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Competition Surfaces for Morro Bay Wind Farm Lease

STRUGGLE FOR POWER

Norwegian Oil Company Has Floating Wind Farms Off European Waters

November 21,2016-
The federal agency that leases US waters for energy production, the Bureau of Ocean Energy Management (BOEM), has been working with Trident Winds on a 650 to 1000 MW wind energy farm, 100 turbines, beyond the 3 mile mark off Morro Bay. After receiving an unsolicited request to lease about 56 square miles offshore back in January – BOEM put out a formal notice to see if others who would might like to bid on the same area. Last month they got their answer from Norwegian-based Statoil, a $109 billion in assets oil and gas firm who is rapidly getting their feet wet in renewable energy. Recently Statoil has been on a fast track to establish wind farms off European waters – the same rough and deep waters they have drilled successfully for North Sea oil and gas for decades.

Statoil Scottish wind farm

Statoil Scottish wind farm

Last month BOEM announced they had “reviewed Statoil Winds submission to assess filing completeness and has determined they are legally, technically, and financially qualified to hold an Outer Continental Shelf renewable energy commercial lease.”

26 Miles Across The Sea
The Morro Bay site is located at 2,600 – 3,300 feet water depth some 26 miles from Point Estero, California. Power would come ashore near Morro Rock connecting to a PG&E substation near the idle Morro Bay power plant.The big draw – a huge population nearby hungry for clean power and infrastructure on land to deliver that power to the grid.Then there is the matter of a retiring 2,000MW nuclear power plant here. And abundant wind energy for the tapping just offshore.

Now Statoil will have to detail their own proposal for a wind farm the way Trident has and then the bidding will begin. In the end BOEM will decide. It’s clear now that Seattle-based Trident has some serious competition from a well capitalized and experienced world energy player to build the first floating wind farm off the West Coast. And the spotlight is on little ol’ Morro Bay.
Statoil has operations in 36 countries and is 67 percent owned by the Norwegian government. Launched as an oil and gas exploration company the international firm has seen its profits dwindle with the price of oil, they lost $4.6 billion last year. In the past few years they have launched five European projects to utilize abundant wind power offshore including its first off Norway that has been generating electricity since 2009.
Earlier this year the Norwegian energy company, was granted a lease off the east coast of Scotland to build the globe’s first floating wind farm in deep waters.Called the Hywind project,the farm will feature five 6-megawatt turbines.Turbines are set to be installed next year. The project will also include a 1-MWh lithium-ion battery that is expected to improve the efficiency of the system.
Now they have their sights set on the US where Statoil has indicated strong interest in waters off New York, Hawaii and as of a few weeks ago – Central California.

Going Deep
While a number of projects offshore are being developed in shallow depths off the Atlantic Coast the US West Coast coastal waters fall off the shelf requiring new deep water technology to anchor turbines. As BOEM says on their website. “While the first offshore wind project was installed off the coast of Denmark in 1991. Since that time, commercial-scale offshore wind facilities have been operating in shallow waters around the world, mostly in Europe. With the U.S. Department of the Interior’s “Smart from the Start” initiative, wind power projects will soon be built offshore the United States. Newer turbine and foundation technologies are being developed so that wind power projects can be built in deeper waters further offshore.”
Meanwhile,with low world oil prices and their balance sheet suffering Statoil is cutting back on oil exploration while investing more in alternative energy. With their deep water experience and track record with floating wind, there is a better chance today than yesterday that someone will be building this huge project.
Whoever builds it they will need to raise money from investors and the cost won’t be cheap.To do that they need a utility to agree to buy the power when it will be available around 2025.They have to gauge the regulatory receptiveness for the renewable power project in a state that has committed to cut greenhouse gases from fossil fuels to a nation now led by a president that is not too excited about it, in fact wants more coal. It will be the Trump administration who will manage these federal waters now and may want to return to ‘drill baby drill.’
Trident has offered no estimate of the cost but Bloomberg Energy has said this technology may cost $9 million per megawatt or a cool $9 billon for 1000MW. This comes at a time when other renewable prices like utility-solar continue to fall. For ratepayers the good news is that competition offers a better chance for them to get a fair deal.
On several levels this is a struggle for power.

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