Danish concern buys development rights for wind farm off Martha’s Vineyard

WASHINGTON – A large European energy company has agreed to purchase the development rights for federal water off the Massachusetts coast, a site it estimates could accommodate more than 1,000 megawatts produced from offshore wind.
Dong Energy, headquartered in Denmark with 2014 revenue of $9.66 billion, announced in a press release Tuesday its agreement with RES Americas Development Inc. to purchase the development rights of 187,523 acres of federal waters off Martha’s Vineyard, Mass.
“The U.S. is an interesting market for offshore wind with the potential to become a significant area for future development,” said Samuel Leupold, executive vice president of Wind Power at Dong Energy, in a statement.
Res Americas originally won a bid in January to lease the federal water, which Dong Energy will now take over. The Danish company describes itself as a “global market leader in developing, building and operating offshore wind farms,” but it also specializes in exploring and producing oil and gas and “providing energy to residential and business customers on a daily basis.”
Dong Energy’s entry into the U.S. marks its first move outside of the European market and comes at a time when the U.S. wind industry is sending mixed messages.
The long-anticipated Massachusetts-based Cape Wind Associates LLC project in Nantucket Sound fell flat and has shown little-to-none signs of life since missing contractual deadlines on New Year’s Day. Opposition fought the project tooth and nail for more than a decade dragging the company through court on numerous occasions.
Rhode Island-based Deepwater Wind LLC, however, is on track to become the country’s first successful offshore wind project, as it enters into its construction phase this summer to build five 6-megawatt turbine project in Rhode Island waters off the shore of Block Island.
Deepwater Wind announced last month its securing of more than $290 million in debt and equity financing and its leadership believes the Block Island project, albeit small, could go a long way toward legitimizing the industry in the United States.
But there’s hesitancy in the market.
In January, RES Americas was just one of two energy companies to bid on the U.S. Interior Department’s Bureau of Ocean Energy Management auction of four “zones” of federal water within the Massachusetts Wind Energy Area, which begins 12 nautical miles off the shore of Martha’s Vineyard.
The Bureau had awarded 12 companies to participate in the auction, but only two zones received bids and the other two – totaling 388,569 acres – received none.
Dong Energy, however, is willing to test the U.S. waters for now and is encouraged by a piece of legislation currently in the Massachusetts state legislature that supports conditions for future offshore wind projects. Leupold also likes the east coast environmental conditions because he says they are similar to some of their ongoing projects in northwestern Europe.
“We already have a number of post 2020 projects in our pipeline in northwestern Europe that we will continue to develop. With the takeover of the offshore wind development project in the U.S., we will broaden our geographical scope and follow the market potential outside our current footprint,” Leupold said. “The project could be developed using well-known technology and logistics.”
Prior to the Interior’s competitive lease auction in January, five competitive wind energy leases had been awarded off the Atlantic coast: two in Massachusetts-Rhode Island, two off Maryland and one off Virginia.
The federal government’s effort to bolster offshore wind projects comes from President Barack Obama, who called for the production of 20,000 megawatts of renewable energy on public lands and federal waters by 2020 in his Climate Action Plan.
The Bureau of Ocean Energy Management must approve the lease agreement with Dong Energy. The federal bureau previously set terms with RES Americas’ lease, in which the company must to submit an assessment plan within its first year, including details on meteorological towers and buoys.
If approved, the company would then have five years to submit a construction and operations plan detailing logistics for their energy project. Pending a subsequent environmental review, according to the Interior.
The terms of operation is 25 years.

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