s concerns and ignoring them and providing promises that they may be dealt with at some later stage of the process. The Tribe will not stand by while a project is developed that causes it more harm than good – this is simply green colonialism.

Coos, Lower Umpqua and Siuslaw tribal council Chair Brad Kneaper

Read Full Post »

Offshore wind: bonding waivers for onshore substations?

Posted in energy policy, Offshore Wind, Wind Energy, tagged , , , , on February 8, 2024| Leave a Comment »

A previous post commented on the bonding waiver for the Vineyard Wind project’s offshore facilities. According to this presentation by Cliff Carroll at the “Close to the Wind Summit” (Jan. 27 in Hyannis, MA), certain onshore bonding requirements are also being waived. Per Mr. Carroll, the Massachusetts Energy Facilities Siting Board has overruled the Town of Barnstable’s objections to bonding waivers for large transformer substations to be located withing the town.

Now there is no Federal bonding on decommissioning and now we have no bonding as a town.

Cliff Carroll

Mr. Carroll’s brief bonding comments begin at the 11:30 mark. Prior to that he considers some of the environmental risks associated with these substations.

Read Full Post »

BOEM/NOAA Right Whale and Offshore Wind Strategy (January 2024)

Posted in energy policy, Offshore Wind, tagged , , , , , , on January 29, 2024| 1 Comment »

North Atlantic Right Whale

Key takeaways after reviewing the BOEM/NOAA strategy document:

NARW status (pages 7-14):

  • Roughly 237 NARWs have died since the population peaked at 481 in 2011, exceeding the potential biological removal (PBR) level on average by more than 40 times for the past 5 years (Pace III et al. 2021).
  • Human-caused mortality is so high that no adult NARW has been confirmed to have died from natural causes in several decades (Hayes et al. 2023).
  • Most NARWs have a low probability of surviving past 40 years even though the NARW can live up to a century.
  • There were no first-time mothers in 2022.
  • About 42% of the population is known to be in reduced health (Hamilton et al. 2021)
  • A NASEM study confirmed that offshore wind has the potential to alter local and regional hydrodynamics
  • “Effects to NARWs could result from stressors generated from a single project; there is potential for these effects to be compounded by exposure to multiple projects.” (p. 14)

BOEM/NOAA strategy:

  • No new mitigation is recommended pending further study.
  • “BOEM and NOAA Fisheries will work together alongside our partners (including the OSW industry) to further develop the information and science the agencies will use to inform their decisions to responsibly develop OSW while protecting and recovering NARWs.” (Comment: While regulator-industry collaboration is essential for effective offshore development, be it wind or oil and gas, regulators and operating companies have distinctly different missions and responsibilities and should not be viewed as partners.)
  • (p. 15): “As the OSW industry continues to grow and as projects begin construction, BOEM and NOAA Fisheries will continue to work with our partners to evaluate existing strategies and to further collect and apply newly available information to inform future decisions. This Strategy is an integral step to organize BOEM, NOAA Fisheries, and their partners around a shared vision and clear path to effectively study and manage this issue moving forward.” (???)
  • (p.17): BOEM will “attempt to avoid issuing new leases in areas that may impact potential high-value habitat and/or high use areas for important life history functions such as NARW foraging, migrating, mating, or calving. For areas that are leased, permitting activities should minimize any known or potential threat to NARWs and their habitats, and developers and BOEM should support research and monitoring.”

Questions:

Pictured below: density of NARWs near wind leases and hydrodynamic effects of turbines

Read Full Post »

Floating turbine maintenance and California offshore wind development

Posted in California, decommissioning, Norway, Offshore Energy - General, Offshore Wind, UK, tagged , , , , , , on January 22, 2024| Leave a Comment »

Hywind Scotland, Equinor

It’s prudent, if not imperative, to tow floating wind turbines to sheltered coastal locations for major maintenance. For that reason, Hywind, the world’s first floating wind farm will be offline for up to 4 months this summer.

Hywind Scotland‘s operator, Norwegian power giant Equinor, says that operational data has indicated that its wind turbines need work. The pilot project has been in operation since 2017.

The five Siemens Gamesa turbines will be towed to Norway this summer. An Equinor spokesperson said, “This is the first such operation for a floating farm, and the safest method to do this is to tow the turbines to shore and execute the operations in sheltered conditions.”

electrek

Published data indicate that Hywind has been the UK’s best performing offshore wind farm. Performance data for Hywind, and a chart illustrating the capacity factors since commissioning, are posted below. The 2024 capacity factor will, of course, be substantially reduced as a result of the essential offsite maintenance.

rolling 12 month capacity factor
ending 5/2022		life capacity
factor		age
(years)		installed
capacity
(MWp)		total elec
generated
(GWh)		power/
unit area spanned
(W/m2)
Hywind Scotland49.5%52.6%4.6306421.0
capacity factor = total energy generated/(hours since commissioning x capacity)

The first US floating turbines are expected to be at these California offshore leases, and Hywind operator Equinor is one of the lessees:

Given the financial challenges facing the offshore wind industry, the still emerging technology, and the risks inherent in California offshore development, the amounts bid on these leases only 13 months ago are stunning.

Some Central Coast residents are not enamoured with “another attempt to industrialize the coast.” Although the turbines will be >20 miles offshore, they will have to be towed to shore for major maintenance. For the Central California leases, nearby harbor areas like Morro Bay (pictured below) would be overwhelmed by the large structures and the maintenance and repair operations. Towing the towers to LA/Long Beach, albeit rather distant from the leases, would seem to be the preferred option for such work.

Ironically, a report for BOEM, points to synergies between the offshore wind industry and oil and gas decommissioning industry. Such synergies will only be possible if longstanding oil and gas decommissioning obstacles are satisfactorily addressed and the offshore wind projects proceed as planned.

Which will come first – platform decommissioning or wind turbine commissioning? For those young enough to find out, what is the over-under for the years until (1) half of those platforms are decommissioned, and (2) half of the wind turbines commissioned? Any number <10 is unrealistic for either.

Morro Bay Harbor

Read Full Post »

Precedent setting financial assurance waiver significantly increases the public’s risk exposure

Posted in decommissioning, energy policy, Offshore Energy - General, Offshore Wind, tagged , , , , on January 18, 2024| 8 Comments »

Vineyard Wind project

BOEM is charged with protecting the public from financial risks associated with the decommissioning of offshore facilities. Previous posts have addressed oil and gas facility decommissioning issues and proposed revisions to BOEM’s financial assurance regulations for those operations.

Recent disclosures indicate that BOEM, which very publicly promotes the offshore wind projects that it regulates, has waived a fundamental financial assurance requirement at the request of Vineyard Wind (approval letter attached). Given its broad applicability, this precedential waiver could have the effect of revising a significant provision of the offshore wind decommissioning regulations without public review and comment.

The issue is the “pay as you build” financial assurance requirement at 30 CFR § 585.516, which was waived by BOEM. This requirement, which is intended to project the public from decommissioning liability, is fair and reasonable given that wind developers must only provide financial assurance “in accordance with the number of facilities installed or being installed.” Companies that don’t have sufficient financial strength to comply with this requirement should not be installing and operating offshore wind turbines.

Vineyard Wind was either unable or unwilling to comply with the requirement. They instead requested to defer providing the full amount of the required financial assurance until year 15 of actual operations. The waiver changes “provide assurance when you install” to provide assurance 15 years after installation if everything goes as planned (hoped?).

After their waiver request was denied in 2017, Vineyard Wind resubmitted the request in 2021 seeking a favorable decision from an administration concerned that project cancellation or delay might tarnish the program that they were enthusiastically promoting.

BOEM (as directed from above?) granted the waiver, citing the general departure authority at 30 CFR § 585.103. However, that authority is intended for special situations, not for broadly applicable waivers that have the effect of revising the regulations without the public review required by the Administrative Procedures Act and Executive Orders 12866 and 13563.

There are no criteria in the Vineyard Wind waiver approval that could not apply to other wind developers. Vineyard Wind has simply committed to the same “risk-reduction factors” that apply to all offshore wind projects: damage insurance, the “use of proven turbine technology,” and long-term power purchase agreements. How could BOEM deny the same request from other companies?

It’s noteworthy that the regulations specific to financial assurance at 30 CFR § 585.516 provide no criteria for waiving the assurance requirements; nor do the regulations provide for the 15-year payment plan approved by BOEM. Given the precedential nature of the BOEM action and its enormous financial implications, a revision to the decommissioning regulations that provides criteria for such payment schemes should be promulgating before any similar departures are approved.

In light of the waiver, the public will likely incur substantial costs if Vineyard Wind fails, walks away, doesn’t fully fund their decommissioning account in a timely manner, or seeks new concessions after some or all of the 62 turbines have been installed.

Given the decommissioning obligations, what company would want to step in and assume responsibility for a failing project 10-15 years from now? What happens if Vineyard Wind’s project revenues don’t meet expectations and contributions to their decommissioning account are insufficient or used improperly? More concessions? We’ve seen this dance before.

Whether the project is for oil, gas, or wind energy, protecting the public from decommissioning liabilities should always be prioritized over facilitating development.

vineyard-wind-financial-assurance-deferralDownload

Read Full Post »

Older Posts »