Wind farm questions begin at BIRA

Mon, 08/24/2009 - 4:00am
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08/22/09 - Members of the Block Island Residents Association were treated to a windfall of sorts Saturday, with three presentations about wind energy, including a focus on a proposed wind farm off the coast of the island.

Deepwater Wind CEO Bill Moore spoke, as did Gary Gump, who spearheaded Portsmouth’s effort to install a municipal turbine that is on the way to providing for all of that town’s municipal energy needs.

Also on hand was Prof. Lefteris Pavlides, who presented his wind energy survey to the group.

Moore’s presentation especially engaged the room, and there was a healthy, if at times heated, exchange about the details of the planned wind farms. Many questions were raised, but not all of them answered. The Block Island Times sat down with Deepwater this week to gain further clarification about the company’s current plans.

Deepwater is now proposing to install eight turbines, each capable of producing 3.6 megawatts of electricity, just inside the 3-mile state limit southeast of Block Island.

The farm would be able to generate 28.8 megawatts of electricity.

Moore said Saturday that the recent core sampling — eight holes at $250,000 per hole — demonstrated that the proposed jacket towers could stand in the area, despite the rocky conditions left over from glacier activity.

Each machine, with its blade extended to full height, would be 450 feet tall, Moore said. For comparison, the core sample barge recently parked off the island was 150 feet off the water.

Block Island’s demand is approximately 1 megawatt in the winter, and just below 5 megawatts in the summer.

On average the island would receive 20 percent of the electricity produced by the farm; the remaining 80 percent would go to the grid on the mainland

Block Island would receive on average 90 percent of its power directly from the wind farm. (The generated electricity would not travel to the mainland and then back to the island, as some on Saturday thought.)

There would be times in the summer, however, when the wind is not blowing hard and the demand on-island is high, that Block Island Power Co. would have to draw power through a cable from National Grid to supplement the wind farm.

Recently passed state legislation says that the farm must be capable of consistently producing 10 megawatts of power. So why is Deepwater installing 28.8 megawatts? According to Deepwater’s Andres de Lasa, the wind will not always blow hard enough to get peak performance from the turbines, therefore Deepwater requires more machines to maintain that 10-megawatt obligation.

On Saturday, David Lewis asked Moore about the capacity of the proposed cable to the mainland. Lewis was concerned that if the cable had the ability to carry more electricity than the roughly 30 megawatts coming from Deepwater’s farm, then it left the door open to potentially more wind farms to the south of the island. Moore assured Lewis the cable’s capacity would not exceed the output of the farm.

De Lasa later confirmed later that the cable’s capacity would be customized to the farm’s output — exactly 28.8 megawatts.

Then there is the question of the town of New Shoreham installing its own municipal turbine and tying into the Deepwater cable. De Lasa said he thought a municipal turbine was a fine idea, but if the town wants to use the cable to sell its excess electricity to the grid, it would make sense to start having that discussion now before the specifications of the cable’s capacity are set.

De Lasa said that Deepwater — not Block Island Power Company — would pay for all cable interconnectivity costs, including the underground drilling and substations. There would also be a decommissioning fund if ever the turbines outlive their usefulness or become obsolete.

What’s the law say?

There was some question at the BIRA meeting about what Deepwater was obligated to do by law. Audience members asked Moore why Deepwater would spend $100 million to build the small farm, when it could build the proposed larger 130-turbine farm 15 miles to the east and tie the island into that one? Wasn’t Deepwater obligated to do so anyway?

After the meeting, de Lasa acknowledged that the original Joint Development Agreement between Deepwater and the state called on the developer to tie Block Island into “Phase Two” — the larger wind farm — if “Phase One” — the smaller farm — was never built. However, the more recent legislation, which de Lasa says trumps the JDA, does not make the same demand.

More precisely, the legislation calls upon National Grid to select a developer to build a wind farm in state waters off Block Island capable of producing 10 megawatts of electricity.

While this partly answers the question of “why the small farm off Block Island?” — Moore offered another reason.

When pressed Saturday, Moore allowed that the company also needed a “demonstration project” in order to raise the approximately $1 billion necessary for the proposed larger farm. This brought some rumbling from the crowd.

Electrons versus contracts

Both Moore and de Lasa took pains to explain the distinction between how the electricity would flow as opposed to the money.

The electricity from the eight turbines would travel directly to BIPCo and then to island homes and businesses. The excess would then travel to National Grid on the mainland, joining other electricity sources, such as coal and nuclear plants.

However the resulting cost of electricity to island customers is reached via an entirely different route; Deepwater plays no role.

The cost of Block Island’s electricity would be determined through an agreement reached between BIPCo, the Public Utility Commission and National Grid. Moore surmised that the electricity wholesale cost should be at least half that of BIPCo’s current fuel costs. He stressed that ratepayers would pay a price set by those three entities — not the price it costs Deepwater to create electricity; that’s a separate agreement between Deepwater and National Grid.

As de Lasa put it, Deepwater will be merely another feeder into the pool of electricity that makes up National Grid.

However, de Lasa acknowledged there are many unknowns about the final costs to island ratepayers.

A BIPCo customer’s bill will be the sum total of the negotiated wholesale electricity price, plus a cable surcharge, plus a BIPCo distribution charge, plus a renewable energy fund charge. Most of these are unknowns at present — could a 20-cent fuel surcharge be replaced by a 20-cent distribution upgrade charge?

From the audience, Michael Hickey expressed his frustration that no one had provided a more detailed estimate about how the farm would affect BIPCo bills. “This isn’t rocket science,” he said.

Cable costs

National Grid estimated the Block Island cable would cost $30 million, and when the cost is spread out to its approximately 580,000 customers, it would result in an initial 38-cent monthly charge. As it is amortized over 20 years, however, that number is an average of about 26 cents.

Deepwater estimates that the cable would cost $22 million.

Moore expressed some incredulity Saturday that state legislators added language to the legislation calling for Block Island customers to pay proportionally more for the cable.

“It wasn’t our idea,” he said.

From the audience Hickey asked Moore what would he do if he were a town leader?

Moore replied that he would hire a reputable consultant/advocate to protect the town’s interests at the PUC negotiations. And he said he would suggest the island’s extra cable cost be no more than 1 cent per bill per customer, which would fulfill the conditions of the law and would not overly tax the island customer.

The island’s Electric Utility Task Group has questioned the logic of trying to allocate more financial burden to 1,700 customers.

More questions

An audience member asked how the project would be financed. Moore said Deepwater was affiliated with First Wind and D.E. Shaw; he said 70 percent of the cost would be covered by conventional bank loans and equity from investors, while 30 percent would come from a federal tax credit. However, he said Deepwater is not eligible for any subsidy until it actually delivers electricity.

From the audience, Michael Delia asked Moore if he would be comfortable with a legacy of tarnishing one of the last great places.

Moderator and BIRA President Bill Penn did not allow the question. Penn went on to say that his most recent BIPCo bill reflected a 47-cent per kilowatt-hour cost. He offered his opinion that he would be in favor of the Deepwater project if it could cut that cost.

Penn said the town’s Electric Utility Task Group, of which he is a part, was eagerly awaiting Deepwater’s proposal to National Grid, which is due August 31.

While Deepwater’s proposed cost for generation should not affect island customers, its proposed cable cost likely will.