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The Interior Department unveiled details for the nation’s first-ever federal sale of offshore wind energy leases on Tuesday, even as Republican lawmakers complain the approach is misguided.
Federal officials had already announced plans to sell wind leases off the Atlantic Coast this year, but the sale package released Tuesday firmly schedules the auction for July 31 and sheds more light on the terms of those leases.
Interior Secretary Sally Jewell said the sale could be a harbinger of things to come.
“We’re optimistic with this lease sale we’ll see some action,” Jewell told reporters on an unrelated conference call on Monday. “If there is good interest in this one, then I think you will have this happening on a consistent basis.”
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Jewell’s optimism is borne in part from her experience in the private sector. Jewell was CEO of Recreational Equipment Inc., while the chain of retail stores made deals to buy renewable energy to offset its carbon emissions. “We actively pursued the purchase of wind energy and solar energy as well,” Jewell said. “There is demand out there for companies that are looking to reduce their carbon footprint.”
But Jewell stopped short of predicting her potentially four-year tenure at Interior will see commercial offshore wind developments, which face financial as well as structural hurdles. The projects are massive, expensive and tough to finance.
“It will really be up to industry to decide the time frame under which they choose to develop wind energy resources,” Jewell said. “What we’re really doing at the Department of Interior is giving people an opportunity to use these resources. We certainly don’t want to be a roadblock to them being in production in four years, if it makes sense to the community.”
“The market will dictate,” she added. “We certainly won’t get in the way.”
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But Republicans say that approach stands in sharp contrast to the Obama administration’s handling of traditional energy development in other coastal areas.
A five-year plan for selling offshore oil and gas leases around the U.S. does not include any auctions along the East Coast, including an area off Virginia where an auction was previously planned. That Virginia lease sale was canceled after the Deepwater Horizon disaster in 2010, with Interior officials citing Defense Department concerns about interfering with operations in the area as a major factor.
Legislation pending in the House would force the the Obama administration to sell offshore drilling leases off the coast of Virginia. And on Thursday, the House Natural Resources Committee is set to hold a hearing on legislation by Rep. Doc Hastings, R-Wash., that would force the Interior Department to redo its five-year oil and gas lease sale schedule, to include Atlantic areas.
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Sen. David Vitter, R-La., on Tuesday renewed his request for economic data about the potential revenue from a wind lease sale, compared to the value of leasing similar acreage for oil and gas development. He and Sen. Lamar Alexander, R-Tenn., previously asked Interior for the information seven months ago.
Vitter accused the administration of “picking energy industry winners and losers” by blessing the offshore wind sale while forestalling oil and gas development in the same Atlantic waters.
“While they do everything they can to advantage renewable energy production, they ignore the benefits that traditional energy provides,” Vitter said in a news release. “The federal government receives significant revenue from royalties for offshore oil and gas production in the form of rents, royalties, bonus bids and taxes. Can the same be said for any potential offshore wind project?”
The federal offshore wind sale comes years after the federal government inked the first offshore wind lease for a controversial project that will be built in Massachusetts’ Nantucket Sound.
The Interior and Energy departments devised a coordinated plan to accelerate the development of offshore wind resources in February 2011.
During the July auction, wind developers will have the chance to bid on 164,750 acres about 9 miles south of the Rhode Island coastline — the same area identified for potential wind leasing in a federal notice last December. A Department of Energy report suggests that the area has the potential for some 3,400 megawatts of installed capacity, enough electricity to power more than 1 million homes.
The Bureau of Ocean Energy Management, which also conducts oil and gas lease sales, is taking a similar approach to the wind auction. The bureau said Tuesday it will evaluate both non-monetary agreements and cash bids. Non-monetary factors could include bidders who hold joint development or power purchase agreements.
Paving the way for the sale and the issuance of commercial wind leases in the area near Rhode Island and Massachusetts, the ocean enerby bureau concluded that the activity would have no significant impact on the environment. Bureau director Tommy Beaudreau said the conclusion followed “extensive collaboration” with “key stakeholders, including industry, commercial fishers and environmental organizations.”
Rep. Ed Markey, D-Mass., praised the development as “a win for American jobs, for American energy security, and for our environment.”
Markey noted that the first offshore wind leases would be in “low-conflict areas” identified by the Interior Department and local stakeholders.
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