Article

Several companies want to be the first to develop an offshore wind farm in the U.S.

With plans moving forward in New Jersey and Delaware - not to mention recent progress in Cape Wind's years-long fight in Massachusetts - it's far from certain that Deepwater and Rhode Island will succeed in their quest to be first. And make no mistake, being first is important. For the developer, it means more than just bragging rights. It gives the company a leg up on its competitors as it tries to develop additional wind farms elsewhere. For the state, it means much-needed economic development and valuable green-collar jobs.

For months, Rhode Islanders have been hearing sometimes breathless claims from government and business leaders that the Ocean State will have the first offshore wind farm in the nation. Governor Carcieri has led the refrain, repeating his catchphrase, "Spin, baby, spin," at green energy events across the state.

Despite two crucial developments within four days in June, Deepwater Wind, the startup company selected by the state, still has much to do before it can install more than 100 turbines in the ocean off the Rhode Island coast.

With plans moving forward in New Jersey and Delaware - not to mention recent progress in Cape Wind's years-long fight in Massachusetts - it's far from certain that Deepwater and Rhode Island will succeed in their quest to be first.

And make no mistake, being first is important. For the developer, it means more than just bragging rights. It gives the company a leg up on its competitors as it tries to develop additional wind farms elsewhere.

For the state, it means much-needed economic development and valuable green-collar jobs. The thinking is that whichever state has the first offshore wind farm will become home to a lucrative... more [truncated due to possible copyright]  

For months, Rhode Islanders have been hearing sometimes breathless claims from government and business leaders that the Ocean State will have the first offshore wind farm in the nation. Governor Carcieri has led the refrain, repeating his catchphrase, "Spin, baby, spin," at green energy events across the state.

Despite two crucial developments within four days in June, Deepwater Wind, the startup company selected by the state, still has much to do before it can install more than 100 turbines in the ocean off the Rhode Island coast.

With plans moving forward in New Jersey and Delaware - not to mention recent progress in Cape Wind's years-long fight in Massachusetts - it's far from certain that Deepwater and Rhode Island will succeed in their quest to be first.

And make no mistake, being first is important. For the developer, it means more than just bragging rights. It gives the company a leg up on its competitors as it tries to develop additional wind farms elsewhere.

For the state, it means much-needed economic development and valuable green-collar jobs. The thinking is that whichever state has the first offshore wind farm will become home to a lucrative manufacturing industry that will supply similar developments up and down the East Coast.

The stakes are high. The U.S. Department of Energy estimates the wind generation capacity within 50 miles of the United States coastline to be roughly equivalent to the country's total current electrical capacity. About half the potential wind resources are located off the Northeast and mid-Atlantic coasts.

So if even a fraction of those resources are developed, the company that builds offshore first - and the state where it builds - could reap huge benefits.

"The potential is tremendous," said Bonnie Ram, an offshore wind expert based in Washington, D.C., with the energy consulting firm Energetics. "It's a game of who gets in first. Whoever does will get the advantage."

THE RACE to build the first offshore wind farm in the United States had only one competitor until very recently. In 2001, Energy Management Inc., a company headed by Jim Gordon that developed power plants in Pawtucket, Tiverton and elsewhere in New England, came up with a $1.2-billion plan to install 130 wind turbines in federal waters in Nantucket Sound about five miles from shore.

But any head start that project (known as Cape Wind) once enjoyed has been undercut by legal challenges mounted by powerful opponents, including the Kennedy family, who have fought to protect Cape Cod from what they believe is an ill-conceived development that would destroy views and harm the boating industry.

Cape Wind was followed in 2005 by the Long Island Power Authority, which proposed putting 40 turbines within sight of shore. But with cost estimates skyrocketing and opposition growing, the plan was scuttled two years ago.

In 2006, Bluewater Wind, a firm with international backers, proposed the first project in deep waters far from land. The company wants to put at least 55 turbines 12 miles from the coast of Delaware starting in 2012.

And then last September, Deepwater Wind LLC was selected over six other companies to develop a proposal in Rhode Island. Deepwater, based in Hoboken, N.J., actually came up with two projects.

The smaller of them, a wind farm with five to eight turbines in state waters about three miles from Block Island, is on schedule to be up and running in 2012. The second project, a wind farm with 100 turbines in federal waters at least 15 miles from the Rhode Island coast, would follow by 2014.

The company is not just focused on Rhode Island. In June, the federal Minerals Management Service awarded Deepwater two exploratory leases in New Jersey to test offshore wind. Fishermen's Energy, another fledgling venture, also received a lease in New Jersey. Bluewater received leases in both New Jersey and Delaware.

Other states and companies on the East Coast have come forward with rough plans to develop offshore wind. The Long Island Power Authority has come back with a second plan, this time partnering with Con Edison to install more than 160 turbines 13 miles from shore. Maine could begin testing offshore sites in early 2010. The Southern Company, an electric utility, is applying to put up data collection towers off Georgia and Florida. South Carolina plans to start taking measurements using offshore buoys.

EVEN AS OTHERS have entered the race, Cape Wind can still claim to be leading the pack.

In January, Energy Management received a final environmental impact statement from the federal government and expects a Record of Decision, the last step in the permitting process, by the end of August, according to a spokesman. In May, the company received a composite certificate covering all of the state permits it needs.

In a presentation to the local chapter of the Northeast Sustainable Energy Association in July, environmental consultant Chris Rein, who is heading up permitting efforts for Cape Wind, said construction is expected to start in a year.

But new lawsuits have already been filed against Cape Wind. The decision to consolidate the state permits has been appealed by a number of groups, including a regional planning commission and the influential Alliance to Protect Nantucket Sound, which has battled the project from the beginning. Opponents have promised more legal challenges once the federal Record of Decision comes through.

There are also questions surrounding Bluewater. Although last year the company signed a contract with Delmarva Power - the first power purchase agreement in the nation between an electric utility and an offshore wind developer - Bluewater's parent company, Babcock and Brown, of Australia, was forced into bankruptcy by the global recession. Bluewater is working to line up alternative investors.

Bluewater was one of the companies beaten by Deepwater in the competition to develop a proposal in Rhode Island. Erich Stephens, Bluewater's Rhode Island project manager, left the company in the spring to join Offshore MW, a company developing an offshore wind farm in Germany and looking at options in the United States.

And in April, Jim Lanard, Bluewater's director of strategic planning, resigned to become a managing director with Deepwater. A Deepwater spokeswoman said Lanard was recruited by Deepwater and that she knew of no connection between Bluewater's troubles and his departure.

Although Bluewater has encountered problems, Ram, of Energetics, doesn't believe the company will drop out of the race.

"If they go through this process and get their permits, then money will follow," she said.

DEEPWATER'S proposal has steadily progressed over the past 10 months, with more significant moves recently.

On June 26, Governor Carcieri signed into law a bill requiring National Grid, Rhode Island's main electric utility, to negotiate long-term contracts with renewable energy providers. Such contracts are critical for developers to attract financing because they guarantee a buyer for their power.

The signing was followed on June 29 with the approval of a lease agreement between Deepwater and the state agency that manages the Quonset Business Park in North Kingstown. Under the deal, Deepwater would pay the Quonset Development Corporation $20.7 million over 10 years to use 117 acres in the waterfront business park to manufacture and assemble turbine components for its Rhode Island wind farms and possibly other projects.

Both developments were extremely important for Deepwater, said Paul Rich, the company's chief development officer in Rhode Island. However, they're just two steps on a long path to putting turbines in the water.

The immediate concern for Deepwater is reaching a power purchase agreement with National Grid for the Block Island project. As required by the new energy law, the utility must present a proposed contract to the Public Utilities Commission by Oct. 15 for providing renewable energy to the island.

There is greater uncertainty surrounding the more far-reaching portion of the law: a contract of up to 15 years between National Grid and a developer to supply green energy to the state as a whole. The law only sets the framework for such an agreement. It does not put in place an agreement or guarantee that Deepwater will even be a part of it. In fact, there is no requirement in the law that National Grid must even buy power from only Rhode Island projects.

There are some questions that still need to be answered in regard to such long-term contracts before National Grid can seek proposals, according to a company spokesman. When the utility does open the bidding, Deepwater may have to compete for a contract with Cape Wind and other companies.

Deepwater also needs a host of approvals from state and federal agencies. The company, however, will not apply for any permits until the completion of a comprehensive ocean mapping project to select potential sites for wind farms in Rhode Island. The state Coastal Resources Management Council, the project coordinator, expects to finish the Special Area Management Plan, or SAMP, in August 2010.

Immediately afterward, Deepwater will submit an application for the Block Island wind farm - the smaller of its two proposals - to the Army Corps of Engineers, the lead permitting agency for that project. Rich estimates it will take at least six months for the federal agency to review the application. Deepwater has already consulted with the Army Corps to ensure all the information it needs in its application is ready when the SAMP process is done.

Because the proposed 100-turbine wind farm would be located in federal waters, the Minerals Management Service would have primary oversight for the project. Deepwater could send its application to the MMS at the same time it applies to the Army Corps for the Block Island project, but Rich said the company will likely wait.

In the meantime, Deepwater will work on its facility at Quonset Point. It must carry out environmental assessments of the three parcels it will lease in the state-owned business park. At least one parcel could be contaminated and may need to be capped or require some other type of remediation, said Rich. Deepwater may also need to widen roads to ensure enough room for the transport of unwieldy turbine components.

Public reaction to the plan has so far been muted, perhaps because the majority of Deepwater's turbines will be so far offshore that they should be out of sight from nearly anywhere in Rhode Island.

Rich and other Deepwater executives believe that financing their project will not be a problem, even though credit is tight and developing offshore wind is extremely expensive, as much as 70 percent more costly than land-based wind. The proposal is backed by FirstWind, a developer of three land-based wind farms in the United States, and the D.E. Shaw Group, a global investment firm with $29 billion under management.

It's unclear at this early stage how much of the project will be financed through equity and how much will be borrowed, said Jonathan Goldberg, an analyst with D.E. Shaw. In the case of onshore wind farms, one-third of funding typically comes from equity and two-thirds from debt, according to industry experts.

At a meeting of the Quonset Development Corporation's board of directors in June, Deepwater chief executive Chris Wissemann said the company is already in discussions with potential lenders in Europe who have experience with offshore wind projects and is consulting with them to fine-tune his company's plans.

DEEPWATER representatives say the successful construction of their wind farms in Rhode Island will not just benefit their company's fortunes but will also boost the state's sagging economy.

The company's two projects are expected to eventually create 800 jobs at Quonset. Many will be high-paying union positions. Most, though, will only come when the larger project gets under way.

But those jobs could last well beyond the completion of Rhode Island's wind farms. If Deepwater's proposals in New Jersey move forward, they would be staged at Quonset. The company is also exploring options in New York and Maine.

And Rich believes that the specialized structures needed to place turbines in deep waters far off the East Coast, where winds blow stronger than close to shore, will restrict the number of places where other companies can stage their projects.

Offshore turbines in Europe have typically been placed in shallow waters using monopiles, which, as their name suggests, are single steel towers sunk into the ocean bottom. But monopiles are heavy and costly to produce. At greater depths, it is more cost-effective to put turbines on top of latticework jackets, steel structures that are most commonly used in the offshore oil industry.

A 300-ton jacket would be roughly equivalent in height to a 1,000-ton monopile, according to Bill Wall, Deepwater's vice president for marine construction and operations. Deepwater is considering jackets of up to 160 feet in length.

The technology is largely unproven in the wind energy industry. A two-turbine test project 16 miles off the coast of Scotland in 150-foot deep waters is the only wind farm in the world to use jackets.

There is no place on the East Coast of the United States where jackets are built. If Deepwater starts building them at Quonset, it would make sense for other companies to use its facilities, said Rich.

Quonset could then become a hub for the manufacture, assembly and transport of turbines between Maine and Delaware. It could be, in Rich's words, the "Silicon Valley of offshore wind."

That is what the state is counting on. Andrew Dzykewicz, the state's former energy commissioner, said the offshore wind industry could generate several thousand jobs in Rhode Island over time. Siemens, one of the two leading companies in the world that make offshore turbines, has talked to state officials about coming to Rhode Island.

"People smarter than me say this is a $50-billion industry," he said. "Being out front on this can't be anything but good."

BUT BEING FIRST may not be everything.

The offshore wind race isn't a zero-sum contest, said Laurie Jodziewicz, the manager of siting policy at the American Wind Energy Association, an industry group.

Just because one company is successful doesn't mean others' plans will be derailed. It also doesn't mean that other states will be excluded from growth in the industry.

Jodziewicz said that if offshore wind is anything like the land-based sector, many different manufacturing centers will spring up. Because of the high cost of transporting turbines, it would make sense to build them close to where they will be installed.

Mark Rodgers, spokesman for Cape Wind, said that because of the proximity between Massachusetts and Rhode Island, both states will benefit from either of their projects. Energy Management had considered staging the Cape Wind project at Quonset Point. More recently, the company moved its focus to the Port of Providence and New Bedford. Rodgers sees the competition as regional - New England versus the Mid-Atlantic.

"That's where the first-in-the-nation argument gets a little blurred," he said. "The benefits will spread."

And there's more than enough room in the ocean for many projects, said Rob Propes, Bluewater's Delaware project director.

"This is just the beginning," he said. "We expect multiple wind farms off the coasts of multiple states."

Rich said it will take more than one project to convince manufacturers, banks and insurers - all based in Europe, where the offshore wind industry is thriving - to open factories or offices in the United States.

He points to the setbacks suffered by Cape Wind over the past eight years, saying that project's misfortunes scared Europeans who want to do business across the Atlantic. More than one project must succeed to convince them that the time is right for offshore wind in America, Rich said.

But that doesn't mean Deepwater underestimates the importance of being first.

"What it says to the outside world is, ‘We're serious and we're successful,' " Rich said.

And what if Deepwater loses the race?

That wouldn't change the company's plans to be a major player in the offshore wind industry, Rich said.

"But," he quickly added, "we wouldn't like to be behind anyone else."


Source: http://www.projo.com/news/c...

AUG 16 2009
http://www.windaction.org/posts/21756-several-companies-want-to-be-the-first-to-develop-an-offshore-wind-farm-in-the-u-s
back to top