Elizabeth Arnold
OCEAN ENERGY IN THE UNITED STATES: CLOSING THE ACHIEVEMENT GAP
Karen Blixen said that “the cure anything is salt water.” In 1964, I doubt she understood
the application of this statement to today’s energy crisis. The ocean is a mostly untapped source
of predictable, clean energy. Governments and private companies around the world have
recognized the potential for ocean energy to curb the environmental effects of energy production.
Portugal and the United Kingdom in particular have implemented many ocean energy projects
that now supply a significant portion of their country’s energy needs. However, the United
States has lagged behind because the regulatory hurdles facing the implementation of these
innovative technologies hinder proper development of ocean energy. The process is too
complicated, and coordination or preemption of state law is necessary to facilitate development.
BACKGROUND
Marine hydrokinetic energy, also known as ocean energy, is the process of using
hydrokinetic technology to harness the energy of moving water in the oceans, including waves,
tides, and ocean currents. It differs from dams because it captures energy of moving water
without the impoundment or diversion required by many conventional hydroelectric facilities.
Ocean energy technology in 2010 is developmentally where wind power was in the 1980s. The
current technology is capable of supplying between two and five percent of the world's current
energy consumption and ten percent of the United States’ current consumption. The technology
has on many different models and concepts, but few have made it to installation, as is common
with emerging renewable technology.
The European Energy Association estimates that, globally, the oceans could yield more
than five times the electricity the world uses in a year if only 0.1% of the ocean’s energy could
be captured. This could be done if current technology was perfected. This enormous source of
energy is particularly attractive because ocean energy production produces zero greenhouse gas
emissions, making it much cleaner than traditional energy sources. It is also less aesthetically
disruptive than giant wind turbines because they are much smaller. Tidal turbines can even be
located beneath the ocean surface and cannot be seen or heard. Unlike dams, this technology
does not involve restraining natural water flow which can drastically change the surrounding
landscapes. Marine energy technology can interfere with marine life; however, the
environmental impact has not been studied extensively. Technology can be places such that it
doesn't interfere with migration routes or fishing areas. In some cases, these systems can create
greater and more diverse marine life by creating artificial reefs.
Another important characteristic of ocean energy is its predictability and reliability.
Unlike the wind, tides and waves can be predicted far in advance (days for waves, and centuries
for tides). They also generally come only from one or two directions, so the machines used to
capture this energy do not need to be as complex to capture energy from every direction.
Additionally, water is 830 times denser than air; for a given electricity output, tidal turbines can
be much smaller than equivalent wind turbines. The ocean holds a vast resource of nonpolluting, endlessly renewable energy that should be explored to take advantage of its benefits.
Although the potential of ocean energy looks bright, there are significant hurdles,
including regulatory costs, development costs, and potential environmental impact. The
regulatory hurdles are discussed below. As with most new energy generators, there are high
entry costs, which makes competition with mature technology particularly difficult. The cost of
wave and tidal energy is between forty and fifty cents per kilowatt hour, while the average
energy cost in the United States is about seven to eight cents per kilowatt hour. With the current
cost over five times the price of electricity, cost reduction is important to success of ocean
energy technology.
However, such cost reductions are often seen in emerging technology; for example, wind
energy cost has fallen by eighty percent in the last twenty-five years. Wind energy was about 40
cents when initially developed, but is now at around seven cents per kilowatt hour; the same cost
decrease is expected with marine energy technology. As ocean energy technology is about
twenty-five years behind wind energy technology, competitive costs could result with time, new
technology, and economies of scale with larger projects. Once the technology is in place, costs
are limited to maintenance costs, as there are no input costs, such as coal.
Although the environmentally impact on our oceans appears minimal, ocean energy
technology is so new and so diverse, no one is completely aware of the true effects on the
environment. Additionally, the standards for environmental impact are higher than in the past
due to increased environmental awareness. The full effect cannot be fully known without
implementation. The potential impacts include: alteration to sediments and seabed, effects of
noise and electromagnetic fields on marine animal behavior and migration, impact due to
physical barriers on migration, toxicity of hydraulic chemicals and paint. As each technology
may affect the environment differently and so few projects have been implemented at a fullscale, many environmental advocates fear that ocean energy projects could have a variety of
adverse effects, including unforeseen effects.
TECHNOLOGY
There are a wide variety of devices designed to capture ocean energy, though few have
reached implementation. Devices designed to capture wave energy typically have two or more
independent parts of the device move relative to each other. At least one part is displaced by the
waves and reacts with the other device, which moves pistons and create energy. Some wave
energy converters. Some capture energy as waves crash over the device, while others take
advantage of the energy produced by oscillation before waves break. This allows wave energy
converters to be located many miles offshore.
One of the earliest successful wave energy converters is known as the Pelamis Wave
Energy Converter. The converter resembles a sea snake which sits on water halfway submerged.
It is six hundred feet long and thirteen feet in diameter. It produces energy as waves travel
perpendicularly to the converter, swinging the individual portions of the snake about at the
hinged joints; the joints move pistons within the snake which produces energy which is sent to
shore through a seabed cable.
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The Pelamis Converter has been successfully installed in Scotland and Portugal. Three
machines are currently installed in Portugal, making it the first commercial wave farm with more
than one device. Each converter can capture up to 750 kilowatt hours; although they usually
capture between twenty-five and forty percent of the total capacity. It is designed to be deployed
between two and fifteen miles off the coast. Developers of the Pelamis converter contend that
the environmental effects are minimal because of the relatively slow movement of the device, the
lack of toxic fluids or anti-fouling paint necessary to operate, and the negligible noise it creates.
New Pelamis Converter projects are being considered at many locations in Europe and North
America.
Tidal energy devices can be deployed in tidal zones, ocean currents, and river currents.
They capture energy from the flow of water across or through a device which powers a generator
without impounding or diverting the flow of the water. These devices operate like wind energy
conversion devices work. They can be located entirely beneath the water’s surface so they do
not interfere with navigation and produce no aesthetic disruption to the coast. In the past,
particularly high tidal range and flow velocity was needed to extract energy; however,
technological development has increased the number of places where this technology could be
implemented.
One technology which has been successful is the OpenHydro tidal turbine. The
OpenHydro system is a giant propeller which sits on the ocean floor and uses tidal currents to
turn turbines which powers a motor and sends energy through a transmission line to the shore.
Its design is unique because it is slow moving and has open center which decreases the impact on
marine mammals. Successful OpenHydro projects have been implemented in Nova Scotia and
Scotland. Expansion into France and Washington State is expected. The Pelamis Converter and
the OpenHydro turbine are just two of the many devices that have been developed; however, few
actually reach implementation due to cost and regulatory hurdles.
THE COMPLEX REGULATORY SCHEME IN THE UNITED STATES
The United States lags behind European nations in the implementation of marine
hydrokinetic technology. Although lesser tax subsidies and governmental investment play a part
in this development gap, the complex regulatory process in the United States is the most
significant problem facing implementation. Although the Federal Energy Regulatory
Commission (FERC) supports marine hydrokinetic development, multiple federal and state
agencies have an interest in the permitting process. Coordination and preemption are necessary
to facilitate proper development of marine hydrokinetic technology.
The regulatory process was designed over a half century ago for conventional
hydroelectric plants and is not suited for advanced wave and tidal energy conversion
technologies. Although FERC has responded to criticism from the industry, many federal and
state agencies have veto power over these projects. Because approval is needed for so many
sources, regulatory uncertainty inhibits developers’ ability to obtain capital.
To operate a marine hydrokinetic generation facility, the facility must obtain a lease and a
permit. FERC has jurisdiction over the licensing process needed to obtain a permit for every
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marine hydrokinetic project, regardless of where it located. States have exclusive jurisdiction
over the leasing process for projects located three nautical miles off the state’s coastline. For
projects located on the outer continental shelf (the part of the continental shelf greater than three
nautical miles from shore, where the state’s jurisdiction ends to approximately 200 nautical miles
offshore), the federal Bureau of Ocean Energy Management, Regulation and
Enforcement (BOEMRE), formerly known as the Minerals Management Service (MMS) has
exclusive jurisdiction to grant leases. BOEMRE is part of the Dept. of the Interior.
The Energy Policy Act of 2005 granted MMS this authority to develop offshore
renewable projects, but limited the ability to obtain a lease to U.S. individuals and companies
only. A lease is generally obtained prior to beginning the licensing procedure. A lease includes
the exclusive property right to the water column and the ocean floor in the leased area and the
right to an easement for transmission line if a FERC permit is obtained. It typically takes
between one and two and a half years to obtain a lease. If only one party is seeking a lease for a
particular location, the initial lease costs twenty-five cents and acre, plus annual rent. If multiple
parties are interested in the location, the parties make a closed bid to determine the price and the
winner of the lease.
Once the lease is obtained, FERC has jurisdiction under the Federal Power Act over all
hydrokinetic projects to grant permits. Prior to 2008 all marine hydrokinetic projects were
required to obtain a preliminary license and traditional license in order to construct and operate a
project. The preliminary permit simply maintains priority of an application site for three years in
order to conduct feasibility studies. However, it does not authorize any construction. It is often
used with other licenses to reserve areas for future build-out of existing projects.
If the feasibility study produced good results, the developer would then need to obtain a
traditional license which authorized construction and operation. The Federal Power Act requires
that licenses “be best adapted to a comprehensive plan for developing a waterway for beneficial
public purposes, including power; protection, mitigation, and enhancement of fish and wildlife;
and other beneficial public uses.” The original permit is usually valid for fifty years, and
requires re-licensure every thirty to fifty years. This process is extremely time consuming and
costly. The permit requires an extensive environmental impact study, which is extremely
difficult to do prior to implementation. Because the technology is so new, there are few
environmental studies, so developers must start from scratch. Developers estimated that it took
five years and millions of dollars to get an operational prototype in place under this licensing
process. As of November 2010, no marine hydrokinetic had successfully obtained a traditional
permit.
The traditional licensing process was criticized for requiring full formal licensing process
prior to pilot testing because developers had to go through the whole process to do even a small
prototype test. FERC responded to these criticisms and developed a conditioned license and a
pilot project licensing procedure. The conditioned license grants a license pending actions by
other regulatory agencies (usually environmental agencies). The goal of the conditioned license
is to prevent delays in non-construction activities, such as raising capital. Once the conditions of
the conditioned license have been fulfilled, the license then operates as the traditional license,
which allows construction and operation. Although one conditioned license was granted to the
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Makah Bay Project (which is discussed below), the project was abandoned before the conditions
were met.
Another very promising development by FERC was the implementation of Expedited
Licensing for Pilot Hydrokinetic Projects. This was a further attempt by FERC to explore “ways
to reduce the regulatory barriers to realize the amazing potential of this domestic renewable
power source.” FERC’s goal was to meet the needs of entities testing the new technology
(including grid interconnection) while minimizing environmental effects. The Pilot Permit
allows developers to test new technologies, evaluate sites, and observe environmental effects
while generating electricity. This short term license allows for FERC and other agencies’ input,
and, if successful, allows for complete licensing in as little as six months.
The permit guards against environmental harm because the license is for limited energy
production for a short time, and it requires a project shutdown and removal plan should
regulators grow concerns about the impact. Although applicants are still expected to consult
with affected federal, state, and local resource agencies, Indian tribes, non-governmental
agencies, and members of the public in preparing a pilot project application, the pilot permit
waives many of the requirements of the traditional permit. Some of these groups may still have
veto power over the pilot project.
Developers recognize that FERC has implemented these changes to the licensing project
to help the developers succeed. However, FERC regulations often aren't the problem; it is other
federal agencies which require additional information or constrains. Because many of these
projects are located on the Outer Continental Shelf (which is under federal jurisdiction), they are
subject to these greater restraints than conventional power plants (which are largely regulated by
the states). Currently, ten wave energy and seventeen tidal energy pilot permits have been
granted, with a total capacity of over 5,000 megawatts.
THE MAKAH BAY WAVE PROJECT
The failed Makah Bay Wave Project, developed by Finerva Renewables, Inc., illustrates
the regulatory hurdles which developers in the United States face. It is the only marine
hydrokinetic project to ever receive a conditioned license from FERC. The project was located
in the Pacific Ocean in Makah Bay, several miles offshore of Waatch Point Clallam County,
Washington. This area is part of a marine sanctuary. The project was expected to take up
twenty-nine acres and produce 1,500 megawatts of energy annually. This can power about 130
homes.
The technology behind the project was the AquaBUOY, a steel wave energy converter
with a mooring/anchoring system, an electrical connection system, and an almost 4 mile-long,
direct current submarine transmission cable connecting from one of the AquaBuOY’s power
cable to a shore station. Finerva initially planned for four 250-kilowatt hour rated steel wave
energy conversion buoys, with the ability for further expansion.
After three years of attempting to obtain a traditional license, a five‐year conditioned
license was issued by FERC on December 21, 2007. FERC allowed Finerva to obtain a
conditioned license because full environmental evaluation was not yet complete. After 5 years,
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Finerva could convert the conditioned license into full license with fulfillment of conditions.
Alla Weinstein, a Finerva executive commented that “permitting agencies were [un]familiar with
our technology, so we had to create a permitting process as we went along.”
The proposed Makah Bay project was located in a marine sanctuary, and the onshore
station was to be located on an Indian Reserve. To implement the project, Finerva was required
to get approval or permits from the following state and federal agencies:
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FERC,
U.S. Coast Guard,
U.S. Fish and Wildlife Service,
U.S. Bureau of Indian Affairs,
NOAA,
National Marine Fisheries Service,
U.S. Army Corps of Engineers,
Advisory Council on Historic Preservation,
Tribal Historical Preservation Office,
Makah Indian Nation,
Washington State Department of Fish and Wildlife,
Washington State Department of Ecology,
Washington State Archeological and Historical Perspective, and
Washington State Department of Natural Resources.
These agencies required Finerva to conduct the following environmental studies to gain their
approval:
 Oceanographic study,
 Sedimentation and Current Flow study,
 Electromagnetic Field Literature Review,
 Marine Photography,
 National Environmental Policy Act Compliance,
 Washington State Environmental Policy Act Compliance,
 NOAA coordination with state and federal agencies,
 Acoustic output study,
 Eel Grass Analysis, and
 Gray Whale/marine mammal migration route analysis.
Compared to this overlapping web of regulatory complexity, the European regulatory system is
much simpler. The SeaGen tidal turbine in Northern Ireland, the first commercial scale tidal
turbine ever implemented, had to get approval of only two regulatory agencies.
Unfortunately, the conditioned license was voluntarily surrendered in April 2009 citing
lack of capital and the economic climate. The necessary approvals had not yet been obtained
from all fourteen required groups listed above. The AquaBUOYs never even made it to the
water, and Finerva abandoned the wave energy technology field.
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THE SOLUTION
Although the U.S. government (or at least FERC) recognizes the potential of ocean
energy technology, not enough has been done to incentivize the development this technology.
With greater development, marine hydrokinetic technology can become cost competitive with
current, environmentally unfriendly energy generation. Some government incentives currently in
place include: a two cent subsidy per kilowatt hour produced and sold to consumers, a thirty
percent investment tax credit for new projects, $250 million grant to the Department of Energy
Wind and Hydropower Technologies Program for marine renewable Research, Development,
Demonstration & Deployment, and a $5 million grant to NOAA to support the siting of offshore
renewable energy facilities and assist with implementation of marine spatial planning.
However, these incentives do little to overcome to complexity and costliness of
regulatory approval. The potential for marine is too good to pass up. Only nine wave and tidal
prototypes were tested in 2009 in the United States. More than forty-five prototypes are
expected to be ocean-tested in 2010 and 2011. If we expect viable technologies to be developed
to the point where they are competitive with traditional energy generation, the United States
needs coordination and cooperation between developers, state regulators, and federal regulators.
President Obama recently developed the National Ocean Council (NCO) to coordinate
ocean policy, including energy policy coordination. NCO is composed of leaders of federal
agencies. Once of its goals is to coordinate policy between federal, state, regional, local, and
Indian management of oceans. The NCO required no enabling legislation, and relies on existing
legislation and regulations to carry out its goals. It is unclear whether the NCO has any real
power to coerce cooperation between these varied interests; however, it is a step further in
ensuring that minor interests of one agency do not inhibit development of these projects for the
greater good.
FERC has also made strides to tailor regulatory program to new context by pursuing
memorandums of understanding (MOU) with state regulatory agencies to streamline the
licensing process. For example, the State of California and FERC signed an MOU to coordinate
their review of hydrokinetic energy projects in California state waters. The California MOU is
intended to reduce some of the regulatory barriers associated with siting and permitting such
projects, while also ensuring that projects are undertaken in an environmentally and culturally
sensitive manner. The MOU states that the State of California coordinates state agencies, such
as the California Coastal Commission, the San Francisco Bay Conservation and Development
Commission, the California State Lands Commission, the California Department of Fish and
Game, and the California Ocean Protection Council.
However, these MOUs don’t appear to actually bind any party to any action. They
accomplishes little more than saying: we both want these projects to work. No part of the
agreement forfeits the veto right of any party. MOUs have been reached with Maine,
Washington, and Oregon. However, California is special in that it has aggressive green portfolio
requirement. The other states with MOUs are traditionally liberal and have a strong sense of
protection for the environment. It is unlikely that all coastal states would be willing to cooperate.
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The tradition of federalism and its constitutional barriers in the United States will
continue to hamper the development ocean energy. The country needs an updated, streamlined
process to accelerate development and attract capital for marine hydrokinetic projects in the
United States. MOUs are a weak attempt at cooperation, with no real power behind them.
Preemption of state agencies’ veto power over these projects may be necessary to ensure proper
development. Although these interests are certainly important considerations in licensing new
projects, the need for the development of clean renewables is great. The federal government,
perhaps through FERC or the NCO, should have the power to allow these projects to move
forward, after considering the interests of affected parties.
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