Deepwater promises power cable to BI

Mon, 09/29/2008 - 5:00am

If all goes according to plan, by 2012 Block Island will have a power cable to the mainland as part of a massive offshore wind farm project officially unveiled Thursday. However, the chief operating officer of the firm awarded the project said the company, New Jersey-based Deepwater Wind, has yet to determine whether the island would be able to draw electricity from the mainland power grid or be limited to buying electricity from the farm.

A panel appointed by Governor Donald Carcieri selected Deepwater as the winning bidder to develop a privately financed $1.5 billion offshore wind farm that aims to provide 15 percent of the state’s electricity needs, or 1.3 million megawatt hours of energy.

At a press conference Thursday Deepwater CEO Chris Brown assured Rhode Islanders that the turbines — to be located 15 to 20 miles offshore — would be virtually invisible from Newport and much of the mainland. However, he made no promises that those on the south end of Block Island would not see the 100 or so turbines that are expected to reach 240 feet into the air with blades of about 206 feet from end to end. But he pledged to work with communities affected.

“We believe communities should not have to choose between their views and the environment,” Brown said.

The final location of the farm has yet to be determined. A group of scientists and researchers at the Coastal Resources Management Council (CRMC) and University of Rhode Island Graduate School of Oceanography are working on an Ocean Special Area Management Plan (SAMP) to identify viable sites and create zones in the ocean suitable for industry, similar to how towns zone areas for residences and industries. The area being studied stretches 20 to 30 miles wide along the entire Rhode Island Atlantic coastline and includes Block Island and Rhode Island sounds.

The SAMP is expected to be completed in 2010 and Carcieri said he wanted permitting for the farm complete by January 4, 2011 — the day he leaves office. Deepwater will need to get approval from the federal Minerals Management Service (if the farm is located in federal waters), the CRMC and likely the Army Corps of Engineers. In addition, the company must reach an agreement with New England ISO, the region’s grid management company. Deepwater COO Chris Wissemann said the company hopes to install the first 50 wind turbines by 2012, and the next 50 by 2013.

Block Island connection

The cable to Block Island will actually come from the wind farm itself, with another cable connecting the farm to the mainland. Wissemann said Deepwater would pay for the installation of the cable to the island, its connection into the island’s grid and not charge the island or Block Island Power Co. (BIPCo) a lease for the cable.

Brown promised electricity delivered at “competitive rates” now available on the mainland where the state’s dominant electric carrier sells electricity for 12 cents a kilowatt-hour. Brown declined to speculate the cost per kilowatt-hour for electricity generated by the wind farm but said, “I can tell you this cable will significantly lower the costs of electricity there.” Electric costs on the island reached as high as 65 cents a kilowatt-hour this summer, giving island ratepayers the dubious distinction of paying the highest rates in the nation.

BIPCo Chief Operating Officer Cliff McGinnes said after the press conference said that he wasn’t quite ready to abandon the idea of the power company running its own cable to the mainland.

“I always say the devil is in the details and we didn’t get the details today,” McGinnes said.

He said much would hinge on whether the cable would be capable of delivering energy from the mainland grid to the island. If so, McGinnes said BIPCo would likely drop plans for its own cable because Deepwater’s timeline would complete the project faster and without the cost to the business or ratepayers.

“I have to think I came away with a pretty good feeling if it all happens,” he said.

Making it happen

To construct the farm Deepwater Wind has pledged that it would construct a regional manufacturing facility in Quonset, and create up to 800 direct jobs with annual wages of $60 million. The Quonset facility would manufacture support structures upon which the turbine and its tower are based and would serve the entire Northeast.

The company would utilize “jacket” type platforms. These four-legged structures, used extensively in the offshore oil and gas industry, can be mounted in deeper water deeper than monopile turbine designs traditionally used for offshore wind farms.

Deepwater will also oversee the construction of a specialty ship that would tow the platforms and turbines into the ocean where final assembly would occur.

Deepwater must still find a supplier for the wind turbines themselves. Brown said that ideally Deepwater would be able to lure a turbine manufacturing company to Quonset. Barring that, Brown said the company has plenty of time to obtain the backordered turbines from a foreign manufacturer because Deepwater still needs to go through the permitting process.

Carcieri and other state officials hailed the announcement of Deepwater’s decision to establish its regional headquarters in North Kingstown.

“We are on the verge of establishing a new industry,” Carcieri said, adding that he hoped Rhode Island would become the “epicenter” of wind farm manufacturing for the Northeast.

The deep pockets

Deepwater’s primary investors are FirstWind, a Newton, Mass.-based major developer of on-shore wind projects in the United States; DE Shaw & Co., a capital investment firm with deep experience in the energy sector with $39 billion to invest; and Ospraie Management, a New York-based asset and hedge fund management firm with a focus on alternative energy markets.

The British newspaper the Guardian reported last month that Ospraie had to liquidate one of its main hedge funds in August after suffering steep losses. Ospraie, according to the article, was partly owned by Lehman Brothers, which has since been purchased by Barclays Bank in England after suffering catastrophic losses.

Lehman Brothers was also the primary investor behind the embattled Cape Wind project proposed for an area off Nantucket.

As far as the financing, McGinnes said that alternative energy is “a hot button issue and they’ll get the money together.”


The state will not finance the Deepwater farm, but will help usher the project through the regulatory process, a process the company has little experience in. To gain experience the company partnered with First Wind, which has built or is planning to build offshore farms capable of providing a combined 200 megawatts.

Deepwater also acquired New York-based Winergy on May 1, 2008. Winergy has a history of proposing large-scale offshore wind farms and then backing out or significantly scaling them down.

In 2002 the Army Corps of Engineers criticized the company’s Permit Compliance Officer, Robert Link, for failing to meet self-imposed deadlines for filing reports necessary to move forward with federal projects.

“He [Link] has been telling me he’ll be submitting in a couple of weeks, and it’s been a couple of months now,” Karen Adams project manager for the U.S. Army Corps of Engineers told the Cape Cod Times.

It would not the last time the Corps criticized the company. When Winergy filed pre-application plans to the Corps in 2003 to build 21 wind farms along the Atlantic Seaboard, the Corps was not impressed.

“There is more detail on Winergy’s website than we have on its application,” Army Corps of Engineers spokesman Larry Rosenberg told the New York Daily News. “We have not received anything other than good intentions.”

Link remains a consultant to Deepwater and its former President Dennis Quaranta is now the director of development for the company’s test site off Plum Island.

Wissemann said Deepwater has since added “professional” staff and was ready to take on a major project.

“We changed the strategy three years ago to deep water that we perceived as more publicly acceptable than near shore,” he said.

But the company — which has never before successfully built an on- or offshore wind farm — drew criticism from the state’s Democratic Party chairman.

“Deepwater wind does not have a corporate office and submitted a bid based on unproved technology,” party Chairman Bill Lynch said in a statement. “Yet Governor Carcieri handed Deepwater Wind billons of dollars of development rights and unprecedented access to Rhode Island’s most previous resources, its coastal waters.”

Carcieri, though, put his full faith in Deepwater.

“They’ve got a great team and I’m confident in them,” he said.