Posted on November 30, 2022
Three federal leases have been granted for large-scale ocean wind farms off the coast of North Carolina, with two more potential sites now the subject of a monthlong public comment period.
Such waves of offshore wind projects, with the combined potential to ultimately power the equivalent of more than 2 million typical homes, could fuel a clean-energy surge that accelerates North Carolina toward its mandated emissions reductions aimed at curbing climate change.
However, just how much of that power will serve electric customers in the state — or how many of the projects eventually come online — is impossible to predict.
Only one of the proposed ocean arrays, in waters to be leased by an unregulated subsidiary of Duke Energy, is almost certain to come ashore in North Carolina.
Duke Energy Renewables Wind was awarded a $155 million wind-energy lease in May for 55,000 Atlantic acres about 20 miles off the coast of Bald Head Island and near the South Carolina line. Duke estimates its array will have a capacity of 1,600 megawatts, enough to power nearly 375,000 homes.
A U.S. subsidiary of Paris-based company TotalEnergies also submitted a winning bid of $160 million for a similarly sized area adjacent to Duke’s where it expects to have the capability to produce 1,000 megawatts.
Up the coast, a Connecticut company has a five-year head start on Duke and TotalEnergies with what has been dubbed the Kitty Hawk project off the Outer Banks.
Orange, Conn.-based Avangrid Renewables outbid three other companies for wind-power lease rights to 122,000 acres in 2017. The company hopes to have all state and federal permits for the project by 2025 and begin construction in 2026.
While Kitty Hawk is expected to be capable of serving the equivalent of 700,000 homes, few of them will be in North Carolina.
Power generated by the operation will come ashore in Norfolk, Va., and be distributed by PJM Interconnection, a regional transmission organization that sells electricity in all or parts of 13 states and the District of Columbia. Just a small section in the northeast corner of North Carolina is included in PJM’s territory.
‘Simpler path’
The U.S. Bureau of Ocean Management last week identified eight new potential lease sites in federal waters off North Carolina, Virginia, Maryland and Delaware.
The two North Carolina areas, covering close to 250 acres, are east of the northern Outer Banks, near the Virginia border.
The targeted site closest to the coast covers nearly 210,000 acres and is 25 miles from shore. A smaller, 42,000-acre prospective project area is 72 miles out and in considerably deeper waters.
If lease proceedings for the two newly identified sites go through, the winning bidders will have choices to make.
“Given the proximity to PJM territory and Virginia, there’s a real possibility that this power could be delivered into that market versus into Duke Energy territory,” said Matt Abele, director of marketing and communications at the N.C. Sustainable Energy Association.
Duke, North Carolina’s largest utility, will likely have outsized influence over potential wind projects off the state’s coast and the potential route of the power they produce.
Avangrid Renewables avoided dealing directly with Duke by taking a “simpler path” with the PJM Interconnection, Abele explained.
“With the other parts of the state further down the coast, offshore wind development is subject to monopoly control of the utility market, which leaves only one option for an off-taker — Duke Energy,” he added.
While Duke is an upstart in offshore wind generation, TotalEnergies says it is in various stages of projects in waters off the United Kingdom, South Korea, Tiawan, France and the U.S. totaling 11,000 megawatts of capacity.
Those sites include an area off the coast of New York and New Jersey for which the company was awarded a $795 million lease in February.
‘This is a concern’
For Duke’s offshore foray, the capacity projection of 1,600 megawatts — enough to power nearly 375,000 homes — is significant because it equals the highest proposed level of ocean wind in the company’s proposed energy mix to meet state-mandated reductions in carbon dioxide emissions, the leading contributor to climate change.
Bipartisan legislation passed by the General Assembly and signed into law by Gov. Roy Cooper in 2021 directs the N.C. Utilities Commission to “take all reasonable” steps to slash carbon pollution in the state 70%, compared to 2005 levels, by 2030 and reach “carbon neutral” status by the middle of the century.
Under House Bill 951, the commission has until the end of the year to approve a blueprint for Duke to meet those standards. That could be one of four options submitted by Duke, alternatives offered by climate advocates or the commissioners’ own version.
If Duke’s mandated volume of offshore wind is 1,600 megawatts or less, as it has proposed, the company could potentially get all it needs with its own project, essentially exhausting most of the state’s demand.
“This is a concern that many have expressed for the North Carolina market,” the NCSEA’s Abele said.
The NCSEA is one of several intervening organizations critical of Duke’s plan to add natural gas capacity as a “bridge” to replace energy generated in coal-fired plants the company is gradually retiring.
Gas emits about half as much carbon dioxide as coal, but still contributes to climate change.
In an October filing with the utilities commission by the Southern Environmental Law Center, the NCSEA and other advocacy groups suggest an independent third-party consultant study the viability of the three already-leased sites off the North Carolina coast supplying energy to the state.
“It’s important to recognize that offshore wind will play an important role in the future of electricity generation in the state, especially given the fact that North Carolina has the highest offshore wind resource potential on the East Coast,” added Abele, referring to an assessment by the U.S. Department of Energy’s National Renewable Energy Laboratory.
Abele also noted that regardless of the ocean wind capacity called for in the initial approved carbon plan, the company’s energy allocations are expected to evolve because the utilities commission is required by law to update the document every two years.
Gathering winds
Gov. Roy Cooper has set a goal of having 2,800 megawatts of energy-generation capacity off the state’s coast by 2030 and 8,000 megawatts by 2040. However, his June 2021 executive order doesn’t directly address where that wind energy should come ashore or who it will serve.
The three existing leases off North Carolina are projected to produce more than 5,000 megawatts, which is nearly three times more than the highest offshore wind target in Duke’s proposed North Carolina carbon plan options. The latest sites identified by BOEM would add still more to the state’s ocean wind capacity.
Any offshore energy coming directly to North Carolina would enter the state through a connection to Duke’s electric grid. But if supply outstrips the demand dictated by the carbon plan ultimately approved by the utilities commission, what would be the point of sending Duke power it doesn’t need?
Actually, the companies operating the ocean arrays would not be required to sell that power to Duke, nor would Duke be obligated to buy it.
“Interconnection agreements govern how a project is connected to the grid to safely transmit the electricity it generates,” explained Daniel Vandergriff, an attorney at the Winston-Salem law firm Blanco Tackabery who specializes in energy-related issues and projects.
Where that electricity goes next is up to the company that produced it, added Sam Watson, general counsel to the utilities commission.
“An offshore wind generator, like any other generator, can sell at wholesale to any utility or bid into a wholesale energy market, if accessible,” explained
In this case, that access to other markets would be through Duke’s system, as mandated by Federal Energy Regulatory Commission rules.
Under FERC’s Open Access Transmission Tariff, “a utility is required to ‘wheel’ power from a generator across its system to a neighboring utility,” Watson noted. “An offshore wind generator, unlike a generator located onshore, may have more flexibility as to where its transmission line comes ashore and to which utility it interconnects. But, again, a generator is not limited to selling its output only to the utility to which it interconnects.”
Because Duke’s transmission lines cross into South Carolina, some power coming ashore in North Carolina could possibly serve the company’s more than 800,000 electric customers in the Palmetto State, Vandergriff said.
With other large electric utilities in South Carolina, TotalEnergies may consider bringing its wind power onshore there as a viable option, added Munashe Magarira, an attorney at the Southern Environmental Law Center who has been involved in the utilities commission’s carbon plan proceedings.
“I think the question of interconnection hinges primarily on economics,” he said. “If it were cheaper for power to come into North Carolina, then it will come into North Carolina, subject to regulatory approval.”
Want to weigh in?
BOEM will accept public comment on the proposed new lease sites through Dec. 16. To comment, visit regulations.gov and type “BOEM-2022-0072” in the search box.
The agency will hold virtual meetings with the “fishing community and related industries” Nov. 30 at 12:30 p.m., and with environmental organizations Dec. 1 at 1:30 p.m.
For information, visit boem.gov/renewable-energy/state-activities/central-atlantic
