RD295 - Virginia Offshore Wind Development Authority Annual Report - October 15, 2011


Executive Summary:
In 2010, the General Assembly established the Virginia Offshore Wind Development Authority (“VOWDA” or “the Authority”). The members were appointed and the Authority began meeting in December, 2010. Over the last 10 months, the Authority has identified and worked to achieve four main goals:

1. Virginia Offshore Industry Data: Facilitate the definition, collection, and dissemination of relevant met-ocean data, environmental data, and other information needed by Virginia offshore wind stakeholders, using existing, planned, or projected sources of data collection or activities.

2. Offshore Leasing, Permitting, Financing, and Regulation: Identify existing federal and state barriers to the development of the offshore wind industry in Virginia.

3. Virginia Offshore Job Creation and Supply Chain Development: Work in cooperation with relevant local, state, and federal agencies to accommodate the manufacturing, assembly, and maintenance of offshore wind energy project components and vessels.

4. Offshore Wind Project Siting and Development: Communicate and coordinate with stakeholders, including the Department of the Interior Bureau of Ocean Energy Management, Regulation, and Enforcement (DOI BOEMRE, subsequently renamed BOEM) Task Force to ensure the development of offshore wind projects is compatible with other ocean uses and avian and marine resources, including both the possible interference with and positive effects on naval facilities and operations, NASA-Wallops Flight Facility operations, shipping lanes, recreational and commercial fisheries, and avian and marine species and habitats.

To accomplish these goals the Authority engaged with the Bureau of Ocean Energy Management (“BOEM”) to help facilitate the issuance of a Call for Information and Nominations (the “Call”) for the commercial development of Virginia’s Wind Energy Area (“WEA”). VOWDA also worked with the Department of Mines, Minerals, and Energy (“DMME”) to collect relevant met-ocean and environmental data through contracts with members of the Virginia Coastal Energy Research Consortium (“VCERC”). The Authority also organized data regarding the regulatory framework for electric rates in Virginia; the regulatory framework for permitting and siting an offshore wind development project in federal waters with associated state permits; and researched the funding mechanisms and resources and activities being conducted by other states with regard to establishing an offshore wind industry. The Authority received information from the Atlantic Wind Connection and Dominion Virginia Power (“Dominion”) regarding transmission possibilities and costs for connecting offshore wind development onshore. Finally, the Authority conducted a survey of stakeholders to inform its efforts to identify data needs, identify regulatory or other policy barriers, formulate recommended actions, and confirm best practices to attract and support offshore wind development and its supportive supply chain. As a result of its activities, the Authority makes the following priority recommendations.

RECOMMENDATION 1: Investment in facilities that will collect met-ocean and environmental data and incentives that will reduce development cost and schedule.

a. Continue to work with the United States Department of Energy (DoE), the United States General Services Administration (GSA), the National Oceanic and Atmospheric Administration (NOAA) and other interested parties to establish agreements for the acquisition, restoration, upgrade and maintenance of the Chesapeake Light Tower (CLT). Establish ownership and operational responsibilities, cost sharing and data acquisition alternatives and short and long range plans for the continued use of the CLT as a state and national asset for offshore wind development support. Allocate funding to assist in refurbishing the basic structure of and erect a conventional met mast on the CLT, together with two vertical profiling LIDAR units.

b. Provide a mechanism (through tax credits and other means) to offset development and site characterization costs for developers participating in the Virginia Call. Such mechanism should provide that in exchange for offsetting development costs the recipient will commit to provide economic benefits to Virginia such as job creation, investment, or tax revenue.

RECOMMENDATION 2: Increase the investment in the Clean Energy Manufacturing Incentive Grant to provide additional support for offshore wind supply chain manufacturers in Virginia.

a. Ensure that a portion of the grant funding is directly tied to the supply of components and services that support the development of offshore wind energy project.

b. Require recipients of the grant to create jobs that directly benefit the Commonwealth.

ADDITIONAL RECOMMENDATIONS:

1. Provide for dedicated staff at DMME to support ongoing VOWDA operations and activities.

2. Fund the hiring of a director to coordinate offshore wind activities and aggressively identify federal and private funding sources for continued VCERC and VOWDA initiatives. Such sources to include satisfactory commercial arrangements approved by VOWDA for:

a. Federal funding sources such as DoE, Department of Defense (DoD), NASA

b. Private sources such as the developers seeking to secure lease blocks in the Virginia WEA, private groups seeking to promote the development of offshore wind, and other groups promoting offshore wind. Identify mechanisms by which the Commonwealth can participate with BOEM in establishing a relationship with those developers who are the most qualified and can bring jobs to Virginia.

3. Encourage the Virginia Port Authority to complete an analysis of the necessary infrastructure improvements required to enhance the attractiveness of Hampton Roads as a Mid-Atlantic Offshore Wind staging area.

4. Conduct a public opinion survey to determine the support for offshore wind considering various price impacts to electric rates, and other studies to assist the Commonwealth and the legislature establish policy decisions.