CEO: Deepwater’s electricity will be competitively priced

Fri, 07/19/2013 - 2:00pm

If Deepwater Wind wins the auction for a lease in federal waters to build a large wind turbine farm, that farm would produce electricity that is less expensive than what will be produced by the much smaller Block Island wind farm project, according to the company’s chief executive officer.

Although actual costs have yet to be determined, Deepwater CEO Jeff Grybowski said that energy produced by a large wind farm in federal waters off the coast of Rhode Island could be sold to an energy supplier such as National Grid for as little as 15 cents per kilowatt hour (kWh).

He said that this price is “one of the most competitive for renewable energy.”

However, National Grid spokesperson David Graves said the federal wind farm was “too far into the future” to determine if National Grid would purchase the electricity generated from that project.

“We support renewable energy,” Graves said. “But we have to look at the best cost for the customer.”

Grybowski said that if the company wins the lease for the larger wind farm, which will be located in federal waters south of Rhode Island and Massachusetts, the next step would be to pursue Power Purchase Agreements (PPAs) with various electricity distribution companies in those two states, as well as Long Island.

For the company’s smaller project proposed on Block Island, it has already signed a PPA with National Grid. Deepwater will sell the electricity produced by its five-turbine, 30 megawatt Block Island wind farm starting at 24 cents per kilowatt-hour.

Graves, however, called the 24 cent cost “more expensive than any other electricity supply we buy.” National Grid was mandated by the state legislature to sign a PPA with an offshore wind developer.

Grybowski said that the reason the Block Island wind farm — meant to be a demonstration for future projects — costs more is because it is smaller.

Grybowski also disagreed with Graves’ statement. He said that some solar power in the state is sold to National Grid for 20 to 30 cents per kilowatt hour.

National Grid purchases electricity from a variety of vendors — ranging from natural gas to nuclear. The cost of that electricity is not made public, said Graves.

However, the costs of all the electricity National Grid buys are reflected in a blended charge to National Grid customers, which is currently 7 cents per kWh.

Part of this charge is comprised of energy produced by less expensive fossil fuels, and the other part is the more expensive renewable energy, said Grybowski. National Grid is required by state law to purchase a certain amount of electricity produced by renewable energy.

It issues request for proposals (RFPs) to purchase this renewable energy, and Grybowski said his company intends to respond to the Grid’s RFP.

If National Grid chose to purchase the electricity generated from the larger wind farm the two energy supplies would remain separate, according to Graves.

Federal Wind Lease

Deepwater is one of nine companies eligible to bid on a lease located in federal waters south of Rhode Island and Massachusetts. Winning the bid would allow the company to build an offshore wind farm of up to 1,500 megawatts (approximately 250 turbines) in this area, said Deepwater CEO Jeff Grybowski. Grybowski noted that the company would not necessarily build the wind farm at the maximum size.

“The good thing about the site is it is within transmission distance of three markets: Rhode Island, Massachusetts and Long Island,” said Grybowski. “Our efforts have been focused on pursuing [Power  Purchase Agreements] in those three markets and working with state governments.”

Grybowski said that this larger project would not be completed until “2018 or later.”

The five-turbine Block Island wind farm is expected to be operational in 2015.

“The timeline for Block Island has not changed,” he said. He added that winning the federal lease would not impact the timeline for the Block Island wind farm project.

The auction for the federal land will be held by the Bureau of Ocean Energy Management (BOEM) on July 31. Up for auction will be 164,750 acres offshore R.I. and Mass. for commercial wind energy leasing.

Grybowski is optimistic that Deepwater will win the lease.

“We’re Rhode Island’s preferred developer,” said Grybowski. “We think that this partnership is critical to seeing any larger projects succeed. That element is an important part as to why we’re here. That gives us a leg up that others don’t have.”

The other eight companies eligible for the auction are: EDF Renewable Development, Inc.; Energy Management, Inc.; Fishermen’s Energy, LLC; IBERDROLA RENEWABLES, Inc.; Neptune Wind, LLC; Sea Breeze Energy, LLC; U.S. Mainstream Renewable Power (Offshore) Inc.; and US Wind Inc.