Maryland Rules in Favor of Offshore Wind Developer, to Ocean City’s Chagrin

The Maryland Public Service Commission ruled that Ørsted, the Danish multinational offshore wind developer of the Skipjack Wind Farm, could use larger wind turbines that the city had fought for over a year. The developer announced last year that it would use General Electric’s 12-megawatt turbine, manufactured in France, rather than the 8-megawatt turbine original planned, placing them about 20 miles offshore. The Town of Ocean City protested, indicating that the larger turbines needed to be moved farther offshore to minimize the visual impact, which would be detrimental to the town’s tourist industry.

Ørsted’s Position

Ørsted argued that the larger turbines would require fewer turbines—12 instead of 15—thereby improving the viewshed. The company also agreed to move the turbines from 19.5 miles offshore to either 21.5 or 22.7 miles offshore. Ørsted admitted that even the 8 megawatt turbines would be able to be seen from onshore.

Ocean City’s Position

Ocean City argued that the larger turbines would be 3 times taller than the tallest building in town, imposing a greater visual impact. The 12-megawatt turbine at 853 feet would be 212 feet taller than the 8-megawatt turbine. Ocean City wanted the project to be located in the farthest eastern portion of the project area or be over 33 miles from shore to mitigate potential harms to tourism and property values. Ocean City noted that the South Fork Wind Farm under development off Long Island, NY, will consist of 15 turbines located 35 miles off the coast and out of sight of the beaches. Further, Ocean City indicated that the builder is not in routine communication with the town despite being required to do so by the state.

Maryland Public Service Commission Ruling

The Maryland Public Utility Commission ruled with Ørsted because of other benefits accruing from the change. Ratepayers would benefit from the 12-megawatt turbines because the costs would be lower and the project more efficient. The Commission also ruled with Ørsted because there would be fewer turbines placed farther out to sea.

The Maryland Offshore Wind Energy Act of 2013 requires offshore wind turbines to be placed between 10 and 30 miles offshore. If the project is moved out of the area, it would no longer be eligible for the Offshore Wind Renewable Energy Credits, which Maryland offers as financial support toward construction. Maryland’s renewable portfolio standard, enacted in 2004, currently requires 25 percent of all electricity consumed in the State to come from renewable energy by 2020.  The Maryland Offshore Wind Energy Act of 2013 created a special “carve-out” for offshore wind, which is stated as a maximum percentage of 2.5 percent of retail electricity sales in 2017 and beyond (estimated to be equivalent to about 480 megawatts) , with the actual requirements to be determined by the Maryland Public Service Commission subject to the 2.5 percent limitation.

The Commission also noted that the U.S. Bureau of Ocean Energy Management created the Delaware Wind Energy Area, where the Skipjack project will be built, and thus the Federal Government is essentially responsible for siting Maryland wind farms.

Cost of Offshore Wind

Despite the Maryland Public Utility Commission seeing the lower cost of the 12-megawatt wind farm as a benefit to ratepayers, in reality offshore wind is one of the most expensive generating technologies commercially available. According to the Energy Information Administration, the capital costs of offshore wind are 4 times more expensive the capital costs for onshore wind and 5 times more expensive than the capital costs of natural gas combined cycle technology. And, on a levelized cost basis, taking into account differences in operational cost and performance including fuel costs for natural gas and capacity factor differences, the cost of offshore wind is still 3 times higher than either onshore wind or natural gas combined cycle.

Conclusion

The Maryland Public Utility Commission ignored the protests of the residents of Ocean City and allowed Ørsted to build its wind farm using 12-megawatt turbines that are 212 feet taller than the original proposal without moving their location to 33 miles off the coast of Maryland. Ocean City is worried about their effect on tourism and property values. The political requirement to build wind farms off Maryland’s coast is an expensive one, increasing the cost of electricity to ratepayers besides gifting the project with renewable energy credits that affects taxpayers.

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