Type to search

Energy Environment News Statewide Sussex County

Carney opens negotiations for U.S. Wind transmission lines

Katie Tabeling
The first American wind farm started operations in 2017 in Block Island, Rhode Island. Two Maryland projects are on their way through the process. | PHOTO COURTESY OF UNSPLASHED/SHAUN DAKIN

The first American wind farm started operations in 2017 in Block Island, Rhode Island. U.S. Wind and Delaware are in negotiations on how to bring transmission cables into Delaware to connect to the electric grid.   | PHOTO COURTESY OF UNSPLASHED/SHAUN DAKIN

BETHANY BEACH — As Delaware continues to weigh what its role should be in the offshore wind industry, Gov. John Carney has directed state officials to negotiate with U.S. Wind on bringing its transmission lines to the First State.

Carney signed a non-binding term sheet on Dec. 19 with U.S. Wind CEO Jeffrey Grybowski that opens up discussions on how the Baltimore-based wind energy company can bring transmission lines onshore to 3R Beach about 4 miles north of Bethany Beach. From there, U.S. Wind plans to bring the cable through Indian River Bay and connect to the Indian River Substation in Dagsboro.

U.S. Wind, through a limited liability corporation Renewable Redevelopment that traces to its Baltimore offices, bought 140 acres of land surrounding the power plant on Dec. 20 for $20 million from NRG Energy. The power plant was reportedly not included in the deal.

“Offshore wind will help to lower electricity bills for the people of Delaware and will improve air quality across the state by reducing our reliance on burning fossil fuels. We plan to deliver a massive amount of clean energy directly into the electric grid in Delaware and that direct link means a lot of benefits locally,” Grybowski said in a statement. “We look forward to working with the people of Delaware as we progress these plans and we congratulate Governor Carney for carving out this unique opportunity for Delaware to be a major beneficiary of the growth of offshore wind energy in the region.”

The term sheet indicates that U.S. Wind would pay an annual lease of $350,000, with 3% annual increases, for the cable landing.

In return, Carney is seeking possible ways that the state and Delawareans could benefit from the arrangement, including renewable energy credits and up to $40 million in community and environmental causes.

“This agreement means Delaware will become an active player in the growing offshore wind industry,” Carney said in a statement. “It aligns with other objectives, including our emission reduction targets and meeting the net-zero carbon goal set last year. Transitioning to clean energy sources is essential to reducing man-made greenhouse gas emissions that are driving climate change, and these wind projects are part of that transition.”

The term sheet opens up discussions between U.S. Wind and the state, and even if an agreement is met, U.S. Wind would still need approval from the federal Bureau of Ocean Energy Management. The Carney administration stated that a public meeting will be held once a deal is formally drafted.

U.S. Wind, a subsidiary of Italian renewable energy development company Renexia SpA, was one of the first to announce plans to bring a East Coast wind farm in 2014. Today, the company is looking to build at least 70 turbines that would generate 1,100 megawatts of power. Although both projects would give Maryland the energy credits, the closest turbine would be 17 miles from Bethany Beach and 15 miles from Ocean City, Md.

It is notably farther south than projects by Danish developer Ørsted that have raised considerable opposition in Delaware’s coastal communities worried about changes to the ocean landscape.

Meanwhile, Carney has focused heavily in the past two years in moving the needle on Delaware’s involvement in expanding renewable energy sources. Last year, his administration announced it intended to phase out gas car sales entirely in the next 12 years, although the state is now formally committed to an 80% reduction of new gas cars by 2030.

The governor also signed the Climate Change Solutions Act this year, which set Delaware on the ambitious goal of reaching net-zero carbon emissions by 2050. Another bill signed directs Delaware to study the best way to participate in offshore wind energy, among other things. This would mark the third study in 15 years.

Last year, U.S. Wind filed plans that indicated the best path forward to plug the wind farms into the electric grid would be to horizontally drill under the seabed in the Indian River Bay and come ashore to the Indian River Substation in Dagsboro. In the past, U.S. Wind officials said that there are no substations within the area of the barrier island that have a capacity greater than 138 kilovolts.

U.S. Wind’s proposal outlined at least three cables, with one drawing from the wind farm to 3R beach, one from the beach to the Indian River Bay shore and one to the substation owned by Delmarva Power. It may also include underground cable vaults, buried electrical lines, export cables and other facilities.

This project is estimated to bring $200 million in upgrades to the system, which is managed by the PJM Interconnection. In early December, Delaware Department of Natural Resources and Control (DNREC) Secretary Shawn Garvin wrote to PJM to formally study the impacts of interconnecting 1,000 megawatts of wind energy into Delaware.

In addition, PJM is in the middle of its second phase of the study, but has been delayed until 2024 to include large-scale transmission upgrades.

“PJM is working with Delaware as it strives to achieve its policy goals and will continue to perform our analysis work in 2024,” PJM Spokesman Dan Lockwood told the Delaware Business Times.

The wind farm developer would also be prohibited from any construction on the Delaware Seashore State Park between May 15 and Sept. 15 – the prime summer tourism season – and required to provide the state with the design of the cable landings and “make reasonable commercial efforts” to ensure the interconnection project doesn’t interfere with any current or future wind energy projects that would serve Delaware.

In exchange, Delaware would receive 150,000 renewable energy credits (RECs) each year associated with U.S. Wind’s projects at no cost. Delaware is committed to buying or producing 40% of the state’s energy from renewable sources by 2035. As of last year, much of the First State’s renewable energy is bought from out-of-state sources and less than 1% comes from Delaware projects.

The governor’s office told the Delaware Business Times that how the RECs would be distributed would need to be determined. If the deal with the U.S. Wind was in place today, it would fulfill about 1.6% of the state’s 20% non-solar renewable energy benchmark.

However, the term sheet also points out that this deal aims to lower energy prices by $254 million over decades, reducing the average Delawareans electric bill by $9 per year.

State officials also estimate that the credits would be valued at $76 million over the lives of the wind farms. If U.S. Wind fails to meet minimum requirements over the course of two years, it may be on the hook to buy the credits itself and transfer them to Delaware.

Other items up for negotiation include up to $40 million of community benefits, with an exact budget to be determined by the state on a schedule agreed to by both parties. These benefits include dredging; workforce development initiatives at high schools and colleges; supporting the 21st Century Fund, which backs conservation corps projects in state parks; Delaware Community Foundation environmental education scholarships and creating a Delaware State Parks Resiliency Fund.

U.S. Wind would be required to pay into any of these initiatives when one of the wind farms is generating electricity and has approvals to transfer electricity to the grid.

Still, critics say that the costs outweigh the potential benefits. Dave Stevenson, director of Caesar Rodney Institute’s Center for Energy and Environmental Policy, argued that the visibility of the turbines could damage the state’s booming tourism economy, and stem the flood of retirees moving to the coast.

Citing the 2021 report that shows $2.7 billion in tourism spending and factoring in a University of Delaware survey on tourism impacts, Stevenson estimated a 24% hit to the tourism industry in his own analysis. Another University of Connecticut study showed that when turbines are highly visible, property values fall about 11%, which Stevenson said translates to significant property tax loss with $1 million homes in the coastal communities.

“However, the visual blight on ocean views may cost $640 million in lost tourist spending just in the first year. That could mean over 5,000 lost jobs, over $100,000 lost property values for each beach community homeowner, and $65 million in lost taxes,” Stevenson said. “Those losses could continue year after year. The proposal is a really bad deal for our beach communities.”

Editor’s note: This story originally reported that U.S. Wind had acquired the Indian River Substation. That is incorrect, but it has acquired 140 acres neighboring the power plant. We regret the error.

Get the free DBT email newsletter  

Follow the people, companies and issues that matter most to business in Delaware.


You Might also Like

Leave a Comment

Your email address will not be published. Required fields are marked *

Premier Digital Partners

© 2024 Delaware Business Times

Flash Sale! Subscribe to Delaware Business Times and save 50%.

Limited time offer. New subscribers only.

Limited time offer. New subscribers only.


Subscribe to Delaware Business Times and save 50%