Maine State regulators plan Tuesday vote on terms of UMaine’s offshore wind energy pilot project

Source: By Whit Richardson, Bangor Daily News Staff • Posted: Tuesday, January 14, 2014

HALLOWELL, Maine — The consortium backing a high-stakes offshore wind project using floating turbine technology developed at the University of Maine faces a key test Tuesday morning.

At stake is whether state regulators will grant the project a long-term power contract that would allow it to move forward, but under terms that could cost the state’s electric ratepayers hundreds of millions of dollars over the next 20 years.

The three-person Maine Public Utilities Commission will deliberate Tuesday morning on a long-term power purchase agreement that would provide Maine Aqua Ventus with electric ratepayer support as it tests new offshore wind technology developed at the University of Maine. Maine Aqua Ventus is a consortium made up of Emera, Cianbro and Maine Prime Technologies LLC, a spin-off company representing UMaine.

Thomas Welch, chairman of the PUC, said Monday morning that he expects the commissioners will vote Tuesday morning.

Tuesday’s PUC meeting is not a public hearing. Only commissioners will be allowed to speak during the deliberations. They will also be able to ask questions of PUC staff about Maine Aqua Ventus’ project and the project’s term sheet, which details the conditions under which the consortium will sell an estimated 43,000 megawatt hours per year to the power grid from its two, six-megawatt turbines at a price of 23 cents per kilowatt hour. That’s about 14 cents more per kilowatt hour than the current standard offer rate set by the PUC.

The pilot project proposed for waters off Monhegan Island is the next step in the development of UMaine’s offshore wind technology. The university in June 2013 deployed a 1:8-scale model of VolturnUS, its prototype floating turbine, in waters of Castine.

Maine Aqua Ventus I would be a pilot for the future development of a 500-megawatt offshore wind farm project in the Gulf of Maine and possibly elsewhere. The goal is to achieve wind-generated electricity at 10 cents per kilowatt hour by the 2030s.

The $120 million project — with at least 50 percent of that total being paid to Maine-based companies — is expected to create up to 341 full- and part-time jobs, according to an economic analysis completed by UMaine economist Todd Gabe.

Much is riding on Tuesday’s vote. The long-term contract from the PUC will be key to Maine Aqua Ventus’ ability to compete for a $47 million grant from the U.S. Department of Energy, which is expected to be awarded in May.

In 2010, the Maine Legislature enacted legislation that enabled the PUC to conduct a competitive bid process for long-term offshore wind project development.

At the time of the initial bid process, UMaine’s VolturnUS project was not far enough along to apply for the ratepayer support. Only one company, Norway-based Statoil, made the PUC’s initial deadline, which resulted in the PUC’s approval of Statoil’s plan to build a pilot 12-megawatt, four-turbine floating wind farm 10 miles off Boothbay Harbor.

However, in June, the Legislature — under pressure from Gov. Paul LePage — approved a bill to reopen the process to allow UMaine to get involved. Deterred by the political interference, Statoil announced in October it would end its efforts in Maine and instead shift its focus to developing its $120 million project in Scotland.

As was the case with the Statoil term sheet, which the PUC accepted with a 2-1 vote, the cost of electricity that Maine Aqua Ventus aims to generate with its offshore wind pilot project significantly exceeds the cost of electricity produced by other means, including burning fossil fuels. However, proponents of offshore wind energy development point to the fact that electricity generated by a pilot project such as the one proposed costs more because it’s meant to test technology. If that test proves successful, large-scale commercialization of floating turbine technology would reduce the per-unit cost of electricity and place Maine at the forefront globally of offshore wind energy development, they say.

The LePage administration raised concerns about the added cost ratepayers would bear under the terms proposed by Statoil. It has not objected to the term sheet submitted by Maine Aqua Ventus.