Deepwater Wind has offered to sell power to Long Island from a 200-turbine offshore wind farm proposed in Rhode Island Sound at a price far cheaper than what the company would charge Rhode Islanders for electricity from a smaller project that would be built first.
Last year in Rhode Island, National Grid signed a 20-year agreement to buy power generated by a five- to eight-turbine wind farm Deepwater wants to build about three miles southeast of Block Island. The starting price paid by Rhode Islanders would be up to 24.4 cents per kilowatt hour.
The price Deepwater offered to the Long Island Power Authority for electricity from the larger project, however, would be in the “low teens,” according to Deepwater chief executive William M. Moore. A price in that range would also be lower than the price of 18.7 cents per kilowatt hour that National Grid agreed to pay for power from Cape Wind, an offshore wind farm planned in Massachusetts.
Moore would not disclose the exact price because it was submitted as part of a closed bidding process, but in an interview Friday he did offer an explanation for why it is so much lower than the price Rhode Islanders would pay for power from the Block Island project.
The main reason is that the Block Island wind farm is planned as the first project of its kind in the United States. Although there are offshore wind farms in Europe and China, none has been built in the United States. The Cape Wind project has the inside track to be first in this country, but it would be different from what Deepwater plans off Block Island, primarily because it would be located in shallow waters.
The Block Island wind farm would be in deep waters far from mainland Rhode Island – though within sight of Block Island – where winds are stronger and concerns over seeing the turbines are reduced. The turbines would be mounted on steel jacket structures, a method that has been used before but is not as common as the monopoles that Cape Wind will use. Deepwater would build only up to eight turbines off Block Island to demonstrate the technology, said Moore.
Because of the small scale, the price is high. The 200-turbine project, known as the Deepwater Wind Energy Center, would use the same technology but would take advantage of economies of scale to lower the price. The costs of developing offshore wind come from staging, construction and installation. When those costs are spread out, the price of power comes down.
Moore and Jeffrey Grybowski, Deepwater’s chief administrative officer, said the demonstration project is still a key part of the company’s overall plan.
“The best chance that we see of getting to large projects in the U.S. is to start off with small projects,” Grybowski said.
The Block Island wind farm has been met with some opposition because of the high price of power. Two local manufacturers have sued to have the power purchase agreement between Deepwater and National Grid overturned, arguing that the price is unreasonable. The Rhode Island Supreme Court will hear the case next Wednesday.
Despite the objections to that project, Deepwater, which is based in Providence, has forged ahead with plans for the Deepwater Wind Energy Center, submitting an application to federal regulators to lease a 270-square-mile area in the ocean between Rhode Island and Massachusetts for the wind farm. The plan was always to offer power from the 1,000-megawatt project to Rhode Island, Massachusetts, Connecticut and New York.
Deepwater responded to a request for bids from LIPA that was not limited to renewable energy suppliers. The power authority is seeking reliable power that it can use whenever it needs it.
Although offshore wind power is an intermittent resource – the wind doesn’t always blow – Deepwater was able to meet the conditions by putting together an offer that also includes bringing in supply from the New England power grid. Under the proposal, Deepwater would build a transmission line from the east side of Long Island with two end points – one at the Deepwater Wind Energy Center and the other at an electrical substation in Somerset, Mass.
When the wind is blowing, Deepwater would supply up to 600 megawatts of power from the wind farm. When it’s not, power would be fed through the substation from the power grid managed by ISO-New England. That power would probably come from fossil-fuel-fired power plants.
If LIPA accepts the offer, it would mean that the majority of the electricity from the Deepwater Wind Energy Center would go to Long Island through the undersea transmission line. The balance could be sold to Rhode Island or another state, presumably at a similar price.
As part of the offer to LIPA, Deepwater also proposes alternatives based on the construction of an offshore wind farm approximately 30 miles south of the western end of Long Island. That project, dubbed the Hudson Canyon Wind Farm, would also have about 200 turbines with a total capacity of 1,000 megawatts and would also have a connection to the power grid that supplies New Jersey.
Deepwater says it could sell power to LIPA from the Hudson Canyon project, the Rhode Island Sound project or a combination of the two. Power from the Hudson Canyon proposal would also be offered to northern New Jersey and possibly New York City.
Deepwater is also a partner in Garden State Offshore Energy, which proposes building a 200-turbine wind farm 16 miles off the New Jersey coast.
Sixteen other bids were submitted to LIPA to supply power. Deepwater expects a decision in the second quarter of next year.
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