Island residents ask about financing, timing of wind farm

Mon, 08/08/2011 - 2:15pm

Deepwater Wind CEO Bill Moore visited the island Friday, July 29, and gave an update to the Electric Utility Task Group on the demonstration wind farm proposed for three miles off Block Island’s southern coast. Moore fielded questions from several island residents who raised concerns over the project’s financing, time frame and visual impact.

Cooneymus Road resident Mike Hickey asked a number of questions of Moore about concerns he had with the project’s financing and the company’s ability to build the wind farm.

Most of his financial questions were in reference to the federal investment tax credit for offshore wind, which is set to expire in 2012. Hickey questioned Deepwater’s ability to finance the project without it or a similar federal loan guarantee, which was put on hold for the rest of the year.

Moore agreed that the tax credit and loan guarantee would make financing of the project much easier and stated that at least one of the two programs would need to be utilized for the project to work.

“In general it is true that either the ITC [investment tax credit] or the loan guarantee are critical for [the wind farm’s] success,” Moore said.

Hickey asked whether a production tax credit would be utilized if the ITC were not extended, which Moore said was a possibility. Moore, however, rejected the notion, expressed by Hickey, that the project would have a 10 percent interest rate. Moore said if it were built today the interest rate would be around 5.5 percent.

Hickey asked why Deepwater was not being required to pay royalties to the state in addition to a license payment already agreed to by Deepwater. Moore said that the lease payment, the terms of which are still under negotiation, would have the company pay the state for the use of its land.

Hickey countered that Cape Wind was required to pay both a lease and a royalty payment to the federal government, which would then be partially distributed to surrounding communities. Moore said that the Deepwater project was in state, not federal, waters — unlike Cape Wind — and did not come with the requirement to pay two separate fees.

Deepwater’s ability to construct the turbines was also called into question by Hickey, who asked whether a successful deployment of a spar buoy would come before the turbines were erected. The prototype spar buoy briefly installed by Deepwater in the ocean west of the Coast Guard Station suffered a design failure, which caused the buoy to fall over.

“The situation with the spar buoy was embarrassing,” Moore said. “However, this was a first-of-its-kind structure that had never been deployed anywhere in the world.”

Moore also said that the buoy was never intended for extended use off Block Island, as onshore instruments are collecting reliable wind data.

Hickey also requested that visual simulations be done with the newer, larger turbines that Deepwater is now planning to use on the site. Moore said that some of those visualizations are currently available and that the remainder will be submitted as part of the permitting process next year.

Island resident David Lewis asked whether the mainland transmission cable would begin powering the island as soon as it was connected or if it would wait to be activated until the wind farm came online.

“If the cable is permitted and in place, I don’t see why it can’t start delivering power to the island,” Moore responded.

Block Island Power Company CEO Cliff McGinnes Sr. likewise said, “When the cable is here, BIPCo will be ready to utilize that cable.”

Lewis asked about future ownership of the project after it has been installed. Moore said that often a new owner is brought on after construction is completed to manage the farm, and said he couldn’t guarantee Deepwater would be the owner of the project several years after completion.

Moore, along with the rest of the development team, hosted a larger open-house session for island residents in the afternoon where they also took questions.

Energy Forum

The task group members reviewed plans for a community forum to discuss ways to reduce electricity costs on the island. The group came up with a list of categories for how the island could proceed, which will be used during the forum.

Those categories included: install a stand-alone transmission cable, install wind turbines, solar panels, adopt conservation methods or proceed with newer alternative technology like vertical axis wind turbines. They also look at the economics of doing nothing.

The group also discussed possible dates to hold the forum. The Town Council voted earlier this week to hold it over a two-day period on the weekend of October 15 and 16.