Maryland waters could be home to some of the nation's first — and by far its largest — offshore wind farms after the state Public Service Commission on Thursday approved ratepayer subsidies to support a pair of projects off the coast of Ocean City.
Officials had been expected to choose one of the two vying proposals, but surprised many by giving both the green light. The two projects — together expected to cost more than $2 billion — would "position Maryland as a national leader in offshore wind energy," the commission said in its ruling.
The decision could dot the Ocean City horizon with wind turbines as soon as 2020 — and add $1 to monthly residential electricity bills once the windmills start spinning.
While the developers face a few more steps, the PSC decision was seen as the last major benchmark the projects had to achieve to become reality. Renewable energy developers say that without the subsidies, their projects would not be financially viable.
The wind farms are expected to prevent emissions of hundreds of thousands of pounds of carbon dioxide and create some 5,000 jobs and $74 million in state tax revenue.
"This decision creates tremendous opportunities for Maryland," commissioner Michael T. Richard said in a statement. "It enables us to meet our clean, renewable energy goals using energy generated within the state while conditioning our approval on holding project developers to their promises of creating jobs and spurring economic growth."
The two companies have until May 25 to accept a set of conditions requiring certain levels of job creation and investment the commission laid out in its decision.
"If built, these wind farms will be truly pioneering facilities, leading Maryland and the nation toward a 21st century economy that combats climate change and creates jobs in droves at the same time," said Mike Tidwell, director of the Chesapeake Climate Action Network.
U.S. Wind, a subsidiary of Italian energy and construction company Toto Holdings SpA, plans to build 62 turbines at least 14 miles off the coast of Ocean City, a $1.4 billion project expected to start operating in 2020.
The company also plans to build $100 million worth of industrial and manufacturing facilities associated with the project in Baltimore County — at or near the Tradepoint Atlantic redevelopment of the former Sparrows Point steel mill.
"For those of us in the industry, it is truly a historic watershed moment to have this decision," said Paul Rich, director of project development for U.S. Wind. "We're ready to get to work."
Skipjack Offshore Wind LLC, a subsidiary of Rhode Island-based Deepwater Wind Holdings LLC, plans a $720 million project including 15 turbines at least 20 miles off the coast, to launch in 2022.
Deepwater is behind the United States' only offshore wind project constructed to date, the five-turbine Block Island Wind Farm off the coast of Rhode Island. There, the island's utility flipped the switch on wind power earlier this month after a symbolic moment of darkness when it shut down its diesel generators.
Skipjack CEO Jeff Grybowski said the company is reviewing the Maryland commission's order and thanked the panel "for the trust that they have placed" in their project.
The utility commission has limited authority over the wind projects — its decision actually gives U.S. Wind and Skipjack the right to sell renewable energy credits, at $132 for each megawatt hour they generate, to help cover their costs.
Utilities and other energy suppliers are required to buy enough of the credits each year for Maryland to meet a goal to have 25 percent of its energy supply come from renewable sources by 2020. Eventually, at least 2.5 percent will have to come from offshore wind.
Some regulatory hurdles remain. Federal authorities such as the Bureau of Ocean Energy Management are expected to review more permit applications for the projects as they move forward.
And there are still concerns in Ocean City that the turbines will be an eyesore.
The developers are required to build the turbines as far from shore as possible — up to 17 miles for the U.S. Wind farm and 24 miles for the Skipjack turbines. U.S. Wind officials have said that on a clear day, their turbines would appear to a person on the beach as about the size of a thumbnail at arms length.
Mayor Rick Meehan said Ocean City officials will press regulators to keep the turbines far from the resort's beaches.
"It appears this visual impact is much greater than what was originally anticipated," he said Thursday. "Wherever we have the opportunity, we will certainly make our case for relocating these particular projects to be further off shore."
Researchers are still studying the potential impacts such projects could have on wildlife, tracking migration patterns of birds such as red-throated loons to see how much they intersect with potential wind farm sites.
Jennifer Mihills, of the mid-Atlantic office of the National Wildlife Federation, said she thinks the projects "can be sited, constructed and operated in a manner that is protective of our coastal and marine wildlife."
If the turbines are built, it would mean realization of an idea former Gov. Martin O'Malley and Maryland lawmakers discussed for years before the General Assembly approved an offshore wind program in 2013. The law passed that year capped costs to ratepayers at $1.50 a month for residential customers, for a total of up to $1.7 billion for offshore wind farm owners over 20 years.
The maximum impact on customer bills from the U.S. Wind and Skipjack projects is estimated to be an increase of $1.40 a month for residential customers and 1.4 percent for commercial and industrial utility customers. Rich said he expects it to be smaller because the projects will mean Maryland won't have to import as much electricity, reducing costs associated with congestion on the power grid.
In approving that 2013 law, state lawmakers decided the costs are worth the environmental and health benefits.
PSC Chairman W. Kevin Hughes said the commission kept cost concerns in mind, stressing it had "taken great care to ensure that this decision maximizes economic and environmental benefits to the state while minimizing costs to Maryland ratepayers."
Among 30 conditions the commission tied to its approval of the projects: Investment of at least $76 million in a steel fabrication plant in Maryland, $39.6 million to help pay for port upgrades at the Tradepoint Atlantic shipyard, and $12 million to the Maryland Offshore Wind Business Development Fund.
Baltimore County Executive Kevin Kamenetz said the projects create an opportunity for the state and the county "to become a national leader in a new American industry."
Aaron Tomarchio, vice president of corporate affairs for Tradepoint, said the developer has been in talks with both Skipjack and U.S. Wind about building an offshore wind industry hub at the former steel mill site.