Cape Wind, the offshore wind farm famous for its 10-year fight against Cape Cod’s most prominent NIMBYs, will likely be the first U.S. project in federal waters. But there are three smaller pilot projects slated for state waters off Rhode Island, New Jersey and Ohio that are more likely to settle regulatory, permitting and finance issues and start generating electricity sooner.

As Dr. Lorry Wagner, President of the Lake Erie Development Corporation (LEEDCo), put it, “We don’t have the Department of Interior to deal with.”

The most likely first U.S. project will be in New Jersey state waters adjacent to Atlantic City. Fishermen’s Energy, a New Jersey-based consortium of commercial fishing companies that decided in 2007 to join offshore wind instead of fighting it, is the developer.

“The six-turbine project,” said Rhonda Jackson, Fishermen’s Energy Director of Communications, “will be 25 or fewer megawatts.”

“The New Jersey Department of Environmental Protection (DEP) and the Army Corps of Engineers are the permitting agencies,” Jackson said. “We have completed all our permitting on the state level and we are finalizing what we need from the Army Corps. We expect by the end of summer to have permits from them.”

Instead of a power purchase agreement (PPA), Fishermen’s Energy has worked with the state to develop the Offshore Wind Renewable Energy Certificate (OREC) program. ORECs issued by the state will be purchased by electricity distributors from project developers as a means of meeting their state-mandated requirement for offshore wind-generated power. This incentive is expected to provide the necessary extra margin of funding for development.

Construction on the transmission line that will bring the project’s power ashore to Atlantic City is expected to start this fall. ”We expect to have that done off-season so it doesn’t interrupt Atlantic City’s summer [revenue],” Jackson said. “Foundation work will probably be done in the late spring or early summer of 2012, with turbines installed in the summer. If all goes well, the turbines should be spinning by Labor Day weekend.”

Negotiations are being completed on turbines, construction and vessels. Announcements are expected soon.

Aside from the cooperation of regulatory agencies, Fishermen’s Energy has benefited from a favorable public attitude. A July 2009 Zogby/Stockton College survey of residents and tourists found that turbines would leave Atlantic City tourism unaffected. Respondents overwhelmingly saw benefits in offshore wind and associated few negatives with it.

Finally, both Democratic and Republican gubernatorial administrations and environmental groups have backed the project. “They really like the idea of starting with a pilot project,” Jackson said. It will control costs and impacts and produce data upon which future development can be based.

If Atlantic City is not first, Deepwater Wind’s five to six turbine, 30-megawatt Rhode Island project three miles off Block Island likely will be.

The developer won a victory in Rhode Island’s Supreme Court July 1 when its state Public Utilities Commission-approved power purchase agreement (PPA) with New England power-provider National Grid was upheld.

Opponents argued that the capped $0.24 per kilowatt-hour rate put an undue burden on ratepayers by adding an average $1.35 per month per household to carry the $250 million capital investment. It is estimated the project will bring the state $100 million in economic activity as well as 200 construction jobs and many permanent jobs.

Construction is announced for 2012 with operation expected the following year. A new transmission system capable of carrying the Block Island project’s power to the New England grid is already being built.

In Ohio, LEEDCo’s Wagner is not as concerned with being first in the country as with being first in the Great Lakes region. Atlantic and Great Lakes offshore wind are two different types of resources and markets, Wagner said.

“We all have our challenges,” Wagner said of the Lake Erie project. “Right now, we’re looking at the end of 2013 for the project to be completed, but that’s pretty aggressive. The Army Corps of Engineers, the Ohio Department of Natural Resources and U.S. Fish and Wildlife have been really collaborative,” Wagner added.

Ultimate wind capacity potential on the U.S. side of the lake is “something on the order of 50 gigawatts,” Wagner said, but “if we could get ten, we’d have a very vibrant industry here.”

LEEDCo’s pilot project will have five to eight turbines with an installed capacity of 20 to 30 megawatts. “It’s going to be about seven miles offshore,” Wagner said, but “flexibility moving forward” is still necessary.

“At this point, we have an option for a submerged land lease for the pilot project, we’re in the middle of doing some of the permitting work and we’re working on a power purchase agreement.”

The biggest challenge Wagner foresees is getting construction vessels to Lake Erie. The first Atlantic projects are likely to be built with adapted offshore oil industry vessels, but “the vessels that may be available in the Atlantic or the Gulf of Mexico do not fit through the St. Lawrence Seaway.”

On the other hand, LEEDCo does not yet know what kind of foundations its offshore wind turbines will require. “Once we determine that,” Wagner said, “then we can determine logistics and shipping considerations.”

Wagner said some maritime operators have speculated about building vessels that could do work in the Atlantic and yet fit through the St. Lawrence Seaway. But “nobody has said, ‘We’re starting,’” Wagner laughed, “and until that happens, nobody is going to put in an order for a vessel.”