Regulators apply brakes to UMaine offshore wind project

Maine Aqua Ventus vows to work with the Public Utilities Commission to get its pilot wind farm moving forward.

HALLOWELL — Longstanding efforts to establish an offshore wind energy industry in Maine suffered a setback on Tuesday, when state utility regulators voted to reopen a previously-negotiated power contract to test a patented technology for deep-water floating wind farms.

Since January, supporters of the University of Maine-led Maine Aqua Ventus project had expressed fear that action by the Public Utilities Commission to alter four-year-old power-rate terms could doom the venture, just as it’s reaching critical stages for financing and permits.

But following the vote, project leaders took a step back. The UMaine professor heading the project, Habib Dagher, expressed confidence that Maine Aqua Ventus could answer questions raised by the PUC commissioners and keep the project moving ahead. In an interview with the Portland Press Herald, Dagher said he had just spoken to officials at the federal Department of Energy, who assured him that a crucial $40 million grant earmarked for the project wasn’t at risk from the PUC’s action.

Maine Aqua Ventus previously had contended that reopening the terms would put at risk $165 million worth of public and private investment. That included the nearly $40 million of that was awarded by the DOE in 2017, following a nationwide competition. Mainers also approved an $11 million bond for to the project in 2010.

Dagher also said recent announcements of giant wind energy projects to be built on conventional towers set in the seabead in Massachusetts and Rhode Island reinforce the potential for the floating technology being pioneered at UMaine. That sense was made clear last week, he said, at an international offshore wind conference he attended in Boston.

“Everyone there recognizes that floating offshore wind is the next big thing,” Dagher said.

The pilot project in Maine involves two wind turbines on specially-designed floating platforms that the university and its partners are preparing to test off Monhegan Island. Construction was expected to begin in 2020.

But in a lenghtly and complex analysis, the three commissioners challenged the legal justifications for going ahead with the current terms and raised many questions about whether the project meets the requirements of the state’s 2009 Ocean Energy Act. They also made a simpler point: This project would raise rates for electric customers, and the current Legislature has sent a clear message not to take actions that do that. It’s the commission’s duty, they reasoned, to take another look at the contract terms.

It was not immediately clear how long the latest review process will take. The PUC is expected to issue a written order in the coming days with a timeline and requests for additional information.

At issue was the higher cost of producing power in the prototype design. The extra cost is expected to work out to roughly 73 cents a month for an average Central Maine Power home customer, in the first year of the project.

This premium had been approved four years ago by the PUC. But at a meeting in January to vote on approving the long-term contract, the terms came under new and unexpected scrutiny. The three PUC commissioners – each appointed by Gov. Paul LePage – voiced concerns that changing factors warranted another look at the above-market rate. Those changes included lower prices for natural gas, shifting partners at Maine Aqua Ventus, uncertainty about where cables would connect to the mainland and evolving offshore wind development in New England.

The price concerns reflected those of LePage and his energy advisers. They noted that power from the 12-megawatt, two-turbine demonstration project would be well above current market prices, roughly 23 cents per kilowatt hour. That would add between $172 million and $187 million to a CMP bill over the 20-year contract period.

Maine Aqua Ventus has stresssed that it’s misleading to compare the cost of a one-off test project with commercial-scale power plants. And it has shown projections from the federal government and others that the cost off floating offshore wind will be competitive with market rates in the near future, when large wind farms are erected.

Dagher also said that Maine Aqua Ventus is always looking for ways to reduce costs, but noted that the rate proposed for the test site is lower than comparable floating projects being planned or built in Europe.

Maine Aqua Ventus had made its case in a 95-page legal brief submitted last winter to the commission. But on Tuesday, PUC Chairman Mark Vannoy refuted many of the arguments in a presentation that lasted nearly an hour. Vannoy’s rebuttal was highly technical, based on case law and previous commission rulings. But to sum up: Much had changed in New England energy market since 2014, and the PUC isn’t legally obligated to approve a power contract based on terms and conditions that also have changed since then.

Some of the change seems to cut both ways.

One economic promise of Maine Aqua Ventus is to manufacture floating platforms in Maine for the fast-growing East Coast wind industry. But Commissioner Bruce Williamson noted that the offshore projects now being proposed in the Northeast are in shallow water, and that interest in deep water, floating projects are in the more-distant future. That could diminish the reason for ratepayers to invest in Maine Aqua Ventus.

Dagher, however, said that large sections of the areas being leased by offshore wind developers in Massachusetts and New Jersey are in deeper water, where there’s an opportunity to use the floating technology UMaine is developing.

“If Maine continues to move forward,” he said, “that will put us in the driver’s seat.”

Tuesday’s action was condemned by the Natural Resources Council of Maine, which has repeatedly tangled with LePage and the PUC over renewable energy.

“The LePage administration’s anti-wind rampage continued today, with his PUC’s decision to renege on its off-shore wind agreement,” said Dylan Voorhees, the group’s clean energy director.

Voorhees noted how global energy giant Statoil withdrew its proposal to begin building floating offshore wind turbines in Maine in 2013, after LePage pushed the PUC to re-visit a power-rate agreement. The company went on to build a floating wind farm off Scotland.

“The legacy of that decision still haunts Maine,” he said, “as we see other countries and states to our south move forward with offshore wind, reaping the resulting economic boost. Instead of beginning to repair the damage from that fateful move, today’s decision is deja vu.”


JUN 12 2018
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