UMaine’s offshore wind energy pilot project wins initial OK

Source: By Whit Richardson, Bangor Daily News Staff • Posted: Wednesday, January 15, 2014

Habib Dagher

Brian Feulner | BDN Habib Dagher

HALLOWELL, Maine — The Maine Public Utilities Commission on Tuesday morning approved in a 2-1 vote a term sheet for Maine Aqua Ventus’ pilot offshore wind energy project.

The decision clears a hurdle for Maine Aqua Ventus in its path to receive 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.

Habib Dagher, director of the Advanced Structures and Composites Center at the University of Maine, told the Bangor Daily News that the vote represents “an important step” for the pilot project, which would consist of two six-megawatt turbines off Monhegan Island.

“There’s 150 gigawatts of offshore wind off of our coast, enough to power the state of Maine 70 times over. So it’s our largest resource and we’re making an investment today to figure out how to harvest this resource for future generations,” Dagher said. “It’s an important day for the state of Maine and an important day for the country.”

The pilot project, called Maine Aqua Ventus I, is the next step in the development of UMaine’s offshore wind technology. The university in June 2013 deployed a one-eighth scale model of VolturnUS, its prototype floating turbine, in waters off Castine. The turbine began generating power that month and became the first offshore wind turbine in the Americas to send electricity into the power grid.

Maine Aqua Ventus’ long-term vision is the construction of a 500-megawatt offshore wind farm project in the Gulf of Maine. The goal is to achieve wind-generated electricity at 10 cents per kilowatt hour by the mid 2020s, which would be competitive with other forms of electricity generation, Dagher said.

PUC Chairman Thomas Welch and Commissioner David Littell voted to approve the term sheet, which outlines the conditions under which Maine Aqua Ventus’ pilot project would sell its electricity.

Commissioner Mark Vannoy voted against approval, citing the economic viability of a future commercial-scale offshore energy project estimated to cost $1.8 billion and the fear that its long-term effect would be an increase in the cost of electricity for Maine ratepayers.

The ratepayer subsidy to Maine Aqua Ventus would equal between $8 million and $10 million a year, according to Vannoy. Based on certain assumptions about the future electricity market, Vannoy said he did not think that kind of investment would bear fruit for Maine ratepayers.

“I see the term sheet today as a first step down the path of ever increasing demands on the commission for long-term contracts to support a Maine-centric energy development that will result in higher prices and a continued erosion of our manufacturing and industrial base,” Vannoy said in his remarks. “While I appreciate and applaud the success story of the Maine composites laboratory, I do not think ratepayers will be well served in the future by the pursuit of this particular composites application.”

Jeffrey Thaler, an attorney representing the university, disagrees with Vannoy’s assumptions. He said the pilot project is about more than just deploying a commercial-scale wind farm in the Gulf of Maine.

“Even if there is no 500-megawatt project in the Gulf of Maine, there is still inherent benefits to this project,” he told the BDN following the vote, citing the internationally transferable “intellectual capital” that the state’s businesses, researchers and workers would reap from the development of floating turbine wind energy technology.

Tuesday’s vote is 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.

“We’re working 24/7 for the state of Maine to win this contract with the Department of Energy and today is an excellent shot in the arm for the project moving forward,” Dagher told the BDN.

A long-term contract, as laid out in a finalized term sheet, will now be negotiated between Maine Aqua Ventus and Central Maine Power, which is the utility within whose jurisdiction the pilot project would be generating power. The term sheet approved Tuesday calls for Maine Aqua Ventus to sell electricity to CMP for 23 cents per kilowatt hour. The PUC will review and approve the final contract.

The PUC is following through on a mandate the Maine Legislature gave it in 2010 to conduct a competitive bid process to award ratepayer support to a developer of an offshore wind energy project.

At the time of the initial bid process, UMaine’s offshore wind 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 shifted 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 similar 2-1 vote, with Vannoy dissenting, 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.

Attributing the higher price to startup costs associated with any new technology, Dagher compared it to buying a laptop when they first hit the market.

“When you bought laptops six or seven years ago, your laptop cost $5,000 or more … and today you can buy it for a tenth that cost. Why is that? Because the industry has scaled up. And we’re no different,” Dagher said Tuesday morning. “In this industry, by scaling up the technology from the research labs into a demonstration and then a full-scale project, that’s where the costs are going to drop. Our goal is to be competitive with other forms of electricity in the 2020s.”