Rhose Island’s renewable-energy suicide

I noticed the other week that Deepwater Wind is looking to renegotiate its contract to supply power from its proposed phase one offshore-wind project. As a veteran developer of wind projects and one who worked on an alternative bid to the Deepwater project, all I want to say is I told you so.

At the time, I ran the numbers with a competing group and came up with a required power price of about 15 cents per kilowatt hour. I was surprised when the state announced a development that could supply power at under 10 cents. We believed at the time it could not be done.

My conclusion at the time was that the state had drunk the development Kool Aid and fallen for the oldest trick in the book. The developer bids a low price and looks to get the state pregnant on the windmill-jobs program. Then the developer announces that it can’t be done at that price and renegotiates a high price. It sounds as if this were a program run by the Pentagon.

The state is desperate for jobs at Quonset, so all the political forces line up behind the developer. Those who get hurt are the ratepayers, who, of course, are Rhode Island citizens. Those who win are the developer and his political minions.

So let’s look at how this will potentially unfold. The developer gets a 30-megawatt project at 25 cents and commits to assembling the turbines at Quonset. Well, say the pols, it is only 2 percent of our entire generation load so let’s give them the contract. The turbines are assembled and the state and unions are hooked.

How many permanent jobs really are going to be created? Well, actually very few are. Everything is made someplace else. The nacelles come from Europe, the towers come from China, the transformers come from Kentucky. Nothing is really built in Rhode Island.

Don’t get me wrong on this, it would be great to have industrial jobs back. The $52 million in federal development money earmarked to make Quonset the offshore-turbine assembly point could be great for the state, but at what cost per permanent job?

Wouldn’t it be better to take that money and reduce the capital-gains tax for all Rhode Islanders rather than putting that money into a few pockets? After the eight turbines are put together, everyone is laid off. So the state is left with zero jobs and a 25-cent power-purchase agreement (PPA). The out-of-state banks benefit, the out-of-state equity benefits and the developer benefits but do the people of Rhode Island benefit? The answer is pretty clear and it is not a pretty picture.

So now, along comes a European company looking to build a manufacturing facility in the United States. It takes one look at the power rates and taxes in Rhode Island and how quick will it be before it says Kentucky, here I come?

The state should rethink the entire program and stop committing renewable-energy suicide. For the sake of a few assembly jobs, this program is mortgaging Rhode Island’s economic future. We already have among the highest tax burdens in the country. Let’s add to that the highest utility rates. The only solution here is to rethink and rebid the project.

We need to get it out of the hands of the state and let National Grid run a bid process that stipulates that renewable energy be cost-competitive with other sources. I know we can find a much lower-cost way to reach our state’s renewable-energy goals and not commit renewable-energy suicide.

By Thomas E. Gebhard

Thomas E. Gebhard is a renewable-energy developer.

The Providence Journal

www.projo.com

28 November 2009

Tags: Wind power, Wind energy

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