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January 03, 2024 Feature

VII. Renewable Energy

Taylor Stuart, Joshua Robichaud, and Catherine McCarthy

A. New FERC Requirements to Improve Generator Interconnection Process

On July 28, 2023, the Federal Energy Regulatory Commission (FERC) issued Order No. 2023, a rulemaking order, mandating reforms to FERC’s pro forma generator interconnection procedures and pro forma generator interconnection agreements found in Transmission Providers’ Open Access Transmission Tariffs (OATTs). Improvements to Generator Interconnection Procedures and Agreements, Order No. 2023, 184 FERC ¶ 61,054 (2023). Transmission Providers, including independent system operators (ISOs) and regional transmission organizations (RTOs), are required to update their OATTs to incorporate the changes and submit them to FERC in compliance filings or justify how their existing interconnection generator interconnection procedures and generator interconnection agreements satisfy FERC’s new requirements.

Order No. 2023 responds to the significant increase in renewable generation and energy storage development, increases accelerated by state policies promoting renewable generation, continued increases in corporate demand for virtual power purchase agreements to achieve “renewable” or “green” energy targets and federal tax incentives. FERC Commissioner Allison Clements’s concurrence to Order No. 2023 provides details on the recent delays generator developers have experienced in the interconnection process. FERC Order No. 2023 is bipartisan and implements changes designed to achieve efficient and cost-effective integration of renewable generation resources.

FERC Order No. 2023 intends to balance requirements applicable to Transmission Providers to improve the processing of interconnection requests for those renewable energy and energy storage projects likely to achieve commercial operation, on the one hand, with more stringent requirements for generation projects to enter and remain in the interconnection queue to reduce the number of projects in the queue, eliminating projects that are not viable, on the other hand. Order No. 2023 also implements a set of reforms intended to incent the use of new grid and transmission technologies. One significant change relates to the use of a single interconnection agreement for more than one project behind a single point of interconnection.

Order No. 2023 transitions the currently effective pro forma “first-come, first-served” approach to generator interconnection found in many Transmission Providers’ OATTs to a first-ready, first-served cluster model approach to generator interconnection. The “first-ready, first-served” cluster study approach—which is already in place in the PJM market and certain other ISO/RTO markets—is intended to result in more efficient processing of generator interconnection requests. In addition to requiring Transmission Providers to adopt the cluster study approach, another reform affecting Transmission Providers is new penalties for Transmission Providers that miss cluster study deadlines.1 Significantly, these penalties cannot be recovered in transmission rates of investor-owned Transmission Providers. Order No. 2023’s requirements also include increasing financial commitments and readiness requirements for generator developers throughout the cluster study process. For example, interconnection customers will now be required to demonstrate the viability of their projects, and their intention to develop those projects, earlier in the interconnection process.

In addition to ensuring compliance with Order No. 2023, FERC intends to take action on related issues in the near future intended to respond to the proliferation of renewable generation and energy storage resources, including interregional transmission planning reforms, regional transmission planning reforms (currently under consideration in a rulemaking proceeding); transmission incentive reforms; and participant-funding transmission reforms and transmission development reforms (likely focused on cost control related to transmission development).

B. Developments in Offshore Wind

1. Overview

The U.S. offshore wind industry has had an action-packed year, with no shortage of significant legal developments and national headlines. The Department of the Interior’s Bureau of Ocean Energy Management (BOEM), the main federal agency responsible for leasing and permitting energy projects on the U.S. Outer Continental Shelf (OCS), proposed to overhaul and modernize its renewable-energy-program regulations, garnering input from project developers, stakeholders, and other federal and state agencies. The agency has also been working to review more than a dozen pending project applications while simultaneously defending its approvals of the first fully permitted utility-scale offshore wind projects in federal court. Thus far, BOEM has been successful in defending its permits. The Vineyard Wind and South Fork Wind projects offshore Massachusetts and New York have begun offshore construction, with South Fork Wind placing its first steel in the water in late June. The agency appears to have no intention of slowing down—it intends to hold an auction for offshore wind leases in the Gulf of Mexico in August 2023.

In addition to BOEM’s efforts on leasing and permitting, legal issues related to interconnection of offshore wind projects in the United States, transmission planning and cost allocation, and the procurement of power to be produced by them continue to emerge. Interconnection queue backlogs and the need for network upgrades pose significant challenges to developers seeking to interconnect prospective projects. Developers that have entered into agreements with States for the procurement of power have gone back to public utility commissions seeking to renegotiate the price of power following the COVID-19 pandemic, the war in Ukraine, and rising costs associated with inflation.

2. Permitting and Leasing Developments

a. BOEM’s Modernization Rule

Early in the year, BOEM began its efforts to alter the offshore wind regulatory landscape. On January 12, 2023, BOEM announced a proposed rule (the “Modernization Rule”) to modernize its regulations for renewable energy development on the OCS.2 The announcement marked the first time BOEM has substantially updated its renewable energy program regulations since they were first promulgated in 2009 at Title 30, Part 585, 30 C.F.R. §§ 585.100–585.703. The Modernization Rule aimed to harmonize BOEM’s regulations with its current practices and to reflect lessons learned during the industry’s massive growth since 2009.

Much of the Modernization Rule proposed to align Part 585 with BOEM’s current practices in planning, permitting, site assessment, leasing, and project review. This effort includes multifactor auctions and bidding credits, which BOEM deployed in its most recent lease auctions offshore New York, North Carolina, and California in order to bolster domestic supply chain development, labor training, and community benefits. The Modernization Rule would also provide a regulatory anchor for using Project Design Envelopes (PDE) when permitting offshore wind projects. BOEM adopted this approach in 2018, mirroring the European regulatory landscape.3 PDEs allow project applicants to propose a range of design parameters in their project applications, so that agencies can start their permit reviews while the applicant continues to refine the commercial project within the PDE. While PDEs are standard practice now, the Modernization Rule proposed cementing them as a key element of agency practice.

Other portions of the Modernization Rule consider new additions to BOEM’s renewable energy program, including:

  • Establishing a five-year Renewable Energy Leasing Schedule, updated every two years;
  • Eliminating unnecessary requirements for the deployment of meteorological buoys;
  • Increasing survey flexibility by deferring certain geotechnical survey requirements;
  • Focusing financial assurance requirements on estimated decommissioning obligations;
  • Expanding the operating period for a lease;
  • Allowing fabrication of certain project components before submission of a project’s facility design report (FDR) and fabrication and installation report (FIR);
  • Expanding the role of a certified verification agent (CVA) as an independent third-party reviewer of a project’s design, fabrication, and installation.

Industry members, stakeholders, and regulators commented on the Modernization Rule, expressing their views on the most significant regulatory proposal the U.S. offshore wind industry has seen in more than thirteen years. BOEM is expected to finalize the proposed rule in early 2024.

b. Project Reviews and Resulting Litigation

As BOEM seeks to modernize its renewable energy program, the agency continues to review offshore wind project applications and defend its issuance of authorizations to projects that have now begun construction. Dozens of projects have submitted Construction and Operations Plans (COPs) to BOEM for review of their projects pursuant to the agency’s authority under the Outer Continental Shelf Lands Act (OCSLA). For each project, BOEM conducts an environmental review as required by the National Environmental Policy Act (NEPA). BOEM also coordinates with the many other federal and state cooperating and consulting agencies. The overlapping statutory mandates of these agencies creates a complex permitting process, and the permitting timeline for an offshore wind project is still estimated to be eight to ten years from lease issuance to start of construction. Despite BOEM’s increased experience in reviewing project applications, rapid growth of the industry and an increase in the number of applications submitted, coupled with the agency’s finite resources, have prevented shortened permitting timelines from materializing.

However, headlines suggest the federal government continues to make progress on its goal of 30 GW of offshore wind by 2030. Two projects—Vineyard Wind and South Fork Wind—have received all necessary permits and have begun construction offshore Massachusetts and New York. Both projects have faced and continue to face legal challenges to their federal approvals. Most legal claims are related to each project’s impact on endangered species (particularly the North Atlantic Right Whale) and on commercial fisheries. The claimants, who consist primarily of local resident groups and organizations representing the fishing industry, have challenged the legality of BOEM’s regulatory and leasing programs and the environmental reviews conducted and relied upon by federal agencies in issuing each project’s permits and approvals. Thus far, federal courts have rejected these challenges, and the Vineyard Wind and South Fork Wind projects have continued construction.4 BOEM’s recent issuance of a Record of Decision to Orsted’s Ocean Wind Project offshore New Jersey suggests that another wave of litigation is coming.5

c. Leasing

BOEM has also continued to hold auctions for the issuance of new offshore wind leases on the OCS. In 2022 alone, BOEM held offshore wind lease auctions in New York, North Carolina, and California. These auctions resulted in the issuance of thirteen new offshore wind leases—nearly half of all offshore wind leases issued by BOEM since its renewable energy program was created—and more than $5 billion in revenue for the U.S. government. The agency is showing no signs of slowing down. In July 2023, the agency announced that it will hold its first offshore wind lease auction for lease areas offshore the Gulf of Mexico in August 2023.6

3. Offshore Wind Transmission and Interconnection

In addition to permitting and leasing developments, the U.S. offshore wind industry has seen significant legal developments in the areas of transmission and interconnection. On the Atlantic Coast, the PJM Interconnection, L.L.C. (PJM) Tariff includes a transmission planning and cost allocation mechanism—the State Agreement Approach (SAA)—that allows states, individually or jointly, to request PJM to solicit and evaluate on its behalf transmission expansion or enhancement projects that align with defined state public policy goals.7 In late 2020, New Jersey became the first state to use this mechanism to enable the interconnection of its then offshore wind procurement goal of 7.5 GW. Following a roughly eighteen-month process, the New Jersey Board of Public Utilities (NJ BPU) announced the selection of the Larrabee Tri-Collector Solution offshore wind transmission project proposed by Mid-Atlantic Offshore Development (MAOD) and Jersey Central Power & Light Company as well as various other onshore upgrade projects to enable injection capacity.8 MAOD is a joint venture of EDF Renewables-North America and Shell New Energies U.S. Although the state solicited both onshore and offshore transmission solutions, it only selected projects proposing onshore solutions. The NJ BPU estimates that this approach would save New Jersey ratepayers $900 million as compared to an uncoordinated approach, even after accounting for recent cost increases. In April 2023, the NJ BPU announced its intention to conduct another SAA solicitation for projects to interconnection the incremental 3.5 GW of offshore wind generation associated with its now 11 GW procurement goal.9 This solicitation is expected to open in 2023.

Various consortiums of New England states and developers have been exploring coordinated offshore wind transmission solutions intended to serve multiple states and, in some proposals, to cross the Canadian border. In addition to enabling more efficient use of limited interconnection points and development cost savings, these projects are also intended to increase reliability. These transmission proposals remain in the early stages but could gain more traction through the next phase of offshore wind development on the East Coast.

4. OREC Agreements

Most recently, developments in contract negotiations for Offshore Renewable Energy Credits (ORECs) have been the topic of conversation across the industry. In response to unanticipated global inflation, rising interest rates, and supply chain constraints, many offshore wind developers have indicated that their projects—selected through various state solicitations—are no longer financially viable at the awarded prices. Developers with projects selected by Massachusetts and Rhode Island have indicated that they plan to terminate previously awarded OREC agreements with the intent of rebidding the projects at higher prices in future solicitations. Commonwealth Wind, Avangrid Renewables, LLC’s 1.2 GW project selected as part of Massachusetts third solicitation in December 2021, agreed to pay $48 million to terminate its agreement.10 The other project selected by Massachusetts in its third solicitation, Shell New Energies US LLC and Ocean Winds North America’s 1.2 GW SouthCoast Project, is expected to terminate its agreement too. In addition, Rhode Island Energy decided to close its 2023 solicitation without making an award, stating the cost of the only bid that it received was “too expensive.”11 Developers with projects selected by New York and New Jersey have approached the relevant regulators about renegotiating their OREC agreements to address the cost increases that they are experiencing.12 Although pursuing different approaches, each developer cites macroeconomic forces that have eroded the financial assumptions underlying their existing OREC agreements and, in some cases, their inability to attract financing at the previously agreed prices.

In addition to securing clean power, these states have viewed offshore wind development as an opportunity to secure infrastructure, workforce development, and environmental-justice advancements for their state. Therefore, several factors may influence whether states will be willing to renegotiate these contracts.

Notably, New Jersey and New York’s most recent offshore wind solicitation included inflation adjustment mechanisms that allow for adjustments to the OREC agreement pricing based on set formulas and third-party indices. While these mechanisms will be important for future projects, most existing projects do not contain such adjustment provisions. Although offshore wind projects may be able to take advantage of new clean energy tax credits, most OREC agreements require all or a portion of any incremental tax benefits to flow back to the ratepayers of the state. Therefore, from a project economics standpoint, the direct benefit of these clean energy tax credits to some developers is limited.


1. However, FERC did provide for the potential for ISOs and RTOs to recover such penalty amounts from customers given their non-profit status.

2. Renewable Energy Modernization Rule, 88 Fed. Reg. 5968 (Jan. 30, 2023); Renewable Energy Modernization Rule, 88 Fed. Reg. 19,578 (Apr. 3, 2023) (extension of public comment period).

3. Id. at 5979.

4. See Nantucket Residents Against Turbines v. BOEM, No. 1:21-cv-11390-IT, Dkt. No. 130 (D. Mass. May 17, 2023); Seafreeze Shoreside, Inc. v. US Department of the Interior, No. 1-22-cv-11091, Dkt. No. 128 (D. Mass. May 25, 2023).

5. Bureau of Ocean Energy Management, Record of Decision, Ocean Wind 1 Offshore Wind Farm Construction and Operations Plan (July 3, 2023),

6. Final Sale Notice (FSN) for Commercial Leasing for Wind Power Development on the Outer Continental Shelf in the Gulf of Mexico (GOMW–1), 88 Fed. Reg. 47,173 (July 21, 2023).

7. PJM Interconnection, L.L.C., 179 FERC ¶ 61,024 (2022) (order accepting SAA agreement effective April 15, 2022).

8. Press Release, NJ BPU, New Jersey Board of Public Utilities Selects Offshore Wind Transmission Project Proposed by Mid-Atlantic Offshore Development and Jersey Central Power & Light Company in First in Nation State Agreement Approach Solicitation (Oct. 26, 2022),

9. Press Release, NJ BPU, New Jersey Board of Public Utilities Launches State Agreement Approach 2.0 (Apr. 26, 2023),

10. Mass. Department of Public Utilities, First Amendment to Power Purchase Agreement, Termination Agreement and Release to the Power Purchase Agreements the Companies Have Executed with Commonwealth Wind LLC, Dkt. Nos. 22-70/22-71/22-72 (July 13, 2023),

11. Press Release, Rhode Island Energy Not Moving Forward on Sole Bid Received in Most Recent Offshore Wind Solicitation (July 18, 2023)

12. See generally New York and New Jersey offshore wind solicitation websites,;

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Taylor Stuart, Joshua Robichaud, and Catherine McCarthy

This report was prepared in July 2023 and does not reflect developments that occurred between the time of its preparation and publication. Ms. Stuart and Mr. Robichaud are associates at Bracewell LLP in its Washington, DC, office, where Ms. McCarthy is a partner. Thank you to legal assistant Alexandra Zak for her assistance with this report.