Offshore Wind Accelerates in New England

EVEN BEFORE THE FIRST OFFSHORE WIND TURBINE IS planted along the coast of North America, a Rhode Island developer has embraced the latest European model for seaborne energy development.

Deepwater Wind has been developing plans for several years for a Rhode Island wind farm that would total about 200 megawatts. Those plans were radically altered with the announcement made late last year of the Deepwater Wind Energy Center. A 1,000-megawatt wind farm project to be built in Rhode Island Sound, the Deepwater Wind Energy Center would be barely visible from the shore. Construction is planned to begin in 2014, with the first wind turbines in operation by the end of 2015.

The company's plan always was to build 15 to 25 miles offshore, far away from land and unseen by potential adversaries, in large measure to avoid the permitting controversies that have dogged developments closer to land. The coastal water of the states of Rhode Island and Massachusetts would be affected by this project. Both states have embraced the concept.

Although company officials avoid discussing the Cape Wind project off Cape Cod by name, the message of that 10-year-long saga has not been lost on other offshore developers. Farther offshore, the issue of aesthetics is solved, but other challenges exist.

"You can't just put in 20 turbines 20 miles offshore to make the economics work," said Deepwater CEO William Moore. "As we looked at it more closely, we realized the best way to do this is with a larger-scale project. And we would be building transmission links between southern New England and eastern Long Island."

Changes in the global wind turbine market and the economies of scale also played into the decision. As the Europeans gain more experience developing and operating offshore wind, costs have come down. Improved technology and greater generation potential from larger turbines were also major factors.

"It's only become clear in the last few months that several of the European turbine makers are willing to sell 5- to 6-megawatt turbines into the U.S. market. Until then, we were looking at the medium-sized turbine in the 3-megawatt range," Moore said. "As we looked at the market, and as we looked at the availability of the larger turbines, we realized we could do this. This is how we get to lower costs."

The Thornton Bank expansion off Belgium, which will be using 6.15-megawatt machines built by Repower, is one of the next generations of offshore European wind developments. The fact that projects of this scale with larger equipment have passed muster with the European financial community gives Moore confidence that this model would succeed in North America. Even the turbine costs of $4,000 to $5,000 per kilowatt can be overcome, Deepwater insists.

There are other challenges, like water depths of from 80 to 150 feet, beyond the limits of monopile supports for turbines built closer to shore. Deepwater has taken a page out of the oil and gas drillers' book and believes it has solved that problem. Deepwater will use a lattice tower that might resemble an oil derrick.

Deepwater Wind has partnerships in place in New Jersey with Public Service Enterprise Group, and in New York with Consolidated Edison and the Long Island Power Authority. Deepwater recently moved its headquarters from New Jersey to Rhode Island because that state is much further along with its plans.

Rhode Island has a head start over many other eastern states that have expressed an interest in offshore wind. Its Special Area Management Plan, or SAMP, which all coastal starts must have, has been completed. The several-years-long study considered all of the different uses of coastal waters and the environmental impacts, and which designated areas would be best for offshore wind development.

This process also gives Rhode Island an advantage with the federal Department of the Interior, which has indicated states with a SAMP will be further along with the permitting process.

Deepwater has filed a lease application with Interior's Bureau of Ocean Energy Management Regulation and Enforcement, the office that was created in the aftermath of the Gulf oil spill and that handles permitting issues formerly guided by the Mineral Management Service. This is the first step of federal review. Task forces are organized at the state level in Rhode Island and Massachusetts.

Deepwater's plans for the small pilot project off Block Island are still in place and have been the source of an ongoing controversy about costs. The project would include the first transmission tie-in between the island and the mainland.

"I think if you talk to others in the industry - builders, turbine suppliers and lenders - they are all in agreement that you're much better off starting with a medium-size or smaller project," Moore said.

Deepwater expects power costs for the Energy Center to be in the mid-teens per kilowatt-hour when completed, assuming federal tax incentives currently in place remain. That's a far cry from the 24.4 cents per kilowatt-hour it was able to negotiate with National Grid for the Block Island project, which will number no more than eight turbines. The island, part resort and part nature preserve, has no electricity connection to the mainland and is served by a diesel-fired power plant.

The first negotiations between Deepwater and National Grid resulted in a contract that was rejected by the Rhode Island Public Utility Commission for not being "commercially reasonable." Enabling legislation that supporters say included more consumer protections was passed by the legislature. A new contract between National Grid and Deepwater was approved by state regulators last year.

Opponents called this an end run around regulators to benefit a single project and sued. "Unchallenged, this law and the accompanying PUC decision set precedent that will only undermine the efforts to build a future for renewable energy in Rhode Island," said the Conservation Law Foundation, which otherwise supports offshore wind.

That case is pending before the Rhode Island Supreme Court, with a ruling expected this spring.

In any case, Deepwater knows the higher prices - spread out over National Grid's entire customer base - won't fly if the cost doesn't come down significantly. In New England, that means competing with natural gas. Moore insists that Deepwater will be able to compete on those terms with a source that is expensive to build in that market.

With generally high power prices, state mandates to acquire renewable energy and a multistate compact to cut greenhouse gases, Deepwater will find out relatively soon if it will get that chance.