Offshore Wind Wire

FRIDAY INTERVIEW: Four Questions For Lewis Milford and Mark Sinclair

Fri, Jul 29, 2011

Lewis Milford is the president of the Clean Energy Group, Mark Sinclair is the vice president of the Clean Energy Group and the executive director of the Clean Energy States Alliance. Last week, Milford wrote an article in the Huffington Post about the economic argument for offshore wind.

Offshore Wind Wire: Please tell us about the Clean Energy Group: How was the CEG formed, and what is the relationship between CEG and the Clean Energy States Alliance (CESA)?

Milford: Clean Energy Group is a leading nonprofit advocacy organization working in the U.S. and internationally on innovative clean energy technology, finance, and policy programs. I founded CEG in 1998, CEG is headquartered in Montpelier, Vermont, with staff based in Washington, D.C. and Philadelphia. (See www.cleanegroup.org). In 2002, CEG created and now manages a separate, national nonprofit alliance of state-based, U.S. public clean energy funds- Clean Energy States Alliance. CEG also serves as the Secretariat for the UNEP Sustainable Energy Finance Alliance, the only convening body in the international system for public finance agencies in the clean energy sector. (See www.cleanenergystates.org). CEG is supported by major foundations, as well as state, federal and international energy agencies.

OWW:  In your piece last week, you argue that state regulators need evidence of countervailing economic benefits to outweigh higher costs of emerging clean energy technologies. What is the right balance in weighing these factors, and which state has come closest to getting this right?

Milford: Each state will look at this question in light of its own regulatory policies. In many states, utility procurements will be judged by a general standard of whether the acquisition of power is in the public good or public interest of the state. That general standard usually contains several specific benefit type tests such as whether the power procurement would provide economic benefits, jobs, lower rates as compared to other resources, and otherwise contribute to local, state and regional economic development. The best example to date, and the only one so far to have specifically approved a power purchase contract for offshore wind, is the Cape Wind decision by the Massachusetts Department of Public Utilities. Under Massachusetts law, employment benefits are an explicit element to be used in rate case decision making. In this multi-hundred page decision, start at page 200 and read for about twenty pages to see how this is analyzed. You will see there were numerous studies showing job benefits and various other quantified and unquantified benefits-the analysis was used to offset the higher costs of the project as compared to commodity priced power. It’s very interesting to see how utility decision making is about much more than prices, it is now about jobs, environmental benefits, system reliability and regional impacts. Higher costs can be justified by economic development benefits.

So whether this is the right balance is still to be seen. But it is an excellent start to what are likely to be many more utility decisions in the future, if the industry starts taking off the way we expect it will. Of course, over time, we further expect the costs of offshore wind to decline with more supply, so this early stage industry cost dilemma will disappear with expanded deployment.

OWW: What can organizations such as the CEG or the CESA do to promote offshore wind as a reliable energy source in the United States?

Milford and Sinclair: Organizations like Clean Energy Group and CESA can and are taking many steps to promote offshore wind as a reliable energy source.

First, with Congress’ lack of support for advancing national renewable energy policy, state level policies and support for offshore wind, such as renewable portfolio standards, public financing, and tax credits for industry supply chain development, are critical to building a robust offshore wind industry. Therefore, CESA is working closely with several Atlantic Coast states to identify and advance best state policies and price support mechanisms tailored to accelerating offshore wind financing and infrastructure.  Second, the siting of offshore wind projects is a significant challenge in the U.S., with numerous state and federal agencies having overlapping ocean management and regulatory roles.  While the lead agency, the Department of Interior, has recently implemented an improved approach to the review and issuance of leases on the Outer Continental Shelf, there is a real need for increased coordination among state and federal agencies to facilitate smarter permitting. To address this regulatory barrier, CESA is working closely with key state and federal agencies to achieve greater regulatory collaboration and coordination across agencies.

OWW: Where do you think the first offshore wind farm in the United States will be built? When do you think the first turbine will be in the water?

Milford and Sinclair: From our perspective, it is not important where the first offshore wind project is built, but that it is built as soon as possible. Deployment of an initial project is essential to accelerating the offshore wind sector, because it will give confidence to future investors, regulators, and the public that the technology is viable and has much lower risks than other energy generation sources, including oil and gas drilling. If we were forced to make a bet on which project would be built first on the Outer Continental Shelf off the Atlantic coast and when, our crystal ball indicates Cape Wind with construction commencing in 2012.

See the original posting of this article at: http://offshorewindwire.com/2011/07/29/friday-interview-lewis-milford-and-mark-sinclair/.