Who pays to decommission wind turbines?
Credit: By Judy Tierney | The Block Island Times | block-island.villagesoup.com | 21 May 2012 ~~
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If the Deepwater Wind builds its demonstration wind farm off Block Island, how much would it cost to decommission deteriorating or outdated turbines after 20 or 30 years, and where will the money come from to do it? This was the question Mike Hickey posed to the Electric Utility Task Group on Monday.
Speaking as a member of the public, Hickey suggested the town and EUTG calculate those costs independently of Deepwater Wind, and make sure that decommissioning money is allocated from the start.
“The town should take an active role in determining these costs,” Hickey said, cautioning that Deepwater Wind has a responsibility to its shareholders, not to Block Islanders. “This was an organization that allowed a $700-million contract to expire and did not file an annual report,” he said. Stating that few companies survive 20 years, Hickey offered his doubts that Deepwater would still exist in two decades.
For an example, Hickey used the old Jamestown Bridge, which stood for years after being decommissioned before the state finally took it down. The state, he warned, can’t be counted on to take down the wind turbines. “We need to attach [Deepwater’s] parent company, DE Shaw,” he said.
EUTG Chair Barbara MacMullan and member Everett Shorey agreed a study would be a good idea. MacMullan thought the town should be “proactive.” The U.S. Department of Energy has a study on decommissioning costs that they could start with, she said. Citing her experience with the decommissioning of nuclear power plants, MacMullan added that the cost of those was underestimated by a factor of ten.
MacMullan also suggested looking into the role of regulatory agencies, and sending their findings to the Town Council.
Street Light Technology
Task force member John Warfel reported on his investigation of Light Emitting Diode semiconductors (LEDs). Last month Chris Warfel suggested replacing the town’s street lights, which are owned by the Block Island Power Company (BIPCo), with LEDs to reduce power costs.
After speaking with several vendors, John Warfel said LED technology has improved and can last as long as regular lights. BIPCo President Cliff McGinnes and General Manager Dave Milner said they had looked into the LEDs several years ago and came to the conclusion they weren’t worth it because they degraded quickly. Warfel said the technology had changed and quoted one auto dealer who told him he’d saved $7,000 a month after conversion of 73 lights to LEDs.
Chris Warfel, attending as a member of the public, suggested the town or a co-op buy the street lamps from BIPCo and install the LEDs. “Here is an opportunity to value a small asset and see if there is agreement [between the town and BIPCo]”, he said.
McGinnes, sitting in a front row, said: “Send us a letter with a price.”
But owning the street lights would not be a cut-and-dry deal. They would still need to be hooked up to the BIPCo poles and lines, which would entail a rental charge.
Another island resident offered his expertise. Electrician Howell Conant told the group that special equipment is required to service the street lamps and the power company was the only entity on the island that has it. With only 70 street lights in town, he suggested that “no one will go into business to fix it for you. You will have to wait until you have three lights out for someone to come [from the mainland] and do it.” He called town ownership of the street lights, “not practical.”
Asked by MacMullan whether a local electrician might bid on it, Conant said he probably would not.
Shorey clarified that the purchase of the street lamps remained “just an interesting idea.” He pointed out that BIPCo did not include fuel cost adjustments in the pricing of the street lamps, and surmised it costs the company more to operate them now than it did several years ago.
John Warfel said he would look into how much money could be saved if the town purchased the lights.
Block Island Electric Costs Study
Wind power could provide the greatest savings for Block Island electric ratepayers according to an updated study of Block Island electricity costs undertaken by the EUTG. The study was completed in January 2012.
Shorey presented the new data. The greatest savings would be gained, he said, from a Deepwater Wind cable to the mainland. The total cable cost would be $45 million, but only $3 million would come from Block Island. It would yield an annual savings of $2 million and reduce the island fuel charge by 20 cents per kilowatt-hour (kWh).
A residential photovoltaic – solar – system would cost the town $6 million for 1 megawatt of capacity, or about $12,000 per household. Shorey estimated since solar activity would be highest in summer, when demand for electricity is high, the backup diesel generators at BIPCo could still operate smoothly with 1 MW from solar.
On-shore wind energy – a land-based wind turbine —would cost $2.8 million for 0.6 megawatts.
The option with a break-even or lower annual savings would be a standalone cable, as Block Island would have to absorb the total $35 to $45 million cost.
To calculate the figures, Shorey said he looked at the costs to build things (cable, wind farm, PV installations) and then calculated the equivalent of a mortgage payment to pay for them. He compared these to the current fuel charge (recognizing that there have been huge variations in the fuel charge). Typically, he used 4.5 percent and 20 years in the financing assumptions (more or less the municipal borrowing rate – small variations in the rates do not materially affect the numbers).
Summing up, he explained, “This is a simple analysis and ignores lots of things (operating and maintenance costs, inflation, changes in fuel charges, etc.).” But, he added, he also has done complex analyses, and usually the simple ones yield the same results.
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