Published in NH Business Review -10/22/2021
Over the past few years, both the New Hampshire Legislature and Executive Branch considered initiatives to advance offshore wind ("OSW") development. Legislative and Executive Branch support for an OSW procurement process is not only critical to promote the development of the market for the energy generated by OSW projects, but it also signals that New Hampshire is interested in advancing OSW development. Moreover, it provides a necessary roadmap for advancing OSW development.
In contrast to northern Europe, where national governments typically set procurement goals, state governments have led OSW procurement in the United States. In the U.S., the federal Bureau of Ocean Energy Management (BOEM), establishes lease areas in waters subject to federal jurisdiction and conducts a leasing process that determines which companies can construct OSW projects, and in which locations.
States conduct procurement processes (and regulate transmission line siting in state waters and onshore) that allows OSW developers to transmit energy from offshore projects in federal waters into a states' energy grid in a manner determined by each state. This decentralized approach leads to different regulatory requirements and processes in each state.
For example, the Massachusetts Legislature adopted legislation – an "Act to Promote Energy Diversity" in 2016 and an "Act to Advance Clean Energy" in 2018 – that together identified the amount of offshore capacity it would solicit and procure through a request for proposals ("RFP"). The legislation sought connection to 1,600 MW from OSW by 2027 and 3,200 MW by 2035, focused on projects that are currently being pursued in lease areas south of Martha's Vineyard. By comparison, in New York, the Governor set the process in motion by announcing Executive Goals in his 2017 "State of the State" address. In response, the Legislature adopted the "Climate Leadership and Community Protection Act," that called for the solicitation of 9,000 MW of OSW by 2035.
Once a Legislature enacts a procurement statute, OSW solicitations may be conducted by electric distribution companies, the state energy agency, or the public utility commission ("PUC"). The state energy agency or PUC typically reviews project proposals and makes awards based on price and other requirements either prescribed by the Legislature or identified in the solicitation or RFP. After a proposal is selected, the state PUC and other agencies, including the consumer advocate, review awards or related contracts to ensure they comply with all state law requirements and do not result in an unjust impact on ratepayers.
New Hampshire took a step along this path when the Senate approved SB 151 by a vote of 23 to 1. This legislation, similar to the Massachusetts approach, would have established a new State committee to solicit proposals from New Hampshire utilities to procure at least 600 megawatts ("MW") of new OSW. Subsequently, the Senate Finance Committee retained the bill, which means that the proposal will not move forward in 2021, but could re-emerge in the 2022 Session. This bipartisan effort indicates there is support for OSW development and procurement within the State.
During the same period, the New Hampshire Executive Council approved the use of $250,000 of American Rescue Plan funds to assess the impacts of potential OSW development in the deep waters of the Gulf of Maine, which is in its early stages. New Hampshire has also established several other commissions to evaluate the long-term prospects of OSW development in the Gulf of Maine. These groups will consider procurement, port facilities and related onshore infrastructure, effect on fisheries and wildlife, as well as job creation and economic growth. Both the Legislature and Executive Branch of New Hampshire will likely take all of these considerations into account as they evaluate moving forward with a procurement process.
The recent creation of the State Department of Energy ("DOE") with the Legislature's adoption of House Bill 2 also signals support for OSW development. Conceptually, the DOE will play the primary role in establishing procurement goals for the development of a future OSW energy market. It is too early to tell, however, whether it will fall to the PUC or DOE to evaluate any awards coming out of a procurement process. One of the rationales for the DOE was to create a governmental body better suited to making energy policy in concert with the Legislature and the Governor, while focusing the PUC on its adjudicative responsibilities. In addition, the Commission to Study Offshore Wind, created by omnibus bill (HB 1245) in 2020, falls under the new DOE – again suggesting that OSW will most likely be an area largely handled by the newly created DOE and not the PUC.
In addition to creating the DOE, House Bill 2 also called for the creation of a study committee to evaluate the Site Evaluation Committee ("SEC") process. Although the Legislature engaged in a process to revamp the SEC process in 2013, House Bill 2 made it clear that the Legislature still believes improvements can and should be made to the State's energy project siting process. The role of the SEC in OSW development in the State is primarily limited to the facilities for interconnection with the grid on shore. Pursuant to the Submerged Lands Act of 1953, coastal states have jurisdiction over a region extending 3 nautical miles seaward from the baseline, or shoreline, – beyond this theoretical line is considered federal waters. Consequently, any aspect of OSW development occurring beyond this 3 nautical mile limit is subject to federal, not state, jurisdiction. The potential revision of the SEC process could mean – and hopefully will mean – a more streamlined approach for companies seeking to bring OSW into the New England grid through New Hampshire.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.