WARWICK, R.I. – Deepwater Wind now expects its five-turbine offshore wind farm planned near Block Island to produce more power than originally projected, resulting in potentially lower prices for consumers, company CEO Jeffrey Grybowski told the state Public Utilities Commission on Wednesday.
Because of improvements in technology in the five years since the PUC approved a power purchase agreement between utility National Grid and Deepwater, Grybowski said that offshore wind turbines now operate more efficiently and capture the wind more effectively, thereby generating more electricity.
That could translate into a slightly lower overall price because of a clause in the contract that stipulates that any power produced over an agreed-upon threshold must be sold to Rhode Island ratepayers at a 50-percent discount. Under the 20-year contract, the price of power in the first year is 24.4 cents per kilowatt hour.
“The impact will be that the first-year price will be lower,” Grybowski told the commission.
The meeting was scheduled to update the commission on the progress of the project, which is on track to be the first offshore wind farm in the United States. It was the first time Deepwater was back before the commission since the approval of the power contract in 2010.
During an hourlong presentation to the commission, Grybowski said that financing for the approximately $225-million wind farm is going smoothly and that the project is set to begin construction this spring, with full operation expected in fall 2016.
He reported that:
French manufacturer Alstom has already fabricated the 15 blades for the five Haliade 6-megawatt turbines that Deepwater has ordered. The turbines will be built in France this year and shipped to Rhode Island early next year.
The design of the steel latticework foundations that the turbines will sit on, known as jackets, was finalized by Louisiana-based Keystone Engineering at the end of 2014. Gulf Island Fabrication, a Houma, La., shipyard with extensive experience in the offshore oil and gas industry, started building the jackets this month, and they will be shipped in pieces to Rhode Island this summer. Specialty Diving Services, of North Kingstown, will also make components for the foundations.
Installation of the jacket foundations will start in July. Each one will take a week to put in place in the project area about three miles southeast of Block Island. A pile will be driven through each of the jacket’s four legs and into the sea floor, to a depth of 200 feet, to anchor the structure. The jackets are designed to withstand a 1,000-year storm.
The 34.5-kilovolt cable that will link the wind farm and Block Island to the mainland will be ordered in the coming months and will be installed in early 2016. It will be buried 6 feet under the sea floor. (According to a separate presentation from National Grid, the cable cost is now estimated at $107 million and will be paid for through a transmission surcharge on Rhode Island electric bills likely starting in 2017.)
Once the foundations and the cable are in place by summer 2016, the turbines will be mounted. They will measure about 600 feet tall and are designed to withstand a Category Three storm.
Grybowski expressed confidence that Deepwater would be able to tie up financing for the massive project in the next few months. The company is backed by D.E. Shaw, an international investment firm with $34 billion in assets as of Oct. 1, 2014, as well as by First Wind, a Boston-based developer of land-based wind farms.
With equity investments in place, Deepwater is now trying to secure construction loans for the balance of the project. When asked during a break in the meeting to detail the percentages of equity and debt, Grybowski declined.
He was also asked about the recent decisions by National Grid and NStar, another utility, to pull out of contracts with Cape Wind – the project proposed in Massachusetts that has long been seen as the frontrunner in the U.S. offshore wind race – because of delays in completing financing.
“We’re well past that stage,” Grybowski said. “We’re in construction now.”
He continued, “Those are legitimate concerns, but every project is very different. You’ll see vessels off the shore of Block Island this summer.”
In regard to the possible price decrease, Grybowski said that, under the terms of the contract with National Grid, the Block Island wind farm was expected to have a capacity factor of 40 percent – that is, its actual output over the course of a year would be 40 percent of the potential output if it operated continuously at its full 30-megawatt capacity.
With advances in technology, the capacity factor has been upgraded to about 47 percent. In northern Europe, where many offshore wind farms have been in operation for years, capacity factors range as high as 49 percent.
Under Deepwater’s contract, the excess over 40 percent must be sold to ratepayers at half price. Although that portion would likely be small, it would bring down the overall 24.4 cent per kilowatt hour starting price of power. Grybowski would not say what the estimated decrease is.
Of course, even at a lower price, the power from the wind farm would still be more expensive than power from conventional sources. National Grid currently pays a blended rate of 10.7 cents per kilowatt hour for power from natural gas plants, nuclear power plants and other sources, including onshore wind farms. And if the Deepwater project produces more power, ratepayers would buy more power at an above-market rate.
But Grybowski said there’s a long-term need to reduce New England’s reliance on natural gas, which has left the region susceptible in recent years to spikes in electric rates.
“We have to diversify our fuel sources,” he said. “We need more wind. We need more solar.”
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