State negotiating land lease for offshore wind farm connection

For years now, US Wind has been moving forward with the construction of two offshore wind projects due east of Ocean City, Md. However, the company wants to connect to the power grid at a yet-to-be-built substation next to the existing Indian River power plant near Millsboro.

To make that connection, the company has proposed horizontal drilling under 3R’s Beach, just south of the Indian River Inlet. With that in mind, Gov. John Carney announced Dec. 19 the start of formal negotiations between Delaware and US Wind for a land lease that could ultimately pave the way for that coveted connection.

This agreement means Delaware will become an active player in the growing offshore wind industry, and it aligns with the state’s emission reduction targets, said Carney in a prepared statement.

“Transitioning to clean energy sources is essential to reducing manmade greenhouse gas emissions that are driving climate change, and these wind projects are part of that transition,” said Carney.

US Wind plans 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, said US Wind CEO Jeffrey Grybowski in a prepared statement.

“We look forward to working with the people of Delaware as we progress these plans, and we congratulate Gov. Carney for carving out this unique opportunity for Delaware to be a major beneficiary of the growth of offshore wind energy in the region,” Grybowski said.

US Wind has twice been awarded offshore wind renewable energy certificates from the Maryland Public Service Commission – in 2017 for MarWin, which is expected to generate 300 MW, then again in 2021 for Momentum Wind in the same federal lease area, which is expected to generate about 808 MW.

The governor’s office provided an outline for plans that will ensure “Delaware’s residents, the people, communities and ratepayers of Delaware, receive benefits from the development, construction and operation of the projects.”

As proposed, the lease for the cable landing at 3R’s Beach would be $350,000, with an annual increase of 3%, said the announcement.

Additional benefits would include 150,000 renewable energy credits each year, with an estimated value of $76 million over the life of the projects; the funding for dredging projects in Delaware’s coastal areas; the funding for clean energy workforce development training at Delaware colleges and schools; an environmental education scholarship fund; a resiliency fund for climate change projects at state parks; and replenishing the 21st Century Fund. The outline of the agreement proposes that US Wind will provide $40 million for community benefits projects over 20 years, with specific amounts for each to be determined.

There aren’t many details about the added community benefits in the term sheet. Speaking on behalf of the governor’s office, Ashley Dawson, deputy director of communications, said this is simply an outline. The state expects to identify funding for initiatives in those areas as needs are identified and formal agreements are negotiated, she said. 

Prior to finalizing the potential land lease, there will be a public information session to share details of the work to be done at 3R’s Beach. The governor’s office isn’t exactly clear when that will happen.

Finalization of these agreements isn’t expected until well into 2024, but there is no specific timetable, said Dawson. US Wind still has multiple federal and state permitting steps to go through, she said.

The US Wind project isn’t the only offshore wind farm planned for the ocean waters near coastal Delaware. There’s also a project being pursued by Danish-based power company Ørsted, which has twice been awarded Offshore Renewable Energy Credits by the Maryland Public Service Commission for a federally regulated wind farm area about 17 miles due east of Delaware – for Skipjack Wind 1, a 120 MW project, in 2017; and for Skipjack 2, an 846 MW project, in late 2021.

Ørsted has publicly discussed a number of cable routes in Delaware, and has done so with state agencies as well, but no decision has been made regarding a preferred option, said Dawson.