Despite delays, Deepwater reaffirms job projections

With strong political backing from then-Gov. Donald L. Carcieri, Deepwater Wind arrived on the Rhode Island scene in 2008 at the forefront locally of what supporters tout as the next big thing in renewable energy – offshore wind farms.
The state in 2008 selected the then-fledgling company to build a 100-turbine wind farm off the coast, with ambitious plans to hire about 800 employees in the next few years. Since then, progress has been slow and contentious.
The company has managed to open a local office, but employs only 10 in Rhode Island. It did ink a disputed power-purchase agreement needed to move ahead with a demonstration project off Block Island, but only after a fight that landed in the state Supreme Court – and may not be over yet.
Despite the delays, emerging competition and a new governor less focused on offshore wind projects than Carcieri, Deepwater insists it remains committed to Rhode Island and the company’s 2008 job projections.
The firm recently met a deadline to submit its proposal to federal officials for the much larger, high-profile project off the state’s coast. But it is also aggressively looking elsewhere for work, most recently announcing interest in developing a 1,000-megawatt-capacity New York wind farm.
“We have several projects going on, we submitted the proposal for the Rhode Island/Massachusetts project, we’ve signed a lease for the Block Island project not too far away and we are in talks with New York for their project,” said Jeff Grybowski, chief administrative officer and senior vice president for strategy and external affairs.
“Our business strategy is to supply Northeast markets that have limited utility-scale, renewable energy options with offshore wind power that can be directly connected to their near-shore power grids,” Grybowski said. “New York fits that strategy perfectly.”
Grybowski said the company has “spent millions of dollars developing our projects, much of which has been spent locally, employing experts to help us. We [still] expect that a utility-scale project will employ in excess of 800 people locally.”
The company in October responded to the U.S. Department of the Interior’s call for commercial-lease submissions that would allow a lessee to propose the construction of a wind-energy project off Rhode Island and Massachusetts and to develop a project if further environmental review is successful. Seven other Providence-based developers also bid, according to Interior’s Bureau of Ocean Energy Management. But Deepwater remains confident they’ll get the bid for the project because of economic backing and their technological expertise, Grybowski said.
For the Block Island project, a 30-megawatt, demonstration-scale offshore wind farm, the next step is to submit permits to federal and state agencies by the first quarter of 2012 and hopefully have permits approved a year after that, Grybowski said.
“We are very excited about the progress on the [project], which we believe has a good chance to be the first offshore wind farm built in the U.S.,” he said. “Our recent agreement with Siemens [Energy] to supply their latest turbine demonstrates that the Block Island wind farm is a path-breaking project and that the industry is starting to move forward in the U.S.”
Locally, however, the company lost a major backer when the term-limited Carcieri was replaced in January by Gov. Lincoln D. Chafee, who has taken a broader view of renewable energy development in the state, focused on a mix of solar, wind and hydro efforts.
Grybowski, however, does not see that as a threat to Deepwater’s long-term success in the state.
“We don’t think that there has been any drop-off in commitment to offshore wind in the change of administrations,” Grybowski said. “Gov. Chafee has been very supportive of our projects.”
The new governor “clearly supports Deepwater’s commitment here,” said Christine Hunsinger, Gov. Chafee’s spokesperson. “Just because he supports a broader approach to renewable energy doesn’t mean he doesn’t support Deepwater’s efforts here.”
In July, the state Supreme Court unanimously turned away the effort by two manufacturers, including Toray Plastics (America) Inc., to invalidate the power-purchase agreement between National Grid and Deepwater that had been approved by the R.I. Public Utilities Commission.
The agreement had been approved by the PUC by a 2-to-1 vote, and it followed by five months a rejection of an earlier version of the power-purchase agreement, largely done on a determination that the price of the electricity to be generated by the demonstration wind-power project off the coast of Block Island was too high.
Toray opposes the contract due to the high price that National Grid would pay for power generated by the five-turbine demonstration project. In the first year of the contract, Toray says the price would be more than three times the price for power from natural-gas-fired plants and other conventional sources. The costs would be passed on to all electric customers in Rhode Island, including Toray, which operates a factory in North Kingstown that is the single largest user of power in the state.
On Oct. 3, Toray filed a new complaint with state regulators, saying the agreement between National Grid and Deepwater had expired.
Mike McElroy of Schacht & McElroy in Providence represents Toray. He asserts that “by their own admission, the power-purchase agreement automatically terminated on June 30 when the Power Purchase Agreement Regulatory Approval was not obtained by that date.
“In fact, PPA Regulatory Approval could not have been obtained until the Supreme Court issued its decision on July 1, and the Supreme Court rehearing period expired 10 days later,” McElroy said.
It is Toray’s position that the PUC has no authority, statutory or otherwise, to approve a resurrection of the PPA and has no authority to make an attempted approval not subject to appeal, as Deepwater and National Grid have requested.
At a minimum, Toray requests a hearing at which all parties can be heard in more detail on these issues, McElroy said.
In response, Meaghan Wims, a Deepwater spokesperson, simply referred to the court document that approved the PPA even after the deadline had expired.
Though the company hasn’t been able to move forward as quickly as state leaders once hoped, Deepwater is still positioned to be part of the local push toward increased renewable energy options, says Andrew Dzykewicz, who served as energy commissioner under Carcieri.
“The fact that Deepwater is [looking to] take on projects in other states should be good for Rhode Island,” said Dzykewicz, now president of ACDEnergy Group, an energy and project-development consultancy based in Warwick. That’s because the agreement Deepwater inked with the state would mean work on those projects would have to be done locally, he said.
And of all of the renewable energy options he’s studied, Dzykewicz says the reality is that offshore wind power from large wind farms should provide the lowest-cost form of renewable energy available to Rhode Island, “and the only form that has enough … potential to have an impact on the power-generation mix that serves Rhode Island.” &#8226

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