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WTO: Ontario’s Domestic-Content Rules Breach Trade Law

The World Trade Organization (WTO) has ruled that Ontario’s domestic-content requirements – a key mechanism under the province’s feed-in-tariff (FIT) program and one that ensures the viability of its wind energy supply chain – violates sections of the General Agreement on Tariffs and Trade 1994.

The WTO upheld claims made by Japan and the European Union (EU) that Ontario’s FIT program unfairly pressures producers of renewable energy to buy goods and services from Ontario-based supply-chain providers.

Ontario requires that wind energy developers – and, by extension, their supply-chain partners – that participate in its FIT program to source at least 50% of wind project content within the province.

Among numerous claims, the EU and Japan alleged that domestic-content requirements equate to a subsidy because “a financial contribution or a form of income or price support” is derived, and, therefore, a benefit is gained. However, the WTO dismissed the subsidy claims.

Canada’s Department of Foreign Affairs and International Trade, in conjunction with the federal government, plans to appeal the WTO ruling.

“The WTO panel ruled that Ontario’s FIT program is a violation of the national treatment obligation under the general agreement on tariffs and trade and the agreement on trade-related investment measures,” says Caitlin Workman, a spokesperson for the Canadian government. “As this is the first time Canada has received a WTO panel ruling arising solely from provincial policy or legislation, the government of Canada will be appealing the decision as requested by the government of Ontario.”

Wind energy advocates say Ontario’s domestic-content requirements act as a magnet to manufacturers, which continue to look at and consider opportunities to invest in Ontario. Recently, REpower Systems, a subsidiary of Suzlon Group said it would build a rotor blade manufacturing facility in Ontario.

“Companies will only make such investments if they are confident in the sustainability of the market and the opportunity to export beyond that market – the investment must make business sense,” says Chris Forrest, vice president of communications and public affairs at the Canadian Wind Energy Association.

“The wind energy industry works to meet all requirements as set out in Ontario,” he adds. “Those requirements have not changed, pending an appeal of the WTO decision.”

 

What’s In Store
For This Year?

Even with the wind energy production tax credit (PTC) extended, only 3 GW to 4 GW of new wind power is likely to enter commercial operation by the end of this year, compared to the approximately 12 GW that came online in 2012, analysts at research firm Industrial Info Resources predict.

In fact, between 8 GW and 8.8 GW of new wind energy generation could reach the construction stage this year, with construction and operations extending into 2014, says Shane Mullins, the firm’s vice president of product development for the power industry.

“An extended PTC puts the onus on wind power developers to quickly revisit and reactivate the project pipeline, which has been on hold for a while as companies focused on completing projects by year-end 2012,” Mullins says. “Projects that could not be completed by year-end 2012 were placed on hold. Now, those projects need to be revived and reviewed for viability.”

According to Mullins, there are many factors that will likely prevent a repeat of last year’s record level of wind project development.

For one, he says, many utilities are ahead of the curve on meeting their state renewable portfolio standards. In addition, many bankable projects that were being developed for a 2013 kickoff were moved into 2012 in order to take advantage of the PTC.

Another challenge is that due to policy uncertainty, many developers and equipment manufacturers slashed staff and placed projects on hold.

“Developers and manufacturers need time to gear up, so the new PTC extension will be largely felt in the second half of 2013 and will not repeat what happened in 2012, when new development dropped sharply in favor of finishing projects that could operate commercially by Dec. 31, 2012,” Mullins explains.

 

Companies Testing
8 MW Turbine

DONG Energy and Vestas Wind Systems have entered into a cooperation agreement on the testing of Vestas’ V164-8.0 MW wind turbine at a test center located in Osterild, Denmark.

According to Vestas, DONG Energy will now collaborate in a number of test activities on the prototype to accelerate the development of the V164-8.0 MW.

Based on the scope of tests being performed on the V164, DONG says it will no longer build a similar test and demonstration project. The company explains that the majority of the tests that had been planned for its demonstration project are included in Vestas’ planned test scope at Osterild.

Vestas expects that the first turbine will be installed and commissioned during the second quarter of 2014. If the test results are positive, there may be interest in further tests and commercial collaboration between the two companies, Vestas notes.

 

Pact Protects
Right Whales

Offshore wind developers and environmental organizations have agreed to a series of voluntary measures to protect the critically endangered North Atlantic right whale, while helping to expedite responsible offshore wind development, in the Mid-Atlantic.

Building upon proposed federally mandated protections, the Conservation Law Foundation, the National Wildlife Federation and the Natural Resources Defense Council, working together with Deepwater Wind, Energy Management Inc. (owner of Cape Wind in Massachusetts) and NRG Bluewater Wind, have drafted a set of protective measures that these developers will voluntarily implement over the next four years in areas designated by the administration as Mid-Atlantic Wind Energy Areas, which stretch from New Jersey to Virginia.

There is broad scientific consensus that the North Atlantic right whale is one of the most critically endangered species on the planet, with a world population estimated between 350 and 400 individual animals. Given its endangered status, additional precautionary measures are needed to enhance the current protections for this species.

The measures outlined in the agreement provide further protections for the North Atlantic right whale, primarily by reducing or avoiding sound impacts from exploratory activities that developers use to determine where to build wind farms, such as the construction of temporary towers that measure weather conditions and underwater surveys that assess the geology just beneath the ocean floor. This is important because acoustic disturbances under the water can disrupt whale communication, safety of migration and feeding.

The agreement reduces the threat to right whales by limiting weather tower construction and certain other activities during the peak migration season, when whales travel through the Mid-Atlantic region between southern calving and northern feeding grounds.

During other times of the year, when the whales frequent the area less, the activities may take place with additional protective measures, such as enhancing real-time human monitoring for whale activity in the site area and restriction of activities to daylight hours when whales can be spotted, the use of noise-reducing tools and technologies, and a lower speed limit for vessels in the area during migration times to avoid ship strikes.

 

BOEM Begins N.C.
Lease Process

The Bureau of Ocean Energy Management (BOEM) has issued a call for information and nominations to gauge the offshore wind industry’s interest in acquiring commercial wind leases in three areas off the coast of North Carolina.

In consultation with the North Carolina Intergovernmental Renewable Energy Task Force, BOEM has identified three areas on the Outer Continental Shelf (OCS) offshore North Carolina where commercial wind energy leasing could take place.

The three call areas are composed of 195 whole OCS blocks and 60 partial blocks, totaling 1,441 square nautical miles. One area is located six miles offshore Kitty Hawk, and two areas are located seven and 13 miles offshore southern Wilmington.

According to BOEM, each of the three call areas has been designed to make available areas that are attractive for commercial offshore wind development while also protecting sensitive habitats and resources and minimizing space use conflicts with activities such as military operations, shipping and fishing.

Site-specific mitigation measures, stipulations or exclusion areas may be developed as a result of future environmental reviews and associated consultations, the agency notes.

In addition, BOEM is publishing in the Federal Register a notice of intent (NOI) to prepare an environmental assessment (EA). Through the NOI, BOEM is seeking public comment for determining significant issues and alternatives to be analyzed in the EA, which will consider potential environmental and socioeconomic impacts associated with issuing commercial wind leases and approving site assessment activities on the lease areas.

 

Statoil’s Project
Moves Forward

BOEM has issued a finding of no competitive interest in an area offshore Maine where Statoil North America has requested a commercial wind energy lease.

The decision clears the way under BOEM’s non-competitive leasing process for Statoil to submit a plan for a pilot project to demonstrate floating wind turbine technology.

The proposed lease area covers approximately 22 square miles, located about 12 nautical miles offshore Maine. It would be the site of a 12 MW pilot project consisting of four offshore wind turbines.

The proposed Hywind Maine project would be the first to use floating offshore wind turbine technology in the U.S. The company has a prototype of a similar turbine in Norway that has been in operation since 2009. Statoil’s Hywind Maine project is among the seven offshore wind projects that received funding from the U.S. Department of Energy in December.

In October 2011, Statoil NA submitted to BOEM an unsolicited application for a commercial wind energy lease in federal waters offshore Maine. As an initial step in the leasing process, on Aug. 10, 2012, BOEM issued a request for interest (RFI) to determine whether there were other developers interested in constructing wind energy facilities in the same area proposed by Statoil.

The RFI also solicited public comment on site conditions and multiple uses within the proposed lease area that would be relevant to evaluating the project and its potential impacts. The public comment period under the RFI closed on Oct. 9, 2012. BOEM received 11 responses to the RFI, none of which expressed a competitive interest in the area proposed by Statoil North America.

Concurrent with the RFI, BOEM also issued a notice of intent to prepare an environmental impact statement that requested comments from the public for the purpose of identifying important issues to be considered.

 

DOC Rules On
Wind Tower Case

The U.S. Department of Commerce (DOC) has issued its final ruling in the antidumping (AD) and countervailing duty (CVD) investigation of Chinese and Vietnamese producers of utility-scale wind towers.

The DOC found that Chinese producers dumped wind towers into the U.S. at rates of between 44.99% and 70.63%, and that these same producers received countervailable subsidies from the government of China at rates of between 21.86% and 34.81%, according to law firm Wiley Rein.

The DOC also found that Vietnamese producers dumped wind towers into the U.S. at rates of between 51.50% and 58.49%.

The case was brought on Dec. 29, 2011, by the Wind Tower Trade Coalition (WTTC), a group of U.S. producers of utility-scale wind towers. The case covers utility-scale wind towers with a minimum height of 50 meters that are designed to support turbines with generating capacities in excess of 100 kW. The case alleges that unfairly dumped and subsidized wind towers from China and Vietnam are materially injuring the U.S. wind tower industry.

This final ruling establishes the final AD and CVD margins in the investigations. Following the publication of the DOC’s final determination in the Federal Register, and an affirmative material injury determination by the U.S. International Trade Commission, the DOC will instruct U.S. Customs and Border Protection to begin collecting cash deposits on entries of utility-scale wind towers at the AD and CVD rates determined.

“These final results are an important step in remedying the material injury already suffered by the U.S. industry and will force the Chinese and Vietnamese producers to compete fairly,” says Alan H. Price, a partner in Wiley Rein’s International Trade Practice and lead counsel to the WTTC.

 

Initiative Includes
Monster Blades

The U.K.-based Energy Technologies Institute (ETI) has invested £15.5 million in a project that aims to build the world’s longest wind turbine blades.

For the project, the ETI will partner with Blade Dynamics to develop and demonstrate the new wind turbine design. As part of the project, the ETI will become an equity investor in the Isle of Wight-based blade developer, allowing the company to grow its workforce by up to one-third in the short to medium term.

Blade Dynamics will construct blades between 80 and 100 meters long, incorporating carbon fiber rather than conventional fiber glass. This compares with the 60- to 75-meter offshore wind blades currently being deployed.

Blade Dynamics’ design and manufacturing processes construct blades through the assembly of smaller, more accurate and easily manufactured component pieces, rather than from extremely large and expensive full-length moldings, the company explains.

The intended end use for the blade technology is on the next generation of 8 MW to 10 MW offshore wind turbines that are currently under development.

The first stage of the project will focus on blade design in collaboration with an unnamed turbine manufacturer. The project will also test detailed design and manufacturing technologies.

The second stage will establish and demonstrate the proposed manufacturing processes on blades designed for a current 6 MW turbine. A design will also be developed for blades for future 8 MW to 10 MW wind turbines. The final project stages are intended to test and verify the prototype blade performance against the predicted performance.

The new blades are expected to enter production by late 2014.

 

Virginia Agency
Seeks Lease

BOEM says it has received an unsolicited request for a research lease in the wind energy area (WEA) off Virginia identified for commercial wind leasing.

The research would inform future renewable energy production within and around the WEA off Virginia. BOEM seeks public input on the research proposal.

Virginia’s Department of Mines, Minerals and Energy (DMME) submitted the request to conduct wind-energy-related research activities, including the installation of two meteorological and ocean monitoring platforms that would collect data on wind velocities, water levels, waves, and bird and bat activities.

BOEM has published a public notice of an unsolicited request for an Outer Continental Shelf research lease, a request for competitive interest, and a request for public comment in the Federal Register in order to obtain public input on the research proposal, its potential environmental consequences and the use of the area in which the proposed project would be located. w

New & Noteworthy

WTO: Ontario’s Domestic-Content Rules Breach Trade Law

 

 

 

 

 

 

 

 

 

 

 

 

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