Deepwater Wind fully financed

Wind energy coming of age in USA
Fri, 03/06/2015 - 8:30am
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The Deepwater Wind Block Island wind farm project has been fully financed to the tune of $290 million. According to Deepwater Wind's Chief Executive Officer, the financing of the nation’s first offshore wind farm project might also signal a coming of age for alternative wind energy.

“We’re thrilled to reach this milestone and to be moving ever closer to ‘steel in the water,’” said Deepwater Wind CEO Jeffrey Grybowski. “The next year will be a truly exciting time for our project and the growth of the American offshore wind industry as a whole — and it all starts here off Block Island."

“I think it is terrific that they are fully funded and will go ahead with the project,” said Block Island Power Company (BIPCO) President Al Casazza. “I believe that the island will get the cheaper electricity that everyone wants.”

“I think they’re (Deepwater Wind) on the leading edge of it,” said Second Warden Norris Pike, noting that wind energy may be coming of age with the project’s securing of financing. “Once you get one project up and running it can be a domino effect. As opposed to Cape Wind, [which has] been wrapped up in legalities, they’re cutting new ground and showing it can be done.”

While the $2.5 billion Cape Wind project slated for Nantucket Sound is in jeopardy after two major utility companies withdrew from purchasing the proposed wind farm’s power, the smaller Deepwater Wind 30-megawatt five-turbine Block Island wind farm project appears on track for a summer 2016 unveiling. Cape Wind failed to meet a Dec. 31 deadline to secure financing leading to National Grid and Eversource terminating their contracts. Conversely, Deepwater Wind has acquired its requisite approvals, begun construction on some components of the project and more or less stayed on schedule.

It was announced that the Block Island Wind Farm had achieved financial close on Monday, March 2. Funding for the project will be provided by Joint Initial Mandated Lead Arrangers Societé Generale of Paris, France, and KeyBank National Association of Cleveland, Ohio.

“As a former commercial banker, I am impressed by the sources of the financing,” said proponent and island resident Bill Penn. “These are highly regarded international financial institutions and their support attests to the financial viability of the project.”

The $290 million represents the total budgeted amount for the financing of the wind farm project. “We don’t need additional financing — this is everything,” said Grybowski.

The Block Island wind farm project was initially budgeted at an estimated cost of $225 million. The cable, which was first estimated to cost about $60 million to $70 million, will now cost $107 million. The cable will connect Block Island to the wind farm and the mainland.

Supporters say that a benefit of the project may be the fiber optics that will be included in the undersea cable that will be connected to the mainland. In its agreement with Deepwater Wind, the Town of New Shoreham retains its rights to the fiber optics in the cable.

“A huge win will be the fiber optic cable,” said Casazza. “Poor internet access hurts the island in many ways including education, entertainment, business, to name a few.”

“It’s all very positive stuff,” said Pike. “The closer to getting started the better. There will be a lot of benefits. The spinoffs will be phenomenal. More so for the year round economy. It should cut loose a lot of extra money. I think about $200 for every household. It’s got its benefits financially. Plus, it will clean up the environment.”

“I think the commitment for the financing of the wind farm is very good news for Block Island,” said Penn. “We can now be assured that the project will go forward and we will receive the economic and environmental benefits attributed to it.”

One selling point of the project has been that it will benefit the town of New Shoreham by lowering energy costs. BIPCo co-owner Cliff McGinnes, Sr. believes that since the winds are greater on Block Island that there will be an increase in energy output that should benefit ratepayers.

However, Casazza, BIPCo’s president, is stressing caution concerning the potential benefits of the project. “A potential downside to this (project) could be increased development as the increased usage of electricity on Nantucket has demonstrated,” said Casazza. “A second cable had to be installed on Nantucket to meet the additional demand.”

In opposition to the wind farm project, Town Councilor Chris Warfel told The Block Island Times via email that, “The Town severely undervalued this project. The Town should stop referring to this project as a ‘once-in-a-generation opportunity’,” Warfel said. “By that standard, we failed the heirs of Block Island miserably.”

Vocal opponents, like Bob Shield’s Deepwater Resistance, say on their website that the “wind industry cannot be relied upon.” Shields questions the ‘Constitutionality” of the project and has been battling the company in court.

Locally, some argue that the exorbitant cost of the project won’t be offset by its intended return, will be a “blight” on the horizon and burden the town financially for years.

“The process used to arrive at the value, and the people involved were not qualified or made very bad assumptions,” said Warfel, alluding to the way that the town has handled the project. “Once again, the town failed to use expertise readily available and the consequences of this will show up in this year's and subsequent years' budgets.”

"Councilman Warfel has always been opposed to the Deepwater project and has never been willing to acknowledge that many qualified and competent individuals have a different opinion," said Town Manager Nancy Dodge. "As to the reference to the "consequences" being reflected in the town's budgets, I'd simply ask him to elaborate with concrete examples." 

Prior to a special Financial Town Meeting in January (to vote on the bond to refurbish the doctor's house), the Town Council authorized the town’s Finance Director to hold a $350,000 easements option payment from Deepwater Wind in a designated fund. That money is being utilized for improvements to the town’s infrastructure.

“I’m hoping,” said Pike, referencing the project’s unveiling in 2016. “I have my fingers crossed. We’ve heard sabers rattling in the background.” 

The Deepwater Wind Block Island wind farm project will be located in 75-foot deep state waters three miles off the southeast coast of Block Island.