PROVIDENCE – Deepwater Wind has applied to federal authorities to build the largest proposed offshore-wind farm in the United States, a 200-turbine project in Rhode Island Sound.
The 1,000-megawatt project, called the Deepwater Wind Energy Center, replaces a 350-megawatt, 100-turbine proposal that was put forward by the Providence-based company two years ago. Under the new plan, Deepwater would also build an undersea transmission network that would stretch from Massachusetts to New York and connect to multiple states to which the company could sell its power. The wind farm would cost an estimated $4.5 billion to $5 billion, and the transmission system an additional $500 million to $1 billion.
Deepwater submitted an application on Oct. 27 to the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) to lease a 270-square-mile area between Rhode Island and Massachusetts that is the subject of a development agreement between the two states. The wind turbines would rise about 525 feet above the water but would be at least 18 miles from mainland Rhode Island, far enough out to sea that they would be barely visible from land, according to Deepwater.
BOEMRE, an arm of the U.S. Department of the Interior, has authority over the project because it would be located in federal waters. Deepwater planned to announce the new proposal on Wednesday in advance of a federal workshop on Friday with Massachusetts and Rhode Island officials in which the project is expected to be discussed.
Deepwater executives said the company decided to expand the size of its proposal for a number of reasons, including Interior Secretary Ken Salazar’s Nov. 23 announcement that the federal government would expedite permitting for qualifying projects on the East Coast. The first leases to developers could be issued in late 2011 or early 2012.
“The White House and the Department of the Interior are throwing a lot of resources at the permitting process,” Deepwater chief administrative officer Jeffrey Grybowski said. “We want to take advantage of that federal momentum.”
But technological developments were the driving factor in the change in plans. Next-generation turbines that can produce more power are now being built in Europe. Using those machines improves the economies of scale for developers.
“There is this growing realization that the technology is changing fast,” said Deepwater chief executive William M. Moore.
By using more powerful turbines than those envisioned in 2008, Deepwater would be able to triple its wind farm’s capacity while only doubling the number of turbines. Over the last two years, manufacturers have brought 5-megawatt turbines on to the market in place of machines ranging from 3 megawatts to 3.6 megawatts that have typically been installed in Europe and China and are proposed as part of the 130-turbine Cape Wind project in Massachusetts.
On a trip last month to Europe, Moore and other representatives of the company met with manufacturers that have built 5-megawatt turbines and are developing 6-megawatt ones. They include Areva Renewables, of France, and REpower Systems, of Germany, which both have 5-megawatt turbines in operation at the Alpha Ventus project off Germany.
Deepwater is also considering using larger turbines in a demonstration project the company is developing in state waters off Block Island, said Moore. Instead of the originally proposed eight turbines, the company is now looking at installing only five turbines as part of the wind farm planned about three miles southeast of the island.
That project is scheduled to go on line in 2012. It is still awaiting approvals from Rhode Island authorities. Although state regulators signed off on an agreement Deepwater reached with utility National Grid for the sale of power from the wind farm, the contract has been appealed to the state Supreme Court. Objectors have questioned the contract’s high price of power, which is more than double what National Grid pays for energy from conventional sources.
The Deepwater Wind Energy Center would be more cost-effective than the Block Island wind farm, said Moore. That is expected to translate into prices that would be a third lower than the rate of 24.4 cents per kilowatt-hour that National Grid agreed to pay for power from the Block Island project, he said.
The multi-state transmission network would create several potential buyers for Deepwater’s power. Rhode Island is a limited market. It has about half a million customers and is dominated by one utility – National Grid. Massachusetts, Connecticut and New York have more utilities and many more customers. Spreading the power around to multiple markets also ensures that no single state must absorb the higher cost of offshore wind power alone, Moore said.
Although federal agencies would have primary authority over the transmission line, state agencies would have oversight of any interconnections to land. And state regulators would review any proposed power-purchase contracts.
The cost of the 200-turbine wind farm, at up to $5 billion, dwarfs the $1.3-billion price tag of the original 100-turbine project. Although credit markets have yet to fully recover from the recession, Deepwater executives are confident of tying up financing from lenders. They pointed to the recent decision by a group of European commercial banks to lend $1.7 billion for the expansion of a wind farm off Belgium.
Moore also said that “it will only be a matter of time” before more capital partners are brought on board. Deepwater’s primary backer is D.E. Shaw & Co., a global investment and technology-development firm with $20 billion in investment capital as of Oct. 1.
The larger project is not expected to increase the number of jobs – estimated at up to 800 – that would have come with the 100-turbine project. But instead of a two-year construction cycle, the window would stretch to four years or more, guaranteeing construction and assembly jobs for a longer period. Moreover, a larger project would improve the chances that manufacturers of turbines and components would open factories near Deepwater’s staging area in Quonset Point, North Kingstown, said Moore.
The wind farm would be located within Massachusetts and Rhode Island’s “area of mutual interest,” federal waters directly south of Sakonnet Point between Block Island to the west and Martha’s Vineyard to the northeast.
Although the federal government, through BOEMRE, has formally requested proposals in other states, including Delaware and Maryland, it has not issued a so-called request for interest in Rhode Island or Massachusetts. But the agency is accepting unsolicited bids from developers.
One other company, Neptune Wind, of Massachusetts, has submitted a proposal to build a wind farm in the area of mutual interest. According to its website, Neptune is proposing a 120-turbine project with a 360-megawatt capacity.
Deepwater’s turbines would be installed in four phases, with construction starting in 2014. The first 50-turbine phase would go on line in 2015. Subsequent phases would follow in consecutive years.
The proposed project area is irregularly shaped to avoid fishing grounds, shipping lanes and glacial rock formations. Grybowski said the site selection comports with Rhode Island’s recently approved ocean-zoning document, known as the Special Area Management Plan (SAMP). Under the agreement between Rhode Island and Massachusetts, development in the area of mutual interest would be guided by the SAMP.
“They’ve collected a lot of data and we think this is consistent with that data,” he said.Other key offshore-wind proposals in the U.S.
•Cape Wind Associates has won federal approval for a 468-megawatt project off Massachusetts.
•NRG Bluewater Wind has proposed a 350-megawatt project off New Jersey and a project of up to 600 megawatts off Delaware.
•Fishermen’s Energy has proposed two projects totaling 350 megawatts off New Jersey.
•Garden State Offshore Energy, a joint venture between Deepwater Wind and PSEG Global, has proposed a 350-megawatt project off New Jersey.Key points about Deepwater Wind
•Founded in New Jersey; moved its headquarters to Providence in 2010.
•Selected by the State of Rhode Island as its preferred developer of offshore-wind power in 2008.
•Proposes building a five- to eight-turbine demonstration wind farm in state waters near Block Island by 2012.
•Proposes building a 200-turbine wind farm in federal waters in Rhode Island Sound starting in 2014.
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