Both Finavera and OPT released information on company developments. Finavera provided a mid-year report on 2008 activities, while OPT announced its results for the year ending April 30 2008.
There's also a new wave energy technology on the horizon.
Postings will be light through the end of the week because early Thursday morning, I head out to Sacramento, California to speak on the ocean energy track of Hydrovision. Though I'm looking forward to my talk - "Show Me the Money for Marine Renewables," I'm equally excited about getting updates on conventional hydro and reconnecting with my old buddies from the hydro industry, where I started my legal career.
If you're at Hydrovision, be sure to find me and say hi!
While some might say that the long awaited MMS proposed regulations for alternative energy leases on the Outer Continental Shelf are more than a day late (EPAct required MMS to issue regulations by May 2006), at 462 pages, no one could legitimately call this proposed rule short. I've barely had time to sink my teeth into the rule, which you can download herefor your own reading pleasure. But based on the discussion in the MMS teleconference today, the rule will take a phased approach to leases, first implementing a competitive process for issuing a lease (as required by statute), then reviewing the lessees' site assessment and construction plans, then establishing a process for monitoring the project during the term of operation and finally, another plan for decommissioning. This approach (if I've summarized it correctly - again, I'm pressed for time and working off the cuff) in some ways turns the more conventional licensing process on its head; in FERC or Corps processes, developers obtain authorization first and acquire the requisite property interests second. Here, (again with the caveat that I'm understanding this correctly), MMS will first issue a lease giving companies the property interest needed to site the project, and will then review the proposed plan for construction and apply NEPA during the site assessment phase. I'm still working through the pros and cons of this approach as well as trying to figure how it will work with the FERC process - though as I read the rule, MMS seems to politely suggest that FERC's authority over projects does not extend beyond three miles to the twelve mile limit. The rule contains much more - discussion and request for comment on royalty payments, the bid process, surety bonds and how to disburse benefits to adjacent states.
Naturally, OREC will be filing extensive comments on these rules, but I also hope to offer some additional analysis here. However, with this recent issuance, I'm going to postpone Thursday's conference call to give myself more time to go through this rule.
If you have any thoughts, send them below.
With the list of subscribers to this blog growing rapidly - I add one or two nearly every day - I thought that it was time to reach out to readers and thank you with a free teleseminar. I'll give an update on marine renewables in the United States, but more importantly, invite you to email questions in advance so that I can answer them. The call is scheduled for July 10, 2008 at 2 pm EDT.
To register for the call, submit your name and email here. After you submit this information, you'll receive an email with the call in number. To email questions, send them to carolyn.elefant@gmail.com.
Hope to talk to all of you in a few weeks.
I've handled more than two dozen appeals, several with great success, before the venerable D.C. Circuit, so I know my way around the court. But like most appellate lawyers, I'm loathe to try to predict the outcome of D.C. Circuit cases and wind up looking foolish when I'm (inevitably) wrong. Nevertheless, I'm willing to make some predictions about the State of Washington's petition for review of FERC's order issuing a license to Finavera for the Makah Project (docketed as State of Washington Dept. of Ecology v. FERC
No. 08-1191 (D.C. Cir. filed 5/15/2008) because I've seen some misconceptions about the issues in the case online and because I think it's a fairly easy call that Finavera keeps the license. (Full disclosure - years ago, I worked on a matter for AquaEnergy unrelated to this appeal and I now hold stock in Finavera). My detailed analysis follows after the jump.
Continue reading "What's Up With the Finavera License: My Play by Play Predictions" »
Lots of folks want offshore wind in theory, but in practice, few are willing to accept the added costs. That's what happened in Delaware, where the Delaware Commission first approved an offshore wind project, only to experience pushback from the Delaware legislature due to cost concerns. Likewise, the Long Island Power Authority axed its proposed offshore wind project due to higher than anticipated costs.
Until we start building offshore wind projects, we can't benefit from the economies of scale that can help bring costs down. But even though we can't reduce offshore wind costs right now, states can minimize the costs by taking a regional approach to offshore wind, thereby spreading the costs among a large base of ratepayers. According to
Delaware Online, Senator Anthony DeLuca endorses a regional approach to offshore wind development, where states along the Atlantic Coast from Virginia to New York might agree to construct a larger wind farm or a series of several windfarms. Consumers in all of these states would share the costs of offshore wind, but also the benefit of clean energy. And if fuel costs continue to rise and the potential of climate change legislation looms, ratepayers might even find themselves on the winning side of the cost equation in the long run.
Related post: Midwestern states explore collaborative approach to offshore wind development.
Checking my aggregator, I came across two interesting marine renewables trends this week. First, Renewable Energy World reports that tidal/wave energy granted patents reached a high last seen in 2004. Perhaps recent marine renewables IPOs have given inventors renewed incentive to try to capitalize on their ideas.
Second - could there be a new business model for developing marine renewables? Most exising companies are looking to grow marine renewables into utility scale projects - and indeed, that's likely where the big payoff lies long term. But what about the short term? Let's face it - we're not going to see a 100 MW marine renewables project for some time - at least not until someone can actually site and construct a 10 MW facility that operates reliably. So in the meantime, how can companies test the technology and still survive financially? Well - what about dual use projects, where small wave or tidal units are used to produce energy to sustain a second activity, such as desalinization or aquaculture. The New York Times rerpots that drought conditions are turning water into a growth industry in California and elsewhere and major companies like GE and Siemens "have ambitious plans to bring water to developing countries and clean water everywhere." The article notes that "start-up companies like Green Wave Energy Solutions, of Ventura County, are looking to harness wave power for energy while desalinating seawater for freshwater supplies." Likewise, a recent article on the Seadog technology notes that the company plans as its first project the deployment of 18 units in the Gulf of Mexico to produce power to desalinate seawater.
But desalinization isn't the only ancillary use for wave power. Offshore aquaculture facilities , which could be powered by wave and offshore wind energy.
Finally, for those interested in non-electricity uses for wave power, there's the
wave powered boat propulsor system, built by Dr. Yutaka Terao, an engineer at Japan's Tokai University.
At this past Thursday's meeting of the Federal Energy Regulatory Commission meeting, staff delivered this presentation warning of the onset of a period of significantly higher electricity costs that will ast for years. The Commission identified higher fuel costs and rising costs for construction of power plants as the two main forces responsible for driving prices higher. But amidst this sobering bad news lies a sliver of a silver lining for marine renewables.
The staff report details various trends, including futures prices for natural gas as $2.50 to $5.00 above the average 2007 spot price, and costs for plant construction materials such as iron, steel, cement and copper wire all trending upward. In particular, the 2008 capital cost of nuclear and coal plants have jumped substantially from 2003. According to staff's charts, (p. 11) conventional coal plants constructed today are estimated to cost between $2000 and $4500/kw compared to $1500/kw five years ago; nuclear plants are now estimated as $5000 to $8000/kw, compared to $1500 back in 2003. The cost estimates reflect some, but not a complee accounting of risk factors associated with coal and nuclear. As staff points out:
Both of these technologies have long lead times...Nuclear plants also have risks associated with decommissioning and waste fuel disposal. And coal plants have risks associated with the future treatment of greenhouse gases.
True, marine renewables are an emerging technology where questions remain about long term reliability, operational efficiencies and environmental impacts. And like other types of power projects, increases in the cost of materials will make marine renewables more expensive to construct. But while marine renewables carry risks, as staff's report makes clear, in this era of financial, regulatory and legislative uncertainty regarding climate change legislation, even conventional power plants aren't a sure money-making proposition either. In short, it just may be that there's no better time than the present to take a chance on marine renewables.
Here in the United States, we blame the slow emergence of wave and tidal technology on lack of federal goverment support, unavailability of tax benefits like the production tax credit and accelerated depreciation extended to other renewables and a cumbersome and costly permitting process. But across the globe, wave and tidal projects also lag behind wind and solar technologies? The Economist's most recent Technology Quarterly explores the relatively slow progress of wave power and offers some thoughts on where the industry is headed HT Seeking Alpha; article reprinted in full at Enviropolitics Blog)
From the article:
For a start, wave energy has lagged behind wind and solar, because the technology is much younger and still faces some big technical obstacles. The British government’s decision to shut its wave-energy research program, which had been the world’s biggest during the 1970s, set the field back nearly two decades. Since Britain is particularly well placed to exploit wave energy its decision not to pursue the technology affected wave-energy research everywhere.Once interest in wave power revived earlier this decade, practical problems arose. A recurring problem, ironically enough, is that new devices underestimate the power of the sea, and are unable to withstand its assault. Installing wave-energy devices is also expensive; special vessels are needed to tow equipment out to sea, and it can be difficult to get hold of them.
Another practical problem is the lack of infrastructure to connect wave-energy generators to the power grid. The cost of establishing this infrastructure makes small-scale wave-energy generation and testing unfeasible; but large-scale projects are hugely expensive.
U.S. and Portugal Wave the Flag of Cooperation U.S energy secretary Samuel Bodman and Portugese Economy Minister Manuel Pinho signed a memorandum of understanding (MOU) to cooperate in search of solutions to global energy security and climate change, reports
Ojornal.com.
Among other things, the MOU outlines specific areas of cooperation in wave energy technologies, including the exchange of technical personnel; evaluations of demonstration projects; and environmental testing and modeling.
Australia Moves Ahead With Wave ProjectsBiopower Systems, a wave energy development company is ready to test a 250 kw wave power system on King Island off the south-east Australian coast. The company has been able to raise $11 million in funding from government and private sources, according to this story at
Cleantechnica.com.
New Zealand Tries Wave Power A device developed by Wave Energy Technology New Zealand (WET-NZ) – a partnership between the Crown Research Institutes Industrial Research Limited (IRL), and NIWA, and the Wellington power consultancy Power Projects Limited (PPL) is undergoing trials in New Zealand, according to this source.
The experimental generator is capable of a peak output of only around 2 kW of electricity (enough to run two typical homes) but is allowing the project scientists and engineers to refine its design so that it can be scaled up in size. Ultimately, the consortium intends to produce commercial devices of at least 100 kW to supply cities and remote communities.
Spain Working on Wave Energy From Red Orbit, Spanish utility major Iberdrola and diversified technology group Tecnalia Corporacion Tecnologica have announced an agreement to develop the Oceantec wave energy project in the Basque Country of Spain, with the goal of putting into operation a high-performance wave energy device at a competitive cost.
As the
Wall Street Journal Environmental Capital Blog says, file this story under the heading "if you can't beat 'em, join 'em." That's precisely the approach that a group of enterprising commercial fisherman have taken with respect to offshore wind. Rather than oppose offshore wind projects as some of their northern colleagues have done, New Jersey fisherman and dock owners formed Fishermen's Energy of New Jersey (FERN) a consortium that will develop offshore wind projects. FERN has already filed two proposals in response to RFPs for offshore wind projects in New Jersey and Rhode Island. The Rhode Island project contemplates a total of 80 turbines, while the
But the Garden State wants to be home to the U.S.’s first offshore wind farm. Fishermen’s Energy hopes to install eight turbines capable of 20 megawatts by 2011 off the coast of Atlantic City, and an additional 64 turbines and 320 megawatts by 2013.
So can a group of fishing interests beat out venerable competitors like Bluewater Wind or a joint venture between Winergy Power Holdings LLC and PSEG Renewable Generation LLC? At first blush, the notion seems crazy until you consider the following. First, FERN has assembled an impressive team of first rate law firms, consultants, wind modelling company, dealmakers and engineers to get the project permitted and built. Second, since there aren't any U.S. companies that have experience owning or operating offshore wind projects (since none have yet been built), even as a new entity, FERN isn't really at a disadvantage when it comes to evaluating wind plant operating or management experience (which in any event, can be outsourced to a management company). Finally, FERN holds this
trump card: With fishermen as principal developers, a key opposition to offshore wind is removed. FERN's ability to guarantee a smoother permitting process if included as a developer may just be the USP (unique selling proposition) that makes its proposal a winner.
Ever since FERC announced its strict scrutiny policy for preliminary permit applications, it seemed as if much of the site grabbing activity that provoked the policy to begin with had died down. But Pacman companies i.e., those that gobble up wave and tidal sites, remain at large, still gobbling up sites as quickly as they can file preliminary permit applications. This matrix shows the most recent activity.
Now, I'm not saying that developers should be limited to filing a preliminary permit just one site. Companies need some flexibility to move forward at several sites since some may not prove optimal for development, while delays due to a need for extra studies or opposition from opponents may stall progress at other sites. And, it's often less expensive to conduct preliminary studies for several sites at a time.
Still, it's one thing to propose studying four or six or even ten sites at a time, and quite another to pursue dozens of permits at a time. Once a site is under permit, it's off limits to any other developer for three years - which means that responsible companies that spend time developing technology before applying for permits - can potentially be boxed out, effectively penalized for diligence. In addition, filing multiple permits can alarm the public and create backlash against the marine renewables industry. After all, no one wants to see an entire river or ocean packed full of buoys or turbines, no matter how benign they may be. And even when developers hastily file multiple permits and then surrender them, it can give the impression that the industry isn't yet ready for prime time.
To be clear, I'm not advocating limits on the number of preliminary permits that a company should be allowed to file. And I do believe that FERC's strict scrutiny policy, over time, will help knock off the worst of the Pacmen. But it wouldn't hurt for developers to consider the impact that their strategies have not just for their own investors but for the industry as a whole. After all, to paraphrase a famous quote, a rising marine renewables industry will lift all buoys (or turbines).
