COOS BAY – Whether a wind farm gets built off the coast of Coos Bay depends on Oregon utilities’ willingness to sign on – and so far, the cost of Principle Power’s project has been a deterrent.
In May 2014, Principle Power crossed a huge hurdle, receiving up to $47 million in matching grant funds from the U.S. Department of Energy over four years.
Now, five months remain for the company to prove it’s met certain milestones to get the remaining $40 million. In May, the DOE “will reevaluate the full portfolio” of five proposed projects, said a DOE spokesperson.
“The key milestone we need to meet is to clear an identified path toward a power purchase agreement,” said Kevin Banister, Principle Power’s vice president of business development in the Americas and Asia. “If we don’t get a power purchase agreement or we don’t have a clear path (to one) by May 1, support from Department of Energy would go away and at that point, I think it’s fair to say that … it’s likely that we wouldn’t pursue the project anymore.
“From our perspective, that would be a real shame. This presents a real opportunity for Oregon to get out ahead of the offshore wind project on the West Coast. We’re really bullish about it; we think it’s going to be a big deal over the next couple decades.”
But Oregon utility companies have been hesitant, saying the project is too pricey – a cost that would fall on their customers.
“It’s a demonstration scale project, it’s a small project, so costs are high as they are for all small demonstration scale projects in energy,” Banister said.
“Projects that have above-market costs are always challenging for utilities to integrate into their systems. It’s part of the overall regulatory environment we have around energy. Above-market costs, whether it’s a demonstration project or something else, it’s difficult for utilities to embrace them, and we’ve seen some of that with this project.”
Coos Bay’s state legislators – state Rep. Caddy McKeown and state Sen. Arnie Roblan – sponsored House Bill 2216 this spring, an effort to get the Public Utility Commission to pass the cost of WindFloat-generated electricity to Pacific Power and Portland General Electric customers.
“When I first heard the … amount of money requested originally by Principle Power, I was not surprised that PGE and Pacific Power were going to take offense to that,” Roblan said.
Pacific Power, PGE, Citizens’ Utility Board and Industrial Customers of NW Utilities united to push against the bill – saying it “is not commercially viable.”
“It is unreasonable to require by law that the responsibility for the costs of an RD&D (Research, Development and Demonstration) project is saddled on the backs of the customers of two utilities and not spread across all energy customers in the state,” according to a letter the four entities sent to the House Committee on Energy and Environment this spring.
“Offshore wind is an extremely expensive resource for a select group of Oregon utility customers to pay for. We can buy onshore wind for a fraction of the price. The proposed offshore wind farm would cost 3-4 times what we pay for onshore wind. This is an extremely inefficient and expensive way for utilities to purchase renewable power.”
The bill’s failure led to Gov. Kate Brown forming the WindFloat Pacific Offshore Wind Advisory Committee in August, a committee that’s expected to deliver a report to the governor next month.
Costs are high, for one, because the turbines would float far from shore: 18 miles. The cable connecting the operation to shore “is a disproportionately large cost of the project,” Banister said.
“There are less megawatts to amortize the cost of the cable across,” he said. “It’s purely an economies of scale thing. The same is true with most energy resources.”
The number of turbines also comes into play, which has dropped from five to two or three. But it would be “certainly over $100 million,” he said.
Roblan wants the Pacific Northwest to be at the forefront of renewable energy development – the region is naturally suited for the task – but the cost involved is off-putting for many.
“It has to show that it’s a sustainable prospect, which means they have to get some private funding and power has to come in at a rate that makes it possible for them to continue functioning out in the ocean and pay back the investment,” Roblan said.
“I still look at it as a potential for diversifying the job base in our local area. …But I don’t know if we’re going to be able to overcome the cost factor.”