Deepwater lays out decommissioning plan, gears up for public hearings
Deepwater Wind came to Block Island last week to reassure island officials that it has a solid plan to make sure the five giant turbines it’s planning to install just off the island’s southern coast will be safely removed at the end of their 20-year life span.
The company also said it’s willing to work with the town on the details of the financial plan that would pay for the turbines’ removal, which it estimates will cost $7.5 million.
And it revealed updated dates and figures for the cost of the Block Island Wind Farm. The 30-megawatt farm is now estimated to cost $230 million, up from a $204 million estimate a few years ago. The cable needed to feed its power into the mainland grid is still estimated at $50 million. Construction on both is now forecast to start in early 2014. The windfarm could be completely operational two years from now, by fall 2014, the company says, at which point it would lower the average power bill on Block Island by at least a third and help protect against the price fluctuations that ratepayers currently contend with.
Expect the wind farm to be in the news later this year: Deepwater is in the final stages of its permitting process, and applications to the U.S. Army Corps of Engineers and the R.I. Coastal Resources Management Council will mean reams of public documentation as well as at least one, and possibly several, public hearings. The town has asked CRMC to schedule at least one public meeting on Block Island to make it easy for residents to have their say.
The company is gearing up for a public relations push, and Deepwater President Chris van Beek led the presentation to the town’s Electric Utilities Task Group on Friday, Sept. 21, along with Chief Administrative Officer Jeff Grybowski and Island Liaison Bryan Wilson. The three also met separately with the Block Island Times.
Audience members had questions, primary among them why the company’s estimate of costs is so different from the federal government’s estimate of decommissioning costs for offshore industries. That estimate comes to $15 million, double the $7.5 million Deepwater says it will need, and the EUTG told Deepwater it will expect the company to come up with a good argument for reconciling the two figures.
Van Beek, a 25-year veteran of offshore construction, spent much of his career in the offshore oil and gas industries before signing on with Deepwater two and a half years ago and moving to Providence. A native of the Netherlands, he has managed the installation and removal of both the largest, and the deepest, offshore platforms in the world.
The windfarm will not be a complicated project to dismantle, van Beek forecast. “We design it so it’s easy to remove,” he said.
The turbines are designed to last 20 years, and might run for another five. After that, they’ll be compromised by fatigue, he said. “They’re fatigue machines. We check them every five years for stress, like the wings of an airplane.”
Dismantling the turbines is easier than installing them for a host of reasons, not least because crews don’t have to be so careful with the structures — at that point, there’s no warranty to worry about voiding, he said.
Water jets will cut the steel 10 to 20 feet below the sea bed. “It’s the most environmentally friendly removal of a turbine you can have,” van Beek said. He said he’s used the technology at least 30 times. About 80 feet of piling will remain buried further down in the sea bed.
As for the cable, it should have a life of more like 50 years, van Beek said, and when it comes time to decommission it, the industry standard is to simply cut the 6-inch cable and leave it, as pulling it up from the ocean floor causes more damage than letting it stay in place.
Deepwater will set up a fund that will work much like an escrow account on a private mortgage, said Grybowski. The mechanism for funding it will be worked out as part of hearings with the CRMC.
The account will be funded over time and designed to allow for inflation and a 10 percent contingency fund, so the money wouldn’t be there in full for 20 years.
So the company needs to have a plan to take care of costs if the wind farm suffers damage from extreme weather or vessel strikes before then and needs to be dismantled prematurely. Grybowski said it will be insured by a separate company that would provide “a suite of insurance to cover the life of the windfarm. There’s a great deal of experience in Europe about how to insure offshore wind farms” that the company will turn to.
Asked if the company could run into the same problems as a land-based turbine in Portsmouth, which lost its warranty after the manufacturer went bust and needs prohibitively expensive repairs, Grybowsi said Deepwater will rely on the deep reach of Siemens. The huge international company, one of the largest corporations in the world, has signed on with Deepwater as a partner and will make the turbines for the farm. Siemens will warranty its turbines for 15 years, Grybowski said.
From the audience, Dan Lewis echoed a letter sent by windfarm opponent Michael Hickey that asked the EUTG why DE Shaw, a company that has invested in Deepwater, isn’t providing a guarantee for decommissioning costs. Lewis also wondered who would cover the costs if Deepwater sells the farm.
Grybowski said Shaw is a stockholder, not a parent company, and couldn’t be expected to provide a guarantee. Hickey said later to the Times that regardless, the town should be worried that it doesn’t have any guarantees from a company with deeper pockets than Deepwater.
EUTG member Everett Shorey had concerns about the project being abandoned, leaving a “shell company” behind. “We don’t want to be the last in line” if the project goes bust, he said.
EUTG member Bill Penn said what was important was not any written guarantee, as they can be hard to enforce anyway. He wanted to see a robust system in place to fund decommissioning costs in any eventuality, and said such a system would remain in place whoever owned the wind farm.
Deepwater has offered to pay for the town to get an independent analysis of what decommissioning costs could be, and EUTG chair Barbara MacMullen said the town will be taking the company up on the offer.
She also said she wanted the town to be at the table when the company sits down to work out its decommissioning funding mechanism with CRMC.
The company is watching to see what the government does about wind tax credits due to expire at the end of this year. A recent New York Times article said companies are closing as business drops in anticipation of the tax credit’s expiration, but Deepwater says it’s hopeful an extension will be passed.
“We are in the process of submitting all major permits,” said Grybowski. He said he expects public notices of comment periods and meetings to start in October and the process to wrap up early next year.
The two agencies with the widest oversight will be the Army Corps and CRMC, but the company must also apply to the Town of Narragansett for local permitting for the cable landing and the substation to link the cable to National Grid. “It’s different because they don’t get a direct benefit” from the project, Grybowski told the EUTG. But he said talks are going well and “we had a big breakthrough a month ago.”
The state Department of Environmental Management will weigh in on some water quality issues, and the Federal Aviation Authority will examine whether the turbines could affect flight plans and holding patterns for the Block Island Airport and T.F. Green.
And then there’s National Grid, which will own the power cable. Talks between the two companies are going well, Grybowski said.
Documents should be available at Town Hall and on Deepwater’s website, the company says. The latest photo simulations for what the farm will look like are available at Town Hall now and the company is working on an animation that will show what the windfarm would look like at night.
Van Beek has worked on projects where platforms have been sunk to form underwater reefs. But that is not currently expected to happen in the Block Island project, in which the value of recoverable steel — the turbines are at least 80 percent steel, containing about 1,500 tons of steel each — and copper is expected to more than cover the cost of getting them out of the ocean.
Once permitting is complete, the company will complete its financing and start staging at the port of Quonset in North Kingstown. That will take up most of 2013, Grybowski guesses.
Construction must work around the seasons. The company isn’t allowed to work on the beaches between the May and October vacation seasons, and in the winter, must work around whale migrations and extreme weather. That means on-land work will be best done in winter and maritime work in summer. If the company can start in early 2014, it should be operational that September, but it’s important that it doesn’t miss its window.