First Offshore Wind Farm in U.S. Powers Ahead

Source: By Jon Kamp, Wall Street Journal • Posted: Monday, July 6, 2015

The bluffs on the southeast coast of Block Island, where the first U.S. offshore wind farm will be visible.

The bluffs on the southeast coast of Block Island, where the first U.S. offshore wind farm will be visible. Photo: Jon Kamp/The Wall Street Journal

 BLOCK ISLAND, R.I.—Beloved by locals and tourists for its soaring clay bluffs and unspoiled views, this small New England island is heading toward another distinction: home to the nation’s first offshore wind farm.

Five towering windmills off the island’s southeast coast are scheduled to begin generating power late next year. The Block Island plan has moved ahead of the Cape Wind project, a much larger turbine farm planned in the waters off Cape Cod in Massachusetts, wind-energy experts said. A contract dispute with local utilities following a slew of legal fights has thrown that 14-year effort into question.

Proponents of the Block Island plan hope it will help jump-start the offshore wind industry in the U.S. The American Wind Energy Association trade group estimates there are 11 projects in 10 states in various stages of development. The U.S. lags behind other parts of the world in developing offshore wind, particularly Europe, which has been tapping the power source for more than two decades.

“I think it’s a showcase project,” said Bill Penn, an environmental consultant and Block Island resident who favors the $338 million project and said he had no business involvement in it. “We’re going to be leading our country.”

The Block Island project also faced some legal challenges, but its opponents say they don’t have the firepower of Cape Wind’s rivals, among them the industrialist William Koch, who has a home on Cape Cod. The late Sen. Edward Kennedy also was a foe of the project. Audra Parker, chief executive of the Alliance to Protect Nantucket Sound, which opposes the 130-turbine Massachusetts project, said the group averages $2 million to $2.5 million in donations annually.

George Mellor, a retired Princeton University professor at his home on Block Island, opposes the wind turbine farm he will be able to see from his back deck.
George Mellor, a retired Princeton University professor at his home on Block Island, opposes the wind turbine farm he will be able to see from his back deck. Photo: Ryan T. Conaty for The Wall Street Journal

Objections to offshore windmills include noise, the blight on pristine views and the above-market costs to consumers. In 2010, a Rhode Island state regulator rejected a plan for the state’s main power utility to buy the wind farm’s output, saying the pricing wasn’t commercially reasonable. But it approved a deal later that year after lawmakers amended a regulatory law to be more favorable. Former Republican Gov. Donald Carcieri was a strong backer of the wind farm, which state political leaders saw as a way to advance clean-energy and economic goals.

For some locals, soaring windmills won’t be welcome. “Some people say these wind turbines are beautiful, but they’re not nature,” said George Mellor, an 85-year-old retired Princeton University professor who expects to see the windmills from his home on Block Island.

Still, the project is fully financed and permitted, and workers are expected to begin anchoring steel foundations to the ocean floor later this month, said developer Deepwater Wind LLC, which is principally owned by hedge fund D.E. Shaw Group.

Block Island has a year-round population of about 1,000 residents who live in a mix of big homes and modest cottages dotting its winding roads. It draws about 485,000 visitors a year, according to the Rhode Island Commerce Corp. The island currently relies on generators burning about 1 million gallons of expensive diesel fuel a year for power.

National Grid, the utility that is buying the Block Island’s farm output, will build a 20-mile, $107 million undersea power cable that for the first time will connect Block Island to the mainland and provide an alternative to diesel. The wind farm at peak capacity is expected to produce significantly more power than the island needs, with the surplus going to the rest of the mainland grid. The cable will also import power from the mainland when winds aren’t sufficient, and bring improved Internet service.

Wind-turbine foundation work is now complete in Louisiana and ready for transport by barge to Rhode Island.
Wind-turbine foundation work is now complete in Louisiana and ready for transport by barge to Rhode Island. Photo: Deepwater Wind

The new power source means Block Island residents will see their power bills go down roughly 30% by replacing the expensive diesel power, estimated Everett Shorey, a part-time islander who serves on a utility task group for the town. This was a key selling point for some wind-farm supporters.

At the same time, National Grid estimates the wind-farm project will increase power costs across its 490,000 customers in mainland Rhode Island because the wind energy—though a tiny portion of the utility’s overall power—will come at a premium price. The power from the wind farm will start with above-market costs that will rise 3.5% each year under a 20-year deal.

The expected increase triggered disputes on the mainland, including a challenge from two companies that took their fight to the state Supreme Court. They lost in 2011.

Some wind-farm critics are still determined in their opposition. But “we don’t have the money to fight this,” said Chris Warfel, a town councilor in New Shoreham, the town covering all of Block Island. He is also an energy consultant, and believes proponents have overstated the wind farm’s potential benefits while overlooking other options to provide Block Island’s power.

Windmill installation is scheduled to begin 3 miles off the Block Island coast in August 2016, said Deepwater chief executive Jeff Grybowski, who was formerly Gov. Carcieri’s chief of staff. Each will generate up to six megawatts with blades reaching 589 feet above the water—much higher than any building in Rhode Island.

The Cape Wind project, which took years to permit because it is in federal waters and faced many legal challenges, is much less certain. In January, Massachusetts’ two largest electric utilities backed out from plans to buy most of that wind farm’s output, citing financing and construction commitments missed by Cape Wind. Though the utilities disagree, Cape Wind said it believes the contracts remain in effect. The developer also believes the continued push for renewable power in Massachusetts could open up more opportunities to sell its power.