The proposal will shed light on what consumers can expect to pay for renewable wind energy generated off the coast of Maine – at least in its developmental stages. The price of wind probably will be well above the price of energy from burning fossil fuels or hydroelectric dams, especially while the technology of offshore, deepwater wind is still being tested.
Initial assessments will be difficult, however, because UMaine has chosen to keep the entire, 100-page document from public view.
So at least for the time being, the public is unable to learn what customers would pay for the electricity or get a sense of the overall economic potential of a venture meant to advance Maine’s standing as a center of research and construction in deep-water ocean energy.
UMaine’s proposal, like a competing bid submitted last winter by Statoil, a Norwegian energy company that also wants to build an offshore wind project, probably will offer power at costs considerably greater than what consumers pay now for electricity.
The prices will quantify the higher costs of offshore wind energy, at least in its developmental stages
The lack of information also makes it impossible for now to compare UMaine’s plan with the Hywind Maine project approved last winter by the Maine Public Utilities Commission. Hywind Maine was proposed by the Norwegian energy company Statoil, and involves a $120 million floating wind turbine project off Boothbay Harbor.
The 12-megawatt Hywind Maine wind park would generate enough energy annually to power roughly 8,000 homes, through a power purchase agreement for 27 cents per kilowatt hour. That’s well above market rates, but the terms also called for Statoil to provide certain economic benefits, tied to job creation and in-state investment.
That didn’t satisfy Gov. Paul LePage, a vocal opponent of wind power. He argued that the rate was too high and the economic benefits were too low. In exchange for allowing a sweeping energy bill to become law this summer, LePage engineered a political maneuver in the waning days of the Maine Legislature. The result was that lawmakers voted to order the PUC to reopen the bid process for offshore wind proposals.
That created a two-month window for UMaine to submit a bid for a project it’s developing, called VolturnUS. The university and its partners submitted the bid last Friday, the deadline for the application.
PUC to review case
In a statement released Tuesday, the university said its proposal is based on a full-scale pilot farm that meets the requirements of the PUC request and on a smaller prototype it is testing off Castine.
“UMaine believes this is a strong proposal from the newly formed Maine-based company Aqua Ventus I, GP LLC – a company formed by Cianbro, Emera and Maine Prime Technologies LLC – to commercialize UMaine’s floating wind turbine technology,” the university said.
The PUC said on Tuesday that the three-member commission will deliberate the case and make a decision by Dec. 31. No date has been set for deliberations.
LePage’s maneuver also prompted Statoil to announce in early July that it was putting Hywind Maine on hold, citing the uncertainty created by the new bidding process. The company said it would re-evaluate the project this fall.
However, it’s unclear when Statoil, or the public, will have more details about what UMaine is proposing. Elizabeth Swain, a consultant in Maine for Statoil, said Tuesday she could not reach company officials in Norway immediately for comment on UMaine’s filing.
In reopening the bid proposal, the PUC set out six broad requirements, beyond electric rates. They include that the bidder has the technical and financial capacity to build and operate the project; that it has experience in the deep-water offshore wind industry; that it will invest in manufacturing facilities in Maine and that it can quantify the economic benefits of the project, such as buying goods from local suppliers.
Documents filed at the PUC typically are put into an online site for public inspection. By law and rule, though, bidders are allowed to designate commercial information as confidential. This is a way to keep business strategies and proposed prices from competitors.
The PUC is authorized to place the information under a protective order and nondisclosure agreements. In this instance, electric utilities and the state’s public advocate will be able to see the documents, but on a confidential basis.
This process allows the utilities and the public advocate to comment on the proposal, as it’s reviewed by the PUC staff. The goal in this instance is to develop the terms of a 20-year contract for the wind power project.
It’s up to the university to make any of the information public, according to Harry Lanphear, a spokesman for the PUC.
“There may be a public version of the document that is put out to comment from the general public,” he said. “It’s too early in the process to determine precisely what type of comment process will occur.”
Statoil launched the world’s first, full-scale floating turbine in 2009, in the North Sea. It was looking to Maine to expand and refine the technology.
The UMaine partners launched a one-eighth-scale prototype of their project in May, off Castine. At full scale, a $96 million project located off Monhegan Island would generate 12 megawatts.
Both projects also are in competition with offshore wind proposals nationally for $50 million in federal energy funds. That decision is expected this winter.
Troubling lack of details
The university’s action caught industry representatives off guard. It seems counter to the intent of the governor and the Legislature, according to Jeremy Payne, executive director of the Maine Renewable Energy Association.
“I was surprised that the university’s application was confidential, from top to bottom,” Payne said. “It doesn’t seem to be the most transparent way. How is the general public, the industry and policy makers to know what to support?”
Payne said he also expects UMaine’s power contract proposal to be well above market rates, which is to be expected for any small-scale project. Commercial scale versions of both VolturnUS and Hywind Maine will be designed to compete with market rates after 2020, their developers say.
The lack of information also was troubling to Martin Grimnes: founder of Harbor Technologies in Brunswick. The company makes composite components for port facilities. Grimnes had met in Norway with Statoil about potential future opportunities in Maine and Atlantic Canada.
“Statoil is a commercial giant that already has committed its muscle to wind,” Grimnes said. “UMaine has done valuable work, and I’m not belittling that; but it’s more research and development.”
The potential synergy between UMaine’s composites research and Statoil’s commercial expertise had been the basis for an earlier partnership between the two parties. That synergy apparently has been lost, at least for now, through the actions of LePage and the Legislature.
But a letter written a year ago this week highlights the level of support that UMaine formerly offered to Statoil.
The letter was sent to the PUC while the agency was reviewing Statoil’s project bid. It was written by Paul Ferguson, the university’s president, Jack Ward, an assistant vice president, and Habib Dagher, director of the Advanced Structures and Composites Center, and a key figure in bringing Statoil to Maine.
“Attracting Statoil is like attracting Apple, GM or Google to Maine,” they wrote.
They noted that Maine was at an economic crossroads, and they set out a case for how one of the world leading oil and gas companies could help commercialize offshore wind in Maine.
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