| Deepwater Wind

Critics blast power costs from nation's first offshore wind farm

One of the towering turbines on the nation’s first offshore wind project was unlocked and started to spin Monday in the ocean waters off Rhode Island as the project begins months of testing prior to generating commercial clean energy.

Although President Barack Obama hailed the project as a renewable energy milestone, critics are awaiting a new hearing in the weeks ahead as they continue a legal fight against developer Deepwater Wind. Those opposed to the project say it contains a bloated rate structure agreement that will force residents to fork over hundreds of millions of dollars in above-market electricity costs.

“Construction is complete on the Block Island Wind Farm,” Meaghan Wims, spokeswoman for Deepwater Wind, told AMI Newswire Monday. That means the project, whose five turbines are located about three miles offshore from the island, are now moving into the commissioning stage, according to the company’s website.

During the several months of commissioning, the project will undergo tests of the electrical infrastructure and newly installed turbines, as well as inspection of engineering data. That will clear the way for commercial electricity generation later this year.

The wind farm will reduce carbon dioxide emissions by 40,000 tons each year and save Block Islanders – who number about 900 during winter – up to 40 percent on their energy bills, according to Deepwater Wind. The island now uses expensive diesel-fueled generators for electricity, but the wind project will link up the island to the state’s power grid.

“Rhode Island just built America’s first offshore wind farm, which will create clean energy and fight climate change,” Obama said on Twitter last week.

But Bill McCourt, president of the Rhode Island Manufacturers Association, says the company’s power purchase agreement with National Grid, an investor-owned energy company in the Northeast, is not in the best interests of ratepayers. In recent weeks, the association filed a challenge to the agreement in federal district court after losing a motion in a lower court.

The power agreement will require ratepayers to pay 24 cents per kilowatt-hour for the wind farm’s electricity, which is twice as much as the competitive rate, McCourt told AMI. In addition, there is a 3.5 percent annual escalator over the next two decades, he said, so the overall cost for ratepayers over that time will be $497 million.

“We’re looking at a rate 20 years from now that could be close to 50 cents a kilowatt,” McCourt said.
And Rhode Island already pays among the highest rates for energy in the nation, he said. Indeed, last year the state had the second highest electricity rates in the continental United States, at just over 17 cents per kilowatt-hour, according to the federal Energy Information Administration.

While it’s true that the wind farm project will represent a small fraction of the state’s power usage, McCourt said that even an incremental increase in overall rates can only make the state’s energy situation worse.

“This is death by a thousand paper cuts,” he said.

The U.S. Department of Energy reported last year that there are 21 offshore wind energy projects – with a potential of more than 15,000 megawatts of generation -- in various stages of development across the nation. A single megawatt can power several hundred homes.

The DOE has invested more than $190 million in research involving offshore wind power since 2006, according to the department’s website. The federal government also has provided businesses with tax credits for investing in wind technology, and Deepwater Wind reported in 2014 that it qualified for such credits.

“There are 70 (offshore) farms in Northern Europe, there are thousands of turbines working today and there are 60,000 people working in that industry in Europe,” said Deepwater Wind CEO Jeffrey Grybowski in a company video. “We’re celebrating the beginnings of a new U.S. industry.”

The cost of offshore wind electricity will drop by 35 percent from 2015 to 2025, provided the right energy policies and technologies are in place, according to a cost analysis released by the International Renewable Energy Agency in June.

Still, McCourt doesn’t see offshore wind being a viable and cost-effective energy source until more technological breakthroughs are made in energy storage, so that consumers can have the generated energy when they need it. He also criticizes a new law that requires Rhode Island to increase its reliance on renewable energy by 1.5 percent per year over the next two decades.

“It sounds great, but is it practical?” he said.

McCourt emphasized that the manufacturers association is concerned strictly with the power purchase agreement and not the wind project itself. Under that agreement, manufacturers will bear a significant part of the cost, something that may dissuade businesses from relocating to Rhode Island in the future, he said.

Moreover, McCourt doesn’t see offshore wind as a major long-term source of new jobs for the state. The Block Island project did provide some temporary construction jobs, as well as jobs in component assembly, but the prime components for wind turbine energy are being built by established businesses in other parts of the world, he said.

“The odds of a company to establish a manufacturing plant here to make those (components) is probably, in my mind, very low,” McCourt said.

He said he favors more natural gas line expansion in the state until offshore wind technologies become more viable.