Deepwater ready for offshore call

When the U.S. Department of Interior announced on Aug. 17 that it would start soliciting proposals for wind farms off the Rhode Island coast, Deepwater Wind was ready. The Providence-based company has spent the better part of three years refining a plan to construct a 1,000-megawatt wind farm off Rhode Island shores.
The developer has until Oct. 3 to respond to the Interior’s Call for Information. If Deepwater’s proposal passes muster, the company would be on track to bid for a formal lease, giving it the exclusive right to develop a wind farm in its requested area. Interior Secretary Ken Salazar said earlier this month that he aimed to issue a lease as soon as next year.
“That’s where everyone is trying to get to: the actual lease,” Deepwater Wind Chief Administrative Officer Jeffrey Grybowski said. “So we’re enthused about his call for issuing a lease in 2012. That would be a good thing.”
A lease makes the roughly $5 billion project more enticing to investors, Grybowski said. A lease also may persuade potential buyers of electricity to sign power-purchase agreements. More contracts entice more investors.
Deepwater is not alone in seeking a lease for a part of ocean roughly between Martha’s Vineyard and Block Island. On Aug. 18, Massachusetts-based Neptune Wind announced it would seek a lease to construct a 500-megawatt wind farm.
But there is little doubt that Deepwater Wind has a jump on any proposal. On its blog – the company lacks a website – Neptune lists no phone number, no corporate offices and just two entrepreneurs as its partners.
Deepwater, on the other hand, has spent the last few years building up staff at its Providence headquarters to 11 people and counts New York hedge fund the D.E. Shaw Group as a major investor. Deepwater has also garnered strong support from state officials, who have generally backed the project as well as a separate Deepwater Wind proposal to construct five or six turbines in state waters off Block Island. “We are very confident that we will win a competition regardless of who else bids,” Grybowski said. “We’ve invested a great deal of money in Rhode Island and in this project and have built up a very strong team.”
And last December, the company submitted an unsolicited proposal to the Department of Interior outlining its project envisioned for federal waters. Grybowski said that the 100-page document would serve as a basis for the formal proposal.
That proposal will include erecting 150 to 200 turbines across an area of between 180 and 270 acres. The farm would tie into the electric grid at Brayton Point in Somerset and on the north shore of Long Island. Such connections capitalize on existing electric infrastructure and put the power near major cities.
The turbines themselves would sit on steel foundations that resemble a three-legged stool. Deepwater Wind says that the technology, already in use in the oil and gas industry, will allow the construction of turbines far from shore. The closet turbine will sit 14 miles from the coast; the center of the farm will be 20 miles away.
Such “over the horizon” locating should keep opposition to a minimum, Grybowski speculated. The next few weeks, however, will tell for sure. Besides soliciting proposals, the federal government asked for comments about whether the area officials identified as ripe for development is appropriate for wind turbines.
Grybowski said the company has been reaching out to commercial fisherman, Native American tribes and others that may express concerns about development in the area.
And already the state has done some of the heavy lifting. In October, the R.I. Coastal Resources Management Council approved an ocean Special Area Management Plan. The plan outlined various uses for the ocean and – through a process of elimination – essentially identified areas suitable for development. Separately, in July 2010, Massachusetts and Rhode Island agreed on an Area of Mutual Interest in federal waters where the states preferred development. In announcing the solicitation area, the Interior Department took a subset of that area.
The area is separate from one in Nantucket Sound, where in October the Interior Department awarded a lease – the first in the country – to Cape Wind Associates to construct a 130-turbine wind farm. That lease took almost a decade to clear federal hurdles.
Since then the Department of Interior has pledged a faster approach to approving offshore wind projects.
Even if the department does issue a lease next year, a farm is still likely years away from operation. With a lease in hand, any developer still must conduct an extensive environmental impact statement that proves the environmental consequences of a farm would be minimal.
The developer also would need to hammer out a financial arrangement with the federal government. Under its 28-year lease with Cape Wind, the developer will pay $88,278 in annual rent prior to the farm’s operation. Once the farm goes online, rent will range between 2 percent and 7 percent of revenue based on selling the electricity to the regional market.
A developer also would need to line up financing. Grybowski said Deepwater expects to bring on additional investors should it win a lease.
Any developer also must outfit a base of operations. Neptune Wind says it would use a new facility planned for the Port of New Bedford as its staging operation. Deepwater wants to use Quonset Business Park in North Kingstown and possibly other ports.
Given all those requirements, Grybowski said the earliest Deepwater is likely to put turbines in the water is 2016. It would take another two or three years to complete the farm. &#8226

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