Plans for the US’s First Freshwater Wind Farm Shelved Due to Obstacles

Rendering from Leedco showing the turbines as specs on the horizon of Lake Erie (Leedco)

PUBLISHED DEC 22, 2023 2:40 PM BY THE MARITIME EXECUTIVE

 

 

A nearly 15-year long effort to develop what would have been the first, and possibly only, freshwater wind farm in the United States has been shelved with the developer lashing out at the obstacles and delays created by regulators. Lake Erie Energy Development Corporation (LeedCo) says it is not ready to concede but admits that the project is “financially untenable in the immediate future.”

LeedCo points to the long delays and legal challenges it faced while specifically calling out “a project killing condition by the Ohio Power Siting Board which significantly impeded the project.” The company was involved in an extended battle with regulators and legal appeals after the Ohio Power Sitting Board initially ruled that the wind farm would have to cease operations in the evening to protect birds. The company highlights the board spent 18 months of extensive study and review before determining that the wind farm “serves the public interest.” LeedCo says it invested great amounts of time reviewing any potential impact on birds.

The plan, which first began in around 2009, called for the development of a 20.75 MW wind farm they called Icebreaker Wind. Working with Fred. Olsen Renewables, they developed the proposal for a demonstration wind farm that would consist of six 3.45 MW turbines located eight to ten miles north of Cleveland, Ohio. The lease area is just over four acres in the lake.

“Additionally, Icebreaker Wind faced frivolous and costly lawsuits,” the company contends alleging they were “funded by dark money tied to fossil fuel interest.”

The company had finally won a tentative approval with more than 30 stipulations in 2020 from the Ohio regulators. Included in the terms was the condition that from March to November the wind farm would have to cease operations at night. The board said it was to prevent potential harm to birds and bats that live in the area during the summer months. On appeal, the company was able to have some of the conditions including that one reversed.

There was also a lawsuit regarding the environmental review and the board having proceeded with the approval. In 2022, the Ohio Supreme Court rejected a case brought in the name of two residents contesting the board’s approval of the project.

LeedCo announced however on December 8 that the years of delays and obstacles had conspired to make it impossible to proceed with the project. They cited the increase in interest rates which had driven up financing costs noting that they are a small non-profit company unlike the multi-nationals developing most of the world’s wind farms. Due to the obstacles and delays, the company reported that its private development partner, which was to construct and operate the wind farm, also has ceased its financial support for Icebreaker Wind.

The company however is calling its decision to pause the project only temporary. LeedCo’s board is reported to be exploring alternative approaches that might make it possible for the project to progress at a later stage. Citing Ohio and the Great Lakes region's need for renewable energy, the company predicts there will eventually be a significant number of nearshore wind turbines situated in the Great Lakes.

RWE Acquires Three UK Offshore Wind Projects from Vattenfall in $1.2B Deal

Vattenfall sells three developmental wind projects to RWE after abandoning one due to the changing economics (Vattenfall file photo)

PUBLISHED DEC 21, 2023 5:34 PM BY THE MARITIME EXECUTIVE

Vattenfall has agreed to sell three of its offshore wind farm projects which were in a late stage of development to RWE in a deal that values the wind zone at approximately $1.2 billion. The companies are highlighting it as a positive development for the projects and the UK offshore wind power industry as RWE is committing to continue the development and restart a project Vattenfall walked away from in July 2023. 

Vattenfall is saying it believes the agreement with RWE is the best way forward both for the company and for the UK projects. They will continue development efforts on the Norfolk Vanguard West and Norfolk Vanguard East projects pending regulatory approval and closing to the sale expected in the first quarter of 2024. The agreement also includes the Norfolk Boreas project which was previously suspended due to the changing finances of the industry. Vattenfall says it will reverse a previously announced $540 million impairment for abandoning Boreas while the deal will also permit the company to focus on other projects that fit its portfolio and risk appetite.

The agreed sale covers the Norfolk Zone located between approximately 30 and 50 miles off the coast of Norfolk in the North Sea. Each of the projects is projected to have a capacity of 1.4 GW with a total capacity of 4.2 GW making Norfolk one of the largest offshore wind development zones in the world. Vattenfall has spent 13 years developing plans for the projects, which RWE highlights as highly attractive because they are in a late stage of development with grid connections and permits secured. 

RWE reports the agreed purchase price corresponds to an enterprise value of approximately $1.2 billion for the Norfolk wind zone. The majority of the purchase price relates to expenses spent to date. The acquisition requires approval from The Crown Estate and regulators.

The Boreas project won its Contract for Difference (CfD) in July 2022 but a year later Vattenfall said inflation and rising costs and challenges in the supply chain made the project unattractive. Vattenfall said it was suspending development but it has continued to pursue the other two projects in the area and was expected to bid for Contract for Difference in the 2024 government auction.

RWE says it looks forward to developing the projects as it believes they can be a key contributor to the UK renewable energy program. Combined they will provide power for approximately four million households. RWE reports it will resume the development of Norfolk Boreas but did not discuss the financial issues with the lower CfD for the project. They highlighted plans to seek agreements for the other two projects in one of the upcoming auction rounds saying that all three of Norfolk's projects are expected to be commissioned in this decade.

Vattenfall emphasized that while it has decided to sell these projects, which were a large portion of its wind portfolio, it will continue forward with offshore wind. It has an installed capacity of 1.1 GW of wind in onshore and offshore projects in the UK and another 500 MW in the pipeline. Beyond the UK, the company recently partnered with BASF for a 1.5 GW cluster off the coast of Germany.

The agreement which provides for the development of the Norfolk wind zone comes a day after Ørsted confirmed that it had decided to make the investment to build the third phase of the Hornsea project which is located in the same region as Norfolk. Hornsea 3 won its CfD in July 2022 in the same auction as Norfolk Boreas. Ørsted is expected to invest as much as $11 billion in the development of Hornsea which also includes a projected fourth phase. When completed, this would be the largest offshore zone generating approximately 7 GW of wind energy for the UK. 

Ørsted Proceeds with Construction of Hornsea 3, World’s Largest Wind Farm

With the addition of Hornsea 3, the wind field will provide more than 5 GW of energy in the UK (Orsted)

PUBLISHED DEC 20, 2023 5:49 PM BY THE MARITIME EXECUTIVE

Ørsted announced that it has made the final investment decision and will be proceeding with what will become the largest offshore wind farm in the world when it is completed in 2027. The decision to proceed with Hornsea 3, which is projected to cost between $10 and $11 billion, is seen as a positive signal both for the UK and the global offshore wind industry. It comes at the end of a difficult year that saw many projects abandoned and Ørsted reporting it would be taking as much as a $5 billion charge due to the changing economics of the industry.

To be located approximately 100 miles off England’s Yorkshire coast in the North Sea, the project will have a capacity of 2.9 GW providing power for up to 3.3 million homes. The company already operates two other phases of the project, Hornsea 1 which started providing power in 2019 and Hornsea 2 which was completed in 2022. When the third field comes online by late 2027, the total area will be providing in excess of 5 GW of power making it the world’s largest operating offshore wind zone. This phase will be built with Siemens Gamesa SG 14 turbines.

Permitting for the project was previously completed and in 2022 the company reached its power agreement with the UK, which uses a system known as Contract for Difference (CfD) which established a minimum price linked to inflation for the power generated by the project. In the case of Hornsea 3, the CfD was agreed in July 2022 at £37.35 per MWh at 2012 prices (approximately $47) for up to 15 years starting after the commissioning of the wind farm. The agreement provides for accumulated inflation from 2012 until the CfD starts, but in July this year Ørsted threatened to walk away from Hornsea 3 calling on the UK government to raise the price guaranty based on inflation and rising costs.

Ørsted points to a number of steps that are making it possible to proceed with the project despite the changed economics. They said that most of the capital expenditures for the project have already been contracted ahead of the recent inflationary pressures. They cite the supply chain and synergies from the already developed Hornsea projects and used flexibility built into the structure of the agreements to ensure they would achieve a targeted return on the project.

The agreements provided Ørsted the ability to defer a portion of their overall project, and they now plan to place that portion into the UK’s upcoming 2024 auction where the CfD has been reset at £73 per MWh. They expect to place a portion of the overall project at the higher price and also highlight plans for Phase 4 which would add a further capacity of up to 2.6 GW. Ørsted received the government consent order for Hornsea 4 earlier in 2023, and it is eligible for the upcoming allocation auction. When it is added to the Hornsea area the total field will provide more than 7 GW.

“Offshore wind is an extremely competitive global market, so we also welcome the attractive policy regime in the UK which has helped secure this investment,” said Mads Nipper, Group President and CEO of Ørsted in a statement announcing the decision to proceed with Hornsea 3.

Adding to the doubts that Hornsea 3 would proceed, it was one of five projects that won its contracts in 2022 along with the neighboring Norfolk Boreas project. Developer Vattenfall walked away from that project during the summer saying the surge in costs made the wind farm uneconomical.

Ørsted highlights that it currently operates a total of 12 offshore wind farms in the UK. They look to leverage the expertise, supply relationships, and infrastructure to help realize Hornsea 3 as part of their commitment to the UK market.

Officials from the UK government hailed the decision for the project to proceed. In addition to the vote of confidence for the industry, Hornsea 3 will play a critical part in the UK’s next phase of expansion of renewable energy to reach the overall goal of having 50 GW of offshore wind power generation in operation by 2030.

EU Adopts Wind Charter to Accelerate Offshore to Reach 111GW by 2030

Ministers from 26 European countries and 300 companies met to endorse the Wind Charter (WindEurope)

PUBLISHED DEC 19, 2023 8:06 PM BY THE MARITIME EXECUTIVE

Europe took a significant step forward in its renewable energy plan with the adoption today, December 19, of the Wind Charter which lays out an aggress framework for doubling the current deployment rate for wind energy in all its forms. The European Union highlights that wind energy has historically been a success story for Europe and must play a critical part in the region’s renewable energy strategy.

Europe recently adopted a strategy that calls for at least 42.5 percent renewable energy generation by 2030 and an ambition to reach 45 percent. To achieve this goal, there must be a massive increase in the EU’s installed wind energy capacity. The Wind Charter which was today endorsed by 26 EU Energy Ministers and more than 300 companies from all parts of the wind energy sector develops a strategy to achieve 111 GW of offshore renewable energy by 2030. Only Hungary failed to endorse the plan, with representatives saying the country is working on legislative procedures.

“Today is a huge day for Europe’s wind energy industry,” said Giles Dickson, CEO of WindEurope, an industry trade group. “Twenty-six countries have committed to implement the actions set out in the EU’s excellent Wind Power package. The actions on permitting, finance, and auctions will help boost the expansion of wind energy and strengthen Europe’s wind industry.”

The Wind Charter follows initiatives adopted by the EU in October to advance the industry. The EU moved to improve access to finance for wind energy investors with the European Commission providing €4 billion for an Innovation Fund as part of a call aimed at supporting investment in clean tech manufacturing. The European Investment Bank also changed its lending rules for the sector and launched a new €5 billion counter-guarantees scheme for wind turbine manufacturing.

Supporters of the initiative highlight however that much of the action will fall to the individual countries to achieve the objectives. The Wind Charter sets out specific steps and seeks to coordinate the next phase of development for wind energy across Europe.

Countries are committing as part of the charter to ensure a sufficient, robust, and predictable pipeline for the development of wind energy projects. They are committing to strengthening their collaboration to identify barriers, especially in the permitting process. They will also in coordination with the European Commission identify ways to potentially accelerate permitting.

They will also improve, simplify, and make the design of auctions more consistent across Europe. This includes creating a coordinated schedule for future auctions. Member states are pledging to improve long-term visibility by developing 10-year plans and long-term strategies for a 2040 outlook.

Other parts of the charter include efforts to support the scaling up of wind equipment manufacturing capacity in the EU. They will also work with the companies in the industry to ensure that business processes, governance, products, and services meet high-quality standards while also supporting the accelerated deployment of offshore wind projects. Contained within the charter is also an agreement to review and identify potentially unfair trade practices in foreign wind product manufacturing. Specifically, they will be reviewing the increasing competition from China.