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Bill creates framework for state to buy offshore wind

April 23, 2024 |By Katie Tabeling

This rendering demonstrates how wind turbines would look off the coast of Bethany Beath, with 10 miles of visibility.| PHOTO COURTESY OF THE U.S. BUREAU OF OCEAN ENERGY DOVER — A new bill that would create the framework for a system so Delaware could buy electric power from future wind farms,

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This rendering demonstrates how wind turbines would look off the coast of Bethany Beath, with 10 miles of visibility.| PHOTO COURTESY OF THE U.S. BUREAU OF OCEAN ENERGY[/caption] DOVER — A new bill that would create the framework for a system so Delaware could buy electric power from future wind farms, be it from its own wind farm or others nearby, was introduced to the General Assembly last week. Senate Bill 265, also known as the Delaware Energy Solutions Act of 2024, would authorize the Department of Natural Resources and Environmental Control (DNREC) and the state Public Service Commission to solicit bids “to procure offshore wind” between 800 megawatts and 1,200 megawatts. Past studies indicated that 800 megawatts would be enough to meet Delaware’s renewable energy credits by 2035. Those bids could include a new wind farm that would serve Delaware or partner with other neighboring states such as Maryland’s two future projects. Sen. Stephanie Hansen (D-Middletown), the bill’s sponsor, said that flexibility for either a Delaware offshore wind farm and buying energy credits was needed to not lock the state or other buyers into one path forward. “Delivering offshore wind to the grid requires several components, all with their own financing and regulatory hurdles,” Hansen told the Delaware Business Times. “The Delaware Energy Solutions Act creates flexibility so that any one of those components that creates value for Delaware and its residents can move forward without being dependent on the completion of an entire system from soup to nuts.” The proposed legislation would also allow the state’s municipal electric companies, rural electric cooperatives, and third-party providers to be able to purchase electricity generated from offshore wind if they choose. “In the event that a utility, co-op or other qualified purchaser opts not to purchase power directly from offshore wind generation, those businesses – and Delaware ratepayers – can still benefit from the renewable energy generated by that facility through the purchase of renewable energy credits,” Hansen added. SB 265 would grant the DNREC state energy office the power to draft a request for proposals for a Delaware-only project or a partnership with other entities, in coordination with the state Renewable Energy Task Force, with the Delaware Public Service Commission weighing in. The bill would also cap the price of wind energy at 110% of the average price that Delmarva Power paid for power in the previous three years or is competitive with other renewable projects in the region. A price escalator of 2% per year is also set to address potential price changes due to inflation, an issue that has dogged offshore wind farm developer Ørsted as it found projects planned off the coast of New Jersey were no longer feasible at the price negotiated years ago. Bids that would be considered would have to have a term of 20 years and describe any impacts to the electric transmission system and the energy market as well as economic costs and benefits. DNREC’s State Energy Office would also determine on what bids reach contract negotiation stages based on several factors, including the likelihood of it becoming operational, its estimated ability to reduce net greenhouse emissions, competitiveness and other factors. The Public Service Commission would then have to sign off on a public hearing for a bid. Hansen has been working on legislation to enable Delaware to buy into wind energy with DNREC and Gov. John Carney’s office late last winter after a study decisively recommended the state should start a procurement system. However, the “Proposed Offshore Wind Procurement Strategy for Delaware” report did not indicate whether Delaware should open the door for its own project or enter into an agreement to buy the energy. It also builds off the Climate Change Solutions Act, which spells out the specific benchmarks of reducing net emissions by 50% by 2030 and 100% by 2050, using 2005 as a baseline. Hansen was also the architect behind that bill, which Carney later signed last summer. During that bill signing ceremony, Hansen said the state officials and residents would need to be open to exploring “uncomfortable” options to meet the aggressive goals. Carney has made it clear that creating the foundation for other climate change solutions is one of his top priorities in his final year in office. In a prepared statement, he said he was in support of SB 265, as it will make “Delaware more of an active player in offshore wind by allowing us to purchase wind-generated renewable energy in a fiscally responsible way.” It remains to be seen what, if any, appetite there could be for a Delaware-only offshore wind project. It’s been more than a decade since the 150 turbines planned for just off the Delaware Coast by Bluewater Wind was scrapped due to financing issues. In Carney’s first year as governor, a study found it too cost-prohibitive to buy wind power. In the time since, Maryland lawmakers set the groundwork for two wind farms, including one that would put the closest turbine 17 miles from Bethany Beach and 15 miles from Ocean City, Md. Ørsted, one of the world’s largest wind farm developers, held one of those leases, but withdrew from existing power purchase agreements with Maryland set in 2020 and 2021 as the company said those terms were not economically viable. However, the company still intends to develop the wind farms and will re-submit a new plan to the U.S. Bureau of Ocean Energy Management. "Clean, reliable offshore wind energy is critical to achieving U.S. energy independence, diversifying the nation's energy mix, and delivering lasting benefits for Delaware's workers and environment,” Ørsted Head of Government Affairs & Market Strategy Maddy Voytek wrote in an email to the Delaware Business Times. “Delaware is ideally positioned to play a key role in offshore wind development in the future. We commend the state of Delaware for its consideration of an offshore wind program and will continue to monitor offshore wind procurement opportunities in the region." SB 265 will be heard by the Senate Environment, Energy & Transportation committee on April 24 at 1 p.m.