Tricky political tides challenge East Coast projects
Now there are six, after Maine’s conservative governor successfully squelched one of the proposals in his state. Another East Coast pilot recently suffered a major setback — a setback some local environmentalists have linked to a different Republican governor’s presidential ambitions.
While the East Coast is considered the most likely region for offshore wind to kick off in America, the past year has further proved that developers there face political head winds even trying to build a small-scale test project.
Norwegian oil and gas company Statoil ASA was one of two developers vying to take advantage of the strong winds blowing off Maine’s coast. Like its competitors Principle Power Inc. and Maine Aqua Ventus I GP LLC, Statoil intended to overcome the challenge of deep ocean waters using floating technology and planned on installing four of its 3 MW Hywind turbines near Maine’s Boothbay Harbor.
Because Statoil wasn’t U.S.-based, the developer attempted to woo state regulators by committing to spend at least 40 percent of its capital expenditures in Maine and employ 150 local, full-time workers during construction. And Statoil started off strong, earning the Maine Public Utilities Commission’s approval in January 2013.
But this wasn’t enough to appease Maine Gov. Paul LePage (R), who saw the project as too costly for Maine’s ratepayers. In June 2013, LePage signed legislation allowing Statoil’s primary competitor, the locally grown Maine Aqua Ventus project, to submit a bid to build in state waters after it had missed the initial deadline to apply for ratepayer support.
An Associated Press investigation then revealed in September that the LePage administration considered a far more aggressive tactic to block Statoil’s pilot by forcing significant reductions in ratepayer support for the project (Greenwire, Sept. 23, 2013).
Citing regulatory uncertainty, Statoil opted to back out of the DOE competition in October, a move celebrated by LePage. “The corporation was ambiguous in its commitment to growing Maine’s economy,” the governor said in a statement.
Local company makes good
Statoil has since moved its Hywind operations to the east coast of Scotland. In the meantime, Maine Aqua Ventus, a consortium including the University of Maine and companies Emera Inc. and Cianbro Corp., has been making steady progress with its 12 MW, $120 million project near Monhegan Island and has enjoyed a boost by the Maine governor’s support.
This January, the Maine PUC approved ratepayer support for Maine Aqua Ventus, earning laudatory remarks from the LePage administration — even though the project’s cost to state electricity buyers was only 4 cents lower than Statoil’s proposal (ClimateWire, Jan. 15).
The University of Maine can also boast achieving a landmark for the U.S. offshore wind industry: In June 2013, the university’s DeepCwind Consortium installed the first grid-connected offshore wind turbine in America, a 65-foot-tall prototype of its VolturnUS technology (Greenwire, May 31, 2013).
“The unit has performed very well,” said Habib Dagher, who directs the University of Maine’s Advanced Structures and Composites Center and leads the DeepCwind Consortium. “We’ve had excellent availability throughout the year, even in these winter storms.”
Dagher explained that VolturnUS’s advantage over other floating turbines is its use of concrete rather than steel for its hull, effectively halving construction costs.
“We have concrete locally,” Dagher said. “We have manufacturing plants across the United States that produce concrete structures, concrete bridges … so we can hit the ground running in the U.S. and build these units right now with existing contractors.”
Menacing fog along N.J.
Moving south to a coastline more famous for gambling than for lobsters, some suspect that a second Republican governor has a hand in slowing progress on a New Jersey-based pilot project.
Fishermen’s Energy LLC is attempting to install a 5-turbine, 25 MW pilot project near Atlantic City, N.J. However, the New Jersey Board of Public Utilities recently rejected the developer’s bid to participate in an offshore wind renewable energy certificate (OREC) program, which would have obligated utilities to buy power from the project. Fishermen’s Energy then submitted a motion for reconsideration, which the BPU denied Wednesday. The developer has announced it plans on taking the issue to court and will now file a formal legal appeal with the New Jersey Superior Court’s Appellate Division (ClimateWire, March 21).
On the surface, the decision hinged on a disagreement over the project’s cost: Fishermen’s proposed a price of about $199 per megawatt-hour, but BPU staffers decided a price of $263 per MWh was more realistic. Among other arguments, the BPU claimed that DOE’s $47 million grant was not guaranteed, and without it, Fishermen’s offshore wind farm would become an even greater burden to ratepayers.
“The Board clearly did not see the value in waiting for the Department of Energy to announce its pending decision of awardees,” Fishermen’s spokeswoman Rhonda Jackson said in a statement following last week’s decision.
But some environmental group leaders, including Jeff Tittel of the New Jersey Sierra Club, speculate that Gov. Chris Christie (R) was somehow involved, slashing his government’s ties to renewable energy as he gears up for the 2016 presidential election.
“The concern that I have is that offshore wind is being held hostage by the governor’s national political ambitions,” Tittel told ClimateWire after the BPU’s rejection in March.
Although Christie signed legislation designed to promote offshore wind in New Jersey in 2010, little has been done since to implement that policy.
Other energy developers have also become leery of pursuing the Christie administration’s support for offshore wind. The New Jersey leg of the Atlantic Wind Connection, a planned transmission line initially pitched as a “backbone” that would connect offshore wind to the East Coast grid, has recently rebranded to ensure its survival. Today, AWC CEO Bob Mitchell is selling the New Jersey Energy Link as a line that would reduce congestion in the existing onshore energy grid (ClimateWire, April 17).
All this could suggest that the New Jersey project is out of the running for the DOE grant. But according to Jackson, Fishermen’s Energy has not given up.
“Fishermen’s has a fully permitted project, and we are in an advanced stage of development,” Jackson said in an interview. “The only thing we were really waiting for was the OREC.”
Va. utility rules the waves?
Farther south, in the coal-dependent state of Virginia, the final competitor for DOE funding seems to have avoided gubernatorial politics. Not only that, but the developer is poised to become one of the East Coast’s most important players in the offshore wind industry — if it is genuinely committed to the idea.
If it wins the DOE grant, Dominion Virginia Power, part of the Southeastern power giant Dominion Resources Inc., would use the $47 million to finance a 12 MW, two-turbine pilot on a shallow section of the continental shelf near Virginia Beach. Dominion aims to cut costs by using “twisted jacket” foundations, which are cheaper than conventional offshore wind foundations.
Beyond the pilot, Dominion has made other major investments in offshore wind over the past year, placing the winning $1.6 million bid on 112,800 acres of offshore Virginia property in the Department of the Interior’s second competitive offshore wind lease sale last September (ClimateWire, Sept. 5, 2013). And this February, Dominion announced it intends to bid on nearly 80,000 acres off Maryland’s coast during Interior’s next offshore wind lease sale.
Some environmental groups have had doubts about whether Dominion — a company that today relies heavily on coal, nuclear power and natural gas to rake in revenues — actually intends to pursue offshore wind development in the near future.
“They’ve been talking about building out the wind farms in phases, and we are worried about just too many phases,” said Eileen Levandoski, assistant director of the Sierra Club’s Virginia chapter.
Washington Post columnist Robert McCartney even suggested in a September 2013 piece that Dominion won the Interior lease simply to prevent a different energy developer from infringing on its territory.
But John Larson, Dominion’s director of alternative generation technologies, said the company will meet the Bureau of Ocean Energy Management’s required milestones and submit a construction plan for the Virginia area in fall 2018. However, he added, “You’re probably talking a decade or so before you would potentially have generation in the wind energy area.”
Several offshore wind insiders, who declined to be quoted for this article, suspect Dominion is serious about offshore wind — and a strong contender for the DOE grant. Levandoski also believes that Dominion wouldn’t be pouring so much money into offshore wind if the company didn’t intend to eventually build turbines in the Atlantic.
“There’s all this investment and all this movement and all this incentive,” Levandoski said. “They just have to stay aggressive.”
Larson added that the company is aware of offshore wind’s massive potential. “We realize it is the largest renewable energy resource that is in the Virginia area — there’s nothing that can really compare to it,” he said.