February 2, 2010

Governor Markell gives address at Offshore Wind Forum, calling for state and federal cooperation to bring jobs and clean energy

Thank you. It’s great to be with all of you today. A lot has happened since I had the chance to speak with many of you at the AWEA conference up in Boston. There have been some big announcements as states up and down the East Coast put forth innovative ideas for accelerating the deployment of offshore wind.

Governor O’Malley announced his intention to buy 50 megawatts from the NRG/Bluewater Wind project in Delaware. Governor Patrick announced an MOU for Cape Wind and Governor Baldacci introduced innovative legislation in Maine. New York is moving ahead with its large RFP for a project off Long Island. We’ve also seen recent announcements in Rhode Island, Massachusetts, Virginia, and North Carolina. And, in Delaware, we’re working hard every day to move the ball forward.

Republicans and Democrats in Statehouses across the East Coast are coming to realize what all of you—and folks in Delaware—have understood for a few years: offshore wind presents an incredible economic and environmental opportunity. As we work to create jobs and rebuild our national economy, the rapid deployment of offshore wind has the potential to reinvigorate manufacturing on the East Coast, reduce our national trade deficit, promote energy independence, and significantly reduce greenhouse gas emissions.

The challenge is, that while we’re all working hard, we must work together more closely to ensure that we’re connecting all of the dots.

Delaware is the first state in the nation with a PPA for offshore wind and we have bold ambitions: to be the first state largely powered by renewable sources and eventually export excess offshore wind energy westward; and to establish the state and region as a world center for innovation, research, development, production, and deployment of offshore wind technology. But no State can achieve its vision alone—and without unprecedented coordination these goals will be nothing more than words on a page. To launch an entirely new industry, it will take more than a series of individual projects, speeches, and state initiatives—it will take all of us working collaboratively to build the market demand, supply chain, and infrastructure necessary for sustained growth.

Much of this coordination must come at the state level and Delaware is working hard to form key partnerships. Last year, we worked with Governor Patrick and nine other States on a letter to Congress raising concerns about ensuring that offshore wind and land-based wind were treated equally in climate and energy legislation. A few months ago, Governor O’Malley, former Governor Kaine, and I announced a Mid-Atlantic partnership to work on many of these issues together.

Our States coordinated with former Governor Corzine to work with the Federal Energy Regulatory Commission on the need for Regional Transmission Organizations to ensure that renewable energy transmission infrastructure is factored into their long-term planning as states strive to achieve their RPS goals. Thanks in part to these multi-state efforts, you will hear tomorrow about the progress being made in offshore transmission.

Another key area for collaboration is ensuring that we build sufficient marine vessels, sailing under the American flag, for offshore wind installations. In collaboration with NRG/Bluewater Wind, we’re working with Governor Rendell on a TIGER grant application through the Stimulus Package to support vessel construction in the Port of Philadelphia. As a Plan B, we’re working with Massachusetts to identify other creative sources of financing. We’re also working across the region on standardizing permitting practices and beginning coordination of spatial planning efforts.

These collaborations are all important, but there’s much more work to be done and I’d like to discuss a few areas that are critical to our collective success, specifically creating sustainable market demand; a robust regional supply chain; coordinated spatial planning and scientific research; offshore transmission; and workforce development.

Over the past several months, I have had conversations with many of the leading European manufacturers who made it clear that they will not manufacture in the U.S. unless there is sufficient market demand that justifies developing new facilities. Until then, they will serve the American market from existing facilities in northern Europe.

While we each have our bold individual goals, every state is trying to figure out how to best create this sustainable demand through different models: PPAs, RECs, O-RECs, feed-in tariffs, standard offer pricing, just to name a few. Unlike our respective solar carve-outs in our RPS’s, the regional nature of offshore wind suggests that it is critical that we strive to leverage our individual efforts to create regional demand and common incentives to give developers, manufacturers, and investors alike some consistency and predictability as the industry grows.

To this end, we are working in Delaware and across the region to modernize our renewable portfolio standards to incentivize local generation and make sure that we maximize the economic opportunities from renewable energy without burdening ratepayers.

We are also putting the policies in place to level the playing field for renewable energy. Delaware’s Public Service Commission recently finalized our Integrated Resource Planning (IRP) regulations to require that utilities account for all externality and lifecycle costs when evaluating current and future supply options. This means that instead of comparing 10 cent wind to 6 cent coal, in Delaware we’ll be comparing wind at 10 cents to the real cost of coal at 6 cents, plus health and environmental costs—and help the state make more informed energy decisions. We’ve also passed a series of laws requiring that all new demand must be met first through energy efficiency and renewable energy, before any new fossil fuel generation can be considered.

We also have the opportunity to work collaboratively to piece together the supply chain necessary for the industry to grow in the U.S. Over the past thirty years, our region has lost some of the heavy manufacturing capacity that will be needed for offshore wind manufacturing. We will need to help existing companies seize emerging supply chain opportunities.

We have been inventorying our companies in Delaware and found a surprisingly large number that have the potential to supply the market, companies like Amer Industries, Claymont Steel/Evraz, Philadelphia Gear, Miller Metals, W.L. Gore, and DuPont, but there are also areas that we will need to build regional capacity, in areas like large castings, or recruit new companies to the region. While states will still compete to attract turbine manufacturing, there are also significant opportunities in the supply chain--for every one assembly job there are five jobs creating the components, infrastructure and supporting companies. If we work across state boundaries to strengthen the supply chain, there will be plenty of economic opportunities for all states to benefit.

We can also leverage the research efforts across our region to identify prime areas in the offshore environment where siting makes the most sense—while protecting the marine environment and all that rely in its continued well being. I’ve already directed my team to do just this, but rather than every state undertaking these efforts separately, let’s work to pull together the best research from the Universities of Delaware, Massachusetts, Maryland, North Carolina, Virginia Tech and many others to build a network of the leading thinking across the East Coast, so we can bring the most up-to-date science to bear as we advance our marine spatial planning efforts and seek to understand any potential environmental impacts.

In Delaware, we are fortunate to have some of the leading thinkers in the nation in this area, including our conference chair and University of Delaware Professor Jeremy Firestone, Professor Willet Kempton and Dean Nancy Target. UD’s innovations in composite materials, resource assessment, and offshore wind policy are critical to the State’s efforts. For example, UD recently announced a partnership with Gamesa to test their first offshore machine in realistic conditions, installed in Delaware waters.

As I said in Boston, we, as a nation, must also upgrade our transmission infrastructure to support renewable energy.  Currently, transmission costs increase the total costs of offshore wind to customers and may delay the growth of the industry.  An offshore transmission backbone may provide a solution to this challenge and we need to do the rigorous analysis to determine its feasibility.  This approach should reduce congestion, address concerns about intermittency, and reduce the need for costly storage or backup power solutions--all of which affect the end price to customers. Governor O’Malley and I recently sent a team to meet with the Federal Energy Regulatory Commission members to discuss the need for renewable energy transmission planning. Commission members were supportive and we invite other states to join us in this effort.

And, finally, even though construction is a couple years away, we must begin to prepare the 21^st century workforce for the job opportunities from the offshore wind industry. In Delaware, DelTech, our Technical & Community College, is beginning to work with several companies to develop curricula specific to offshore wind manufacturing, assembly, operations and maintenance that will meet the needs of industry.

To this end last week, I nominated Gary Stockbridge, the President of Delmarva Power & Light to serve as the chairman of Delaware’s Workforce Investment Board. In 2008, Delmarva signed the first Power Purchase Agreement in the nation for offshore wind. And this type of leadership will help shape our workforce development strategy to align with our vision for growing our clean energy economy.

There is much, much to be done by the states, but while we are working together on specific initiatives, creating a robust offshore wind industry in the U.S. will also require bold action from our Federal partners. The Obama-Biden Administration has shown great leadership in their first year. This fall, Delaware had the honor of hosting the nation’s first Offshore Wind Task Force meeting with MMS and the early collaboration among governmental agencies is promising.

Later this month, Governors from up and down the East Coast are meeting with Secretary Salazar. Our message will be simple: while much progress has been made, we need to accelerate the MMS processes. The state teams are doing a great job working on the Requests for Information for the ocean leases, but two to three months is too long for documents to be finalized. If we don’t get these documents out in the coming weeks, we could threaten another year of data collection and delays. We must bring currently developed projects to construction as quickly as possible and pave the way for more projects in the future. We need to ensure that the NEPA process is streamlined and efficient. And we must stop treating offshore wind like offshore oil and gas – the economics are different and the long term consequences of development are certainly different.

Finally, we must work with the White House and Congress to ensure that any energy, climate, or jobs legislation supports the offshore wind industry. We must help ensure access to capital and reduce the cost of capital for early projects, which may well determine their success or failure. We need sufficient funding for research and development, loan guarantees, and stable price incentives through a long-term extension of the production tax credits.

We have our work cut out for us. Developing a clean energy, low-carbon economy will be one of the legacies of this generation—and offshore wind will play a vital role in this transition. We each have a critical role to play, and we need to take action. Citizens in Delaware and across the nation are hungry for the economic and environmental benefits of clean energy. Every day that we delay is another day of dirty power, more emissions, health costs, and missed economic opportunity. I want the efforts that we’ve begun in Delaware to lead our nation towards a clean energy future—and we need your help.

Now is our time. Let’s get to work.