RenewablesOffshore

IMPORTANT MESSAGE TO SUBSCRIBERS - NEED TO RESUBSCRIBE

To all my loyal Renewables Offshore subscribers:

As I've hinted over the past few months, my site is moving to a different location.  The URL, www.renewablesoffshore.com will remain the same, but both the RSS Feed and email may change, so you'll need to re-register.  I moved the site to more closely align it with my law firm website (still under construction) and my other practice area - FERC appeals and other FERC issues at FERCfights.com.  Renewablesoffshore.com will continue to deliver great commentary and up to the minute information on the industry with more vigor than ever at our new home.  So please take the time to change your feed and emails.

Thanks - and now I'm going to hop over to my new site and start posting up a storm!

How Clouds May Help Marine Renewables

 I came across this interesting article about how the White House is exploring cloud computing options as a way to modernize the federal government infrastructure.  For those unfamiliar with the term, cloud computing is a catch all for delivery of different types of services - from infrastructure to software - over the Internet.

Now, I know what you're thinking:  that this is a marine renewables energy blog, not a high-tech blog.  So what relevance does a White House initiative on cloud computing have for the marine renewables industry.  Plenty, in my view.

What's most exciting about cloud applications is that they facilitate collaboration.  Instead of having information housed on local machines, cloud applications operate in a cyber-hub, where lots of different participants can log-in and use them.  Thus, centrally located online data and work hubs could facilitate coordination on permitting - which in turn, would help overcome one of the marine renewables' biggest hurdles: getting projects in the water.

Now you may think that I have my head in the clouds by believing that information technology can help move the marine renewables industry forward.  But for me, collaboration is the silver lining of cloud apps - and it's through collaboration that this industry can succeed.

FERC's Budget Suggests That 2010 Won't Be A Big Year for Marine Renewables

They say that the best way to a man's heart is through his stomach.  Somewhat analogously (though not a perfect fit), the best way to figuring out an agency's intentions is through its budget.  So it was with great interest that I reviewed FERC's FY10 Budget to see if I could glean any insights about the future of the marine renewables industry.  

Going by FERC's budget predictions, there won't be much significant growth in the marine renewables industry, at least over the next two years.  From the budget document:

Since FY 2007, FERC has experienced a moderate increase in interest in both conventional hydropower projects and hydrokinetic technology projects with over 10,000 MW of new hydropower proposals before the Commission.  This trend is a result of high oil prices and market forces, growing interest in low emission, domestic and renewable energy sources, state renewable portfolio standard policies, and federal incentives consisting of tax credits, tax free bonds and direct subsidies. 
 
In FY 2008 Commission staff developed licensing procedures for pilot projects tailored to meet the needs of entities interested in testing new hydrokinetic technology, while minimizing the risk of adverse environmental impacts. The goals of the pilot procedures are to:  accommodate the rapidly expanding interest in hydrokinetic technologies; allow developers to test their new technologies; determine appropriate siting of these technologies; and confirm their environmental effects, all while maintaining Commission oversight and input. The process allows the issuance of short- term licenses (five years) of small scale hydrokinetic projects (5 MW or less) in as few as six months to allow for project installation, connection with the electric grid, operation, and environmental testing as soon as possible.  Projects eligible to use this process are of limited size, are removable or able to shut down on short notice, and are not located in waters with sensitive designations. The resulting license would be short-term and include rigorous environmental monitoring
and safeguards.   The Commission expects three FTEs will be necessary in FY 2010 to work on these new technology issues, consistent with FY 2008.

So - three Full Time Employees to handle marine renewable for FY2010 and no growth over FY2008.  Moreover, the Commission doesn't appear to be anticipating any larger scale projects - which is probably reasonable given that so few small projects have gotten through licensing.  Though I wish the news were better, I tend to believe that the Commission's assessments of its needs are probably accurate.  This is the first time I've wished for more government (since more FTEs for marine renewables would mean more projects) rather than less.

Marine Renewable Energy Promotion Act of 2009 Introduced in U.S. House and Senate

Representative Jay Inslee (D-WA) has introduced the Marine Renewable Energy Promotion Act of 2009 in the U.S. House of Representatives and Senator Lisa Murkowski (R-AK) introduced companion legislation in the United States Senate, reports Energy Current and the  Ocean Renewable Energy Coalition.  The Act will authorize US$250 million for marine renewable research, development, demonstration and deployment (RDD&D), a device verification program, and an adaptive management program to fund environmental studies associated with installed ocean renewable energy projects.  It is expected that the bill will become part of a more comprehensive energy bill.

Marine Renewables News Round-Up

As I await the completion of the new home for this blog, I'm still playing catch-up with postings.  So here's a quick round up of some recent developments and interesting news items from the past two weeks:

The Scottish Saltire Prize - the largest single innovation prize for marine renewables -  which I posted about a year ago continues to attract international attention.   According to this story, 100 entities from 23 different countries worldwide have submitted entries to compete for the $20 million (USD) prize. 

A new study will evaluate the potential for wave, tidal-stream and tidal technologies around the English and Welsh coastlines, says this Press Release.  In the meantime, there's some disagreement over when marine renewables technologies will achieve full blown commericialization.  According to the Irish Times, a recently published report forecast that "wave energy would not develop in Ireland for at least a decade," though these findings were disputed by  John McCarthy, Chief Executive of Ocean Energy, LTD.  Martin McAdam, CEO of Aquamarine Power is equally optimistic, telling Reuters that "What we feel is we can offer a device in future that will be competitive with offshore wind energy. By 2014 we will have a commercially available device."

There's progress in the U.S. as well.  Mike Raferty of Stevens Institute in New Jersey reports progress on the Wave Energy Harnessing Device (WEHD), a system of submerged platforms and buoys will utilize a wave's motion to create electricity.  And over in Maine, a collaboration between the University of Maine, Maine Maritime Academy and Portland-based Ocean Renewable Power Co. has landed nearly $1 million in grant money from the federal government to research and develop tidal power according to this Release.

Finally, an April 30, 2009 article by industry thought leaders Roger Bedard, Mirko Previsic and Brian Polagye, up at Renewable Energy Access gives a good overview on how much marine energy is available for development in the United States.

Marine Renewables and Ancillary Industries

The potential for the marine renewables technologies to eventually spawn ancillary industries and economic growth in related sectors continues to captivate my imagination. Imagine, floating data centers or wave-powered desalinization facilities or other hybrid uses. 

This past week, I came across two potential cross-over marine renewables applications.  The first, via CDiver.net suggests that marine renewables will be a boon for the shipping industry, since vessels are needed to spread power cables for wind farms and also haul components out to sea.  Said Subocean’s operations director, Mike Daniel:

Demand for vessels in marine renewables remains high. By securing the Polar Prince on a long-term charter, we are in a prime position to meet the needs of renewable energy companies.

We continue to win work in the marine renewable sector and are investing significantly in vessels and specialist equipment to maintain our market-leading position and ensure delivery on time and on budget for all our clients in a sector which is noticeably picking up pace.

An example of a second and far less intuitive use for marine renewables comes via Clean Technica.  The post reports on Swell Fuel's wave powered electric technology and notes that
An unlikely savior may be coming to the rescue of the planet’s beleaguered coral reefs:  "they may prove ideal providers of the the low-voltage charge that seems to help coral reefs regenerate."  According to Planet Save.com, ongoing research suggests that coral reef growth may be stimulated by low power electricity, a concept that is under further study. 

FERC and MMS Finalize MOU, Open the Door for MMS Rule

  Well, folks, the jurisdictional smackdown between FERC and MMS that I first posted about over two years ago has finally ended.  Following threat of Congressional intervention, on April 9, 2009, both agencies finally signed off on a Memorandum of Understanding divvying up each agency's respective jurisdictional responsibilities on the OCS.  FERC agreed to give up authority to issue preliminary permits on the OCS and dismissed the Gray's Harbor preliminary permit applications, which brought the MMS-FERC issue to a head (by way of background, Gray's Harbor filed several permit applications for hybrid wave-wind technologies, several on sites that had already been identified by state energy offices as potential locations for offshore wind projects).  MMS will issue leases for marine renewables project on the OCS - something which was always required, as I've previously pointed out.  But MMS will give FERC responsibility for licensing and oversight of marine renewables on the OCS.   As for treatment of hybrid wind-wave projects or projects that straddle the OCS, the MOU leaves those issues open for future resolution.

From my own perspective, the MOU doesn't clarify much that wasn't fairly clear before.  Before the MOU, MMS always needed to issue leases for FERC projects and that hasn't changed.  And though pre-MOU, FERC had the power to issue a preliminary permit, there was nothing to stop MMS from issuing a lease for the lands within that permit to a competing developer.  After all, a permit doesn't convey property rights.  So even though FERC could issue a permit, a developer relying on that permit for priority rights wouldn't have been on very strong grounds, thereby vitiating the practical value of the permit anyway.  Unfortunately, the MOU still leaves open the tough questions such as whether a developer who begins a project on one side of the OCS will be able to access lands on the other side of the OCS for a possible build out.  And if a wind farm goes through an extensive, Cape-Windesque permitting process before MMS and a few years later, decides to add a wave energy component, will it need to go through a full blown FERC process as well?

The best part of the MOU, however, is that it finally cleared the way for MMS' long awaited rules governing alternative energy on the Outer Continental Shelf, which finally issued on April 22.  At 579 pages, there's plenty to digest (stay tuned for a summary), but at least development can begin to proceed on the OCS.  

Why My Postings Have Been Light

As my loyal readers have noticed, my postings over the past several months have been erratic - and I'd like to explain my absence.  First, with the election of Obama and various stimulus packages, budget bills and energy legislation under development on the Hill, I've been spending more of my ocean-related time staying current at the Ocean Renewable Energy Coalition website.  Second, I'm in the process of completing a major overhaul to my law firm website and I plan to move this blog from the Typepad platform and incorporate it at the law firm site.

Once I've made the transition, I'll be bringing this site back full force and may even add a small for-fee subscription service which will provide the kind of detailed coverage that's not possible at this blog and which this particular industry lacks. 

Finally, if any of you happen to be attending the Global Marine Renewable Energy Conference in DC on April 15 and 16, be sure to introduce yourselves.

FERC and MMS Agree to Agree

Under threat of Congressional intervention, FERC and MMS last week agreed to lay down their swords in the jurisdictional smackdown that has held up MMS' issuance of leasing rules for the Outer Continental Shelf and stymied development not just of marine renewables, but also offshore wind.  Don't get your hopes up yet, though because the agencies still need to hash out a resolution that will give FERC the control it seeks without undermining MMS' ability to ensure orderly development of renewables on the OCS.  Many have blamed MMS for the mess, accusing it of trying to preserve its ability to extract royalties from marine renewables developers.  But what they may not realize is that FERC requires developers to pay annual charges to cover costs associated with FERC's administration of its hydropower program.  Presumably, any agreement between the agencies will protect marine renewables developers from paying twice.

We'll keep you posted on this saga.

Why Projects Need to Get Into the Water

Agucadoura Wave Park, the world's first commercial wave energy project has gone off line, at least for the time being reports Green Tech Media. According to Pelamis, the three 750 kwh units were working as expected up through November, with a few unforseen difficulties. The units were towed ashore for repairs, but financial problems experienced by Babcock & Brown, which owns 77 percent of the project, have kept the units grounded. No doubt, we'll see many more experiences similar to Pelamis - as with Verdant and Finavera (with its sunk buoy) en route to a mature industry. In the words of Thomas Edison, another great inventor, companies like Pelamis haven't failed. Instead, they've succeeded in discovering another approach that doesn't work. And that's the reason why getting demonstration or small scale sized projects into the water is so imperative to advancing the marine renewables industry in the United States. Without a chance to test projects in real world conditions and observe what works - and more importantly, what doesn't - the industry will never succeed.

Back At It...Global Marine Renewables Conference Coming Soon!

Sorry for the long break - there's just so much going on in the marine renewables space and I promise to get you all up to speed.  To find out what's going on at OREC, visit OREC Website.  And more importantly, be sure to sign up for the Global Marine Renewables Conference at Global Marine Renewable.com.  

Top 5 Myths of FERC Jurisdiction

OK, so maybe the top 5 myths of FERC Jurisdiction aren't as humorous as a David Letterman Top 10, both features do have something in common. Just as Letterman's top 10 lists are an indispensable part of his show, so too, dispelling the myths of FERC jurisdiction is indispensable to understanding how marine renewables regulation works in the United States. So without adieu, here are some of the most egregious, outrageous and cringe-worthy myths of FERC jurisdiction:

I need a FERC license for my offshore wind farm because it's going to interconnect to the grid.  Wrong! FERC has authority to issue a license for projects that use water to generate electricity under Part I of the Federal Power Act. Technologies like wave, tidal and hydrokinetic use water to generate electricity, offshore wind does not. Part II of the Federal Power Act governs issues like electricity sales or interconnection that are part of interstate commerce. So as a general rule, FERC will have jurisdiction over an marine renewable energy project's interconnection agreement with the utility, access to transmission and wholesale power sales. However, FERC's power under Part II of the FPA relates to regulatory oversight and rate approval, rather than licensing, which it carries out under Part I. So while FERC would have authority over, for example, an offshore wind facility's interconnection agreement with a utility under Part II of the FPA, it does not have licensing authority under Part I.

My wave/hydrokinetic project is entirely in state waters. I don't need a FERC license, right?   Wrong! FERC has power to license wave and hydrokinetic projects that are located on (1) navigable waters; (2) federal lands or reservations or (3) commerce clause waters and connected to the grid. Generally speaking, waters up to three miles from shore are definitively classified as navigable waters, and thus, FERC has licensing power over them. In fact, referring to waters up to three miles out as "state waters" is deceptive. More accurately, these waters are better described as "waters over state submerged lands," because the federal government retains authority to regulate navigation and water power production in these waters.

My project won't connect to the grid so I don't need a FERC license. Well, this one isn't as much a myth as it is a legal fiction. Technically speaking, under the Federal Power Act, any project located in a navigable water whether connected to the grid or not must be licensed. End of story, until the Verdant Power decision. There, in an effort to reach what all (myself included) agree was the right result of allowing Verdant to test its project for a short period without a license, FERC concocted a bit of a legal fiction, suggesting that when a project did not send power to the grid, or earn money from power sales (which would be a transaction in interstate commerce), it could be exempt from licensing. But this whole grid nexus is really irrelevant in the Verdant case since the project is on a navigable water and is jurisdictional whether or not connected to the grid. Truth be told, it would have been far cleaner for FERC to have exercised its authority under Section 10 of the FPA to exempt Verdant type projects under 2 MW from licensing requirements rather to inject confusion into the statute. But it's tough to complain when the result is absolutely the right one.

My project is in Hawaii or Alaska. Does FERC have jurisdiction? Here's where the Verdant decision creates confusion. Technically, projects in Hawaii and Alaska aren't connected to the interstate grid. But those projects may be located on navigable waters - e.g. oceans - and are therefore subject to FERC jurisdiction. With regard to Alaska, the state has the ability to opt out of FERC jurisdiction for projects of 5 MW or less provided that it implements a licensing regime that receives approval from FERC. But to date, that hasn't happened, so marine renewable projects in Alaska remain within FERC's scope.

Since FERC is licensing my project, I can ignore state laws, right? Nope. FERC's ability to preempt state law is extremely limited and only applies to those laws that directly conflict with FERC's authority. And for some state laws, such as those relating to fish protection, FERC is required to attempt to negotiate a solution before overriding state law. Further,when the state implements federal law, such as in issuing CZMA consistency findings or Section 401 Water Quality Certification, those decisions, albeit issued by the state, have the power of a federal statute behind them and as such, can't be preempted.

I can't think of any other myths right now, but if you have questions about the scope of FERC jurisdiction, please feel free to send me a question below.  And keep in mind that none of this constitutes legal advice, it's just my analysis based on my understanding of the law of how FERC jurisdiction works.