WARWICK – National Grid wants to buy power for Rhode Island from a land-based wind farm in Maine at a price that is not only competitive with fossil-fuel-fired power plants today but one that is also projected to be lower than market rates in the future.
Under a power purchase agreement presented to state regulators at a hearing Wednesday, National Grid would pay 7.8 cents per kilowatt hour for power from the proposed 48-megawatt wind farm that would be built on Bowers Mountain in Maine’s Penobscot County by a subsidiary of the Boston-based developer First Wind.
The 15-year contract with Champlain Wind does not include any escalator, meaning the price would not increase over time. By comparison, conventional power generators are subject to fluctuations in the prices of fuels.
The total below-market savings for the Bowers project are estimated at $49 million, according to filings with the PUC.
“This is a good project,” Richard Hahn, an energy analyst hired by the state, told the Rhode Island Public Utilities Commission at the hearing. “It has a very attractive price.”
The deal, which requires approval from the three-member commission, follows the announcement last month that National Grid and five other utilities in Massachusetts had secured contracts for 565 megawatts of onshore wind energy from Maine and New Hampshire for prices that also average less than 8 cents a kilowatt hour.
The pacts are seen as validation of long-standing arguments that renewable energy can compete with conventional sources of electricity and offer the type of price stability that coal- or gas-fired power plants cannot.
The agreements, however, raise questions about other renewable-energy projects. In Massachusetts, critics of the Cape Wind project in Nantucket Sound, which negotiated a selling price of 18.7 cents per kilowatt hour, said the deals undermine the economics of offshore wind power.
And in Rhode Island, opponents to Deepwater Wind’s proposed offshore wind farms, have followed suit, asking why the Providence company’s five-turbine project proposed off Block Island was awarded a contract starting at 24.4 cents a kilowatt hour – more than three times the price of the Bowers pact.
“It calls into question some of the previous agreements signed with Deepwater,” Robert Shields, a Narragansett resident and member of a group that opposes the Deepwater project, told the PUC.
Jeffrey Grybowski, CEO of Deepwater, who was not at the hearing, said the contract with Champlain Wind actually does the opposite. In an interview, he said that early land-based wind projects were expensive, but better siting and technology and a more efficient supply chain have helped bring costs down to what they are today.
Similarly, Grybowski said that his company, which is also backed by First Wind, has always argued that the price of power from the Block Island wind farm would always be high because it’s a demonstration project. There are no offshore wind farms in the United States, and the Block Island project is vying to be the first.
It is only with subsequent projects that the price will come down, he said. Grybowski has said that the price for electricity from Deepwater’s larger proposal, in Rhode Island Sound, would be closer to 13 or 14 cents a kilowatt hour.
“We’ll never get to that declining cost curve unless we start somewhere,” he said. “And the Block Island wind farm is where we begin.”
The Bowers wind project is not a certainty. The Maine Department of Environmental Protection turned down Champlain Wind’s permit application, and the company is appealing the decision. Neil Kiely, director of development for First Wind, expressed confidence at the hearing that a permit would be granted.
The PUC did not rule on the Bowers contract. A decision is expected on or before Nov. 4, according to a spokesman for the commission.
Hahn, a consultant with Boston-based La Capra Associates who was hired by the state Division of Public Utilities and Carriers, recommended approval of the contract, as did Jennifer Brooks Hutchinson, a lawyer for National Grid.
“In the company’s view, this represents a good deal for Rhode Island customers,” she said.
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