Energy Industry Updates For October 2012

FERC Approves First Commercial Wave Energy Project

After more than two years of proceedings, the U.S. Federal Energy Regulatory Commission (FERC) has approved the development of a proposed commercial wave energy project in Oregon. On August 13, 2012, FERC, acting under its authority under the Federal Power Act to license energy projects in navigable waterways and on federal lands, issued an Original License to Reedsport OPT Wave Park, LLC. The issuance caps off more than two years of legal and regulatory wrangling involving not only FERC and the developers of the Reedsport project, but also a host of federal and state agencies.

The first phase of the Reedsport project will involve the installation of one 150 kW wave energy generator 2.5 miles off the coast of Oregon, near the town of Reedsport. After testing of the initial unit, nine additional generators will be installed for a total generating capacity of 1.5 MW. Once the system is connected to the Douglas Electric Cooperative, via 5.5 miles of undersea and underground transmission line, it will become the first commercial wave energy facility in the world. The generators are being developed and manufactured by Ocean Power Technologies, which owns Reedsport OPT Wave Park, LLC and is developing the project.

Because they are built in navigable waters, wave energy projects are subject to many of the same licensing requirements under the Federal Power Act as hydroelectric dams. As a result, they must demonstrate compliance with a wide range of federal environmental, maritime, and agricultural laws and regulations, including approvals from relevant state agencies. FERC's order issuing an Original License to the Reedsport project requires the project developers to monitor and mitigate for harms recognized by the Clean Water Act, the Coastal Zone Management Act, the Endangered Species Act and other laws protecting wildlife, the Magnuson-Stevens Fishery Conservation and Management Act, and several others. The Original License will be valid for 35 years.

FERC's order approving the Reedsport project suggests enthusiasm for wave power technology, stating "The Reedsport Project will demonstrate the potential of an emergent renewable energy industry segment with the goal of bringing clean, competitively priced electricity to commercial and residential customers in Oregon and other states." Reedsport is not the only wave energy project currently under development in Oregon; the nonprofit Oregon Wave Energy Trust has distributed more than $10 million in...