Clean-energy advocates and many business leaders were dismayed last year when the federal Department of Energy passed over Maine for a $47 million grant to help build an experimental floating wind farm. Instead, competitors in New Jersey, Virginia and Oregon won the awards, dashing dreams of kick-starting a multibillion-dollar deep-water wind power industry off the Maine coast.
In hindsight, maybe it wasn’t the worst thing.
Fifteen months later, the three proposals that beat out Maine’s venture are in trouble. Each is stalled because either regulators or utilities have balked at the high cost of building the projects or producing the power. None was able to sign a power purchase agreement for generation by July 31, a condition for getting the $47 million. None can meet a target date of being online by 2017.
Suddenly, it’s possible that if one of the competitors pulls the plug, a project affiliated with the University of Maine, called Maine Aqua Ventus, could get another shot at the $47 million.
The new reality is raising a couple of key questions.
First, might Maine may be better off learning from hard experiences in other states and countries instead of being a pioneer?
Second, can any state reap the potential rewards of offshore wind energy if politicians and ratepayers won’t accept higher power bills early on to develop the technology?
SEEKING NEW DESIGNS
The answers underlie the quest for a cheaper, made-in-America way to generate wind power at sea.
Europe has hundreds of offshore wind turbines, mostly in shallow water on steel towers buried in the sea bed. The Department of Energy is seeking new designs to radically cut the cost of wind energy. One hope is turbines that float far offshore, where the wind is stronger and steadier and where people can’t see or hear them. Maine’s deep coastal waters are a perfect place to test this, and they have attracted interest from global energy companies.
The three DOE demonstration projects, winnowed from seven finalists, are very different. Only one uses a floating technology. But each has hit obstacles that threaten its ability to move forward.
In New Jersey, Fishermen’s Energy is proposing a project off Atlantic City, with five turbines in shallow water on special foundations. But the project has been rejected twice by the state’s Board of Public Utilities, which said the above-market power rates were too costly. An appeal now is at the state’s Supreme Court.
In Virginia, Dominion Resources proposed testing two turbines on foundations far off the coast, in a hurricane-prone area. But the utility announced last spring that the only bid for construction came in at nearly $400 million, almost double what had been projected. It’s now studying how to reduce costs.
In Oregon, the state’s two biggest investor-owned utilities say the electricity from Principle Power’s proposed floating wind farm is too expensive. The WindFloat Pacific design, to be installed in water 1,000 feet deep, was considered Maine’s top competitor for the $47 million grant.
‘A VIABLE SOLUTION’
These projects were selected last spring over Maine Aqua Ventus, which had won a first-round, $4 million grant in 2012. The project is being developed by a for-profit spinoff that represents the University of Maine, Cianbro Corp. and Emera Inc. of Nova Scotia.
In 2013, the partners launched a one-eighth-scale model of a floating turbine off Castine. The unit is made of advanced composite materials that fight corrosion and reduce weight. Its hull is made of concrete, which can be produced in Maine and has a longer life span in the ocean than steel.
The prototype, now back on land, generated a small amount of power and endured extreme sea and wind conditions during its testing. The goal is to use the knowledge to develop a full-size pilot wind farm in deep water off Monhegan Island. It would consist of two turbines, each with a capacity of six megawatts. Based on the availability of wind, the project could generate 43,000 megawatt-hours a year, enough to power 6,000 average homes.
The project won a 20-year power-purchase agreement from the Maine Public Utilities Commission. An average Central Maine Power home customer would pay an additional 73 cents a month, or $8.70 in the first year.
But after the DOE awarded the $47 million grants to the three winners, public interest in Maine Aqua Ventus faded. That could change.
As a runner-up, Maine Aqua Ventus was awarded $3 million to finish design and engineering work on the floating, concrete hull. Jake Ward, UMaine’s vice president for innovation and economic development, said the work has led to refinements in weight, cost and performance.
“The work over the last year has improved our technology,” Ward said. “Having that time to go to 100 percent design has us feeling pretty strongly that this approach is a viable solution.”
Ward’s now waiting to see how the DOE will deal with New Jersey, Virginia and Oregon. Will the deadlines be extended? Could Maine Aqua Ventus be in line for a $47 million grant, if one of the project fails? Those questions were posed by the Maine Sunday Telegram to Jose Zayas, who heads the wind and water power technologies office at DOE and came to Maine when the prototype was launched in 2013. The agency didn’t respond.
A POLITICAL PROCESS
One lesson from the DOE process is that sustained political support and broad public acceptance are essential for deepwater wind energy, which will take many years to develop and needs small, pilot projects with above-market power costs.
That lesson has been learned in Maine.
Until 2013, Maine’s best hope for an offshore wind industry appeared to rest with the Norwegian energy company Statoil. But Statoil was chased out of the state in a political maneuver that has become almost legendary in the energy world.
Statoil had already put a steel floating turbine in the North Sea. In 2011, it proposed a next-stage, 12-megawatt wind farm off Boothbay Harbor, called Hywind Maine. The proposal won approval and a power purchase contract from the Maine PUC. It became the seventh finalist in the DOE’s grant competition, joining Principle Power and Aqua Ventus with floating designs.
But the power contract would have added 75 cents a month to an average home utility bill of $82, which drew the ire of Gov. Paul LePage. He pressured the Legislature into passing a law that had the effect of reopening the PUC bidding process. It also opened a window for Maine Aqua Ventus, which submitted its own proposal to the PUC.
Statoil responded by putting its $120 million project on hold, then pulling out of Maine and redirecting its investment to Scotland.
“Offshore wind will need demonstration projects to move the technology forward,” said Annette Bossler, a wind energy adviser who lives in Bremen and operates Maine(e) International Consulting LLC. “That means that the high cost of such projects has to be accepted by governments, industry and ratepayers.”
The pushback in New Jersey, Virginia and Oregon shows Maine isn’t unique, she said. Politics change, but developers must figure out how to stay on target for the long haul.
Bossler gave a presentation on off-shore wind power last month for the Maine Ocean & Wind Industry Initiative trade group. The sector is dominated by global players who need local partners and resources, and they continue to be drawn to New England. Companies from Germany and the United Kingdom recently picked up federal leases off Massachusetts to test wind farms. Bossler said she expects the Japanese, who are moving fast on offshore wind in their country, to make forays into the region.
Massachusetts remains a draw, she said, despite the apparent demise of Cape Wind, which has been trying for 14 years to erect 130 turbines in the shallow waters of Nantucket Sound. Legal and political wrangling came to a head last spring, when two major utilities backed out of their power-purchase agreements, after Cape Wind sought another extension to start construction. As part of the fallout, the city of New Bedford suddenly is without a tenant at a new marine terminal, built with $113 million in state money. The terminal was expected to support Cape Wind and employ hundreds of people, part of the “supply chain” of equipment and services for wind power.
‘LETTING THE DUST SETTLE’
Cape Wind’s implosion contrasts with what’s happening this summer in neighboring Rhode Island.
There, foundations for Deepwater Wind’s $250 million project are set into the ocean floor, three miles off Block Island and 12 miles from the mainland. It’s America’s first offshore wind farm and the sort of activity that many in Maine yearn for.
But it’s also an apples-and-oranges comparison. In Rhode Island, the turbines are on fixed steel towers in shallow water, using existing technology. The massive steel foundations were built in Louisiana, where the oil and gas industry has experience with offshore rigs, and barged to Rhode island. The power is expensive – 24 cents per kilowatt hour – but will cut rates by 40 percent on Block Island. That’s because the island hasn’t been connected to the grid and has relied on diesel generators.
These distinctions aren’t lost on Paul Williamson, who until this summer headed up the wind and ocean industry trade group. Mainers should view Rhode Island as a learning opportunity, he said, to see how cost savings can be applied to eventual development here. One reason these demonstration projects are so costly, he said, is because the local supply chains to build them don’t yet exist.
Maine’s strong winds and nearness to the Northeast power grid continue to interest global developers. Williamson said he spoke with companies within the past six months. But he said LePage’s handling of Statoil has taught them that Maine’s political environment is too unstable for now.
Beyond Statoil and the faltering DOE process, two other unforeseen events are challenging the economics of offshore wind. One is natural gas prices. They were projected to rise steadily and meet the high cost of deep-water wind, but hydro-fracking and shale deposits have changed the equation. Second is the cost of power from other renewables, namely onshore wind and solar. Both have fallen fast, competing with fossil-fuel generation.
“The interest and desire in offshore wind hasn’t gone away,” Williamson said. “But at this point, it seems like waiting and letting the dust settle may not be such a bad idea for Maine.”
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