Maine regulators give thumbs up to offshore floating wind project

Source: Elizabeth Harball, E&E reporter • Posted: Thursday, January 16, 2014

Stressing the project’s potential benefits for the local economy, Maine regulators have approved the terms of a pilot offshore wind development spearheaded by the University of Maine, a significant step forward for the industry in the state’s deep but windy waters.

Maine Aqua Ventus 1 GP LLC, a consortium including the University of Maine and two partner companies, Emera Inc. and Cianbro Corp., plans to construct two 6-megawatt floating wind turbines 12 miles off the coast of Maine at a cost of $120 million. Last June, the group installed the first grid-connected offshore turbine in the United States, a 1:8-scale prototype of its floating wind technology.

The Maine Public Utilities Commission yesterday voted 2-1 in favor of the project’s terms, which include ratepayer support once the turbines are connected to the grid in 2017. During yesterday’s deliberations, Maine PUC Chairman Thomas Welch said that the decision was in line with the Maine Ocean Energy Act, passed by the state Legislature in 2010 to encourage local development of both on- and offshore wind, and that the project could help boost the local economy.

“There is a strong commitment here to reinvest in Maine,” Welch said.

Maine Aqua Ventus is one of seven demonstration projects selected by the Department of Energy in 2012 to receive an initial $4 million in funding. Now that the project has the state PUC’s initial approval, it can move forward with a power purchasing agreement and is therefore more likely to be selected by DOE to receive an additional $47 million this year (E&ENews PM, Dec. 12, 2012).

“It’s really good to see that the Maine Public Utilities Commission is using the program that was developed by the Legislature to attract investment in offshore wind [and] is actually moving forward with that program to the benefit of the industry as well as the economy of Maine,” said Paul Williamson, director of the Maine Ocean and Wind Industry Initiative. “It’s an extraordinarily important investment that will reap great returns for the state of Maine when this technology becomes commercially viable.”

Is Maine Aqua Ventus better for the state than Statoil?

The development of floating wind turbines is considered a key step for the future of offshore wind in America because much of its coastal waters, especially those off Maine and the West Coast, are too deep to accommodate conventional offshore wind turbines (ClimateWire, Oct. 9, 2013).

But Maine Aqua Ventus is not the first DOE-supported floating wind turbine project to reach an agreement with the Maine PUC. In January 2013, the commission approved a similar term sheet proposed by the Norwegian company Statoil ASA, which aimed to install four floating turbines in the Gulf of Maine with a total capacity of 12 megawatts.

Last September, however, an Associated Press investigation revealed that Maine Gov. Paul LePage (R) and his administration worked to obstruct Statoil’s project due to concerns about higher electricity costs, pushing the state Legislature to allow the University of Maine to submit its own proposal. In response, Statoil backed out of the project in October (Greenwire, Sept. 23, 2013; Greenwire, Oct. 16, 2013).

Despite the fact that Maine Aqua Ventus’ proposed ratepayer costs are not substantially different from Statoil’s (the Norwegian company’s contract price was 4 cents higher), LePage’s administration has thrown its support behind the University of Maine’s project.

“The Maine Aqua Ventus technology was developed by Maine students and Maine companies, and has attributes designed to bring offshore wind to economically competitive levels,” Maine Energy Director Patrick Woodcock said in a statement following the commission’s decision yesterday. “We will continue to support advancing the research and development of this Maine grown technology.”

Building local wind energy expertise

Maine Aqua Ventus’ proposed terms include a 20-year contract with Maine ratepayers at a base price of 23 cents per kilowatt-hour, with an annual energy cap of just more than 43,000 megawatt-hours. Today, Maine residential customers pay about 14 cents per kWh. The higher cost of wind energy was raised as a concern by Maine PUC Commissioner Mark Vannoy, who voted against approving the project.

“The fundamental issue in the ocean engineering community has never been one of technical capability but rather one of economic viability,” Vannoy said during yesterday’s deliberations. “The question is, can it be competitive with other forms of energy in the New England market?”

Vannoy also said he was uncertain that the project will attract enough outside investment for Maine Aqua Ventus to construct a 500 MW, utility-scale project in the Gulf of Maine, as it has suggested it will do if the pilot technology proves successful.

But PUC Chairman Welch argued that even if an offshore wind farm wasn’t ultimately constructed in Maine, the project would still create job opportunities for residents because it would develop local expertise in the wind industry.

“If Maine in fact became a center of expertise in this area, it may well be that Maine will benefit significantly, wherever in the world these things are put in place, which I actually think may distinguish it from the Statoil situation,” Welch said.

Maine Aqua Ventus has aggressively promoted the project’s potential economic benefits to the state. In its term sheet, it estimates that close to 60 percent of the project’s capital expenditures on development and construction would be awarded to Maine-based businesses and that it would generate about $10 million in annual local labor income during the three-year construction process.

After the commission reached its agreement yesterday, Jeff Thaler, co-counsel and permitting lawyer for Maine Aqua Ventus, said his consortium was pleased with the commission’s approval.

“We’re also pleased because the majority of the commission agreed that this project represents a significant step forward for the state of Maine both in terms of economic opportunity, research and development, intellectual capital opportunity, as well as producing energy from carbon-free sources,” Thaler said.