Wind farm options remain up in the air
4/10/10 — A week after the Public Utilities Commission rejected the power contract between Deepwater Wind and National Grid, the future of offshore wind energy in Rhode Island, or near Block Island, remains in limbo.
“We are evaluating our options,” said Deepwater Chief Development Officer Paul Rich Thursday. The company remains committed to Rhode Island and Block Island, he said, but does not currently see “any clear path to reviving [the Block Island wind farm] at this point.”
Rich also said that there is a tight timeline laid down in the enabling law, and “if there are any ways to get things back on track, they need to happen” fast.
Rich will be on island Friday at noon to meet with the Chamber of Commerce at the Fire Barn.
Deepwater had proposed an eight-turbine wind farm for within three miles of Block Island’s southeast shore, with a cable connecting it to the island. A separate cable would have connected the island to the grid on the mainland. In optimal conditions the farm could have provided for all of the island’s electricity needs, with the excess electricity traveling to the mainland. When the wind wasn’t blowing, the cable would have allowed for electricity to flow from the mainland back to the island.
The PUC found that the contracted electricity price of 24.4 cents per kilowatt-hour was too expensive, resulting in Narragansett Electric customers paying $500 million in above-market costs over 20 years for a project that would provide one-tenth of one percent of the state’s needs. (The price Block Island electricity customers would have paid was never established, as they are not National Grid/Narragansett Electric customers.)
The commission, recognizing that Block Island’s electricity costs — which are tied to the price of diesel fuel — are crippling to businesses and residents alike, will open a docket to discuss a cable to the island. The docket will also address the island’s current distribution infrastructure, which suffers a line loss of approximately 13 percent and has also led to surges that disable electronics on the island.
On Thursday, a PUC spokesman Tom Kogut said it remained to be seen whether the commission could compel National Grid to install a cable to Block Island without the wind farm. If Grid is supportive of the concept, he said, then it becomes a cost allocation issue.
The PUC decision to turn down the contract appeared to end the quest for the small demonstration wind farm off Block Island, while leaving in play the larger utility scale wind farm, which would be comprised of more than 100 wind turbines approximately 15 miles east of the island.
Deepwater’s Rich confirmed Thursday that the Joint Development Agreement signed by Deepwater and the governor “is still in place” and “the big project is a piece of that.”
Previously Deepwater argued that it could not build the larger farm without the smaller “Phase 1” farm in place.
Another open question is whether Block Island would get a cable as part of the larger farm project.
According to the JDA, if the smaller farm was not built — but the larger farm is — Deepwater was still obligated to provide a cable to the island, though not necessarily from the farm itself.
Last summer, however, a Deepwater representative said that the enabling legislation, which set the stage for the power agreement and did not obligate Deepwater to provide a cable via the larger project, trumped the JDA.
The historic flooding the state endured in the last week has also bogged down momentum on the wind farm questions. The governor’s office said Wednesday that Gov. Carcieri has been fully immersed in flood issues and has not had the time to address the next step in his drive to establish Rhode Island as the national leader in offshore wind energy.
Block Island Power Company Chief Operating officer Cliff McGinnes Sr., in reaction to the PUC decision, said, “we’re disappointed relative to the cable.”
He said that without the promise of the cable, the company is faced with a slew of capital expenditures in the next few years.
For example, he said, some of BIPCo’s diesel engines will need to be replaced. McGinnes said Caterpillar has offered BIPCo a new state of the art engine, which normally costs $1.2 million, for just under $600,000.
But, he says, “we don’t have the money,” and he doesn’t think the “climate is right” to pursue a rate hike to cover those costs.
BIPCo has five engines; three run during peak demand in the summer, and one runs in the summer.
He’s expecting new Environmental Protection Agency rules that will call on BIPCo to upgrade its exhaust system. BIPCo is also obligated to remove any underground storage tanks by 2015, which will be another large expense, not to mention the $3.5-million distribution upgrade, which the PUC and the town are pushing for.
With so many “balls floating in the air,” McGinnes says it’s “hard to make decisions.”
He also made clear that a municipally owned land-based wind turbine would not be feasible on the island without a cable to the mainland. BIPCo could not handle the excess electricity generated by the turbine, he said.