Gold: Deepwater delays ‘unavoidable’

NO SHORE THING: A rendering of the turbines for the planned offshore Block Island Wind Farm. “We’re still targeting 2015 [for completion], but it could slide into 2016,” said Deepwater Wind CEO Jeff Grybowski. / COURTESY DEEPWATER WIND
NO SHORE THING: A rendering of the turbines for the planned offshore Block Island Wind Farm. “We’re still targeting 2015 [for completion], but it could slide into 2016,” said Deepwater Wind CEO Jeff Grybowski. / COURTESY DEEPWATER WIND

Time has proven the initial guiding document between Deepwater Wind and the state – the Joint Development Agreement, or JDA – ambitious, with a host of unmet target dates.
Though clearly outdated, a recent state review of the 5-year-old document concluded “that Deepwater Wind has lived up to its end of the bargain and the state has upheld its end of the bargain,” Rhode Island Energy Commissioner Marion S. Gold told Providence Business News.
Gold told PBN last week that unmet target dates in the document, including: July 31, 2010 – R.I. Coastal Resources Management Council grants Deepwater all necessary permits and approvals for Phase I (five-turbine Block Island Wind Farm); and June 30, 2012 – Completion of a fully developed project for Phase I, will not be updated.
“Milestones were missed because of unavoidable delays,” Gold told PBN in email responses to questions regarding the validity of the contract. “The document stands as an indication of the collaborative intent which both the state and company have honored but, going forth, challenges relating to energy markets and competition with other types of electricity generation will have the most influence on how the Phase II (200-turbine) offshore wind project moves forward.
“We also will hold Deepwater Wind to its commitment to maximize economic development in Rhode Island as the projects move forward – a commitment that the company has stood by to date,” she said.
The document, negotiated in 2008 and signed Jan. 2, 2009, does still include “an option for contract termination if the [200-turbine] project in federal waters is stalled as of Dec. 31, 2016,” said Gold. “The ability for the state to terminate the agreement in 2016 is the leverage remaining in the JDA.
“That said, the state regulatory agencies, separate from the JDA, will hold the developer to the highest standards with respect to the environment, safety and other issues,” she added. Other than potential termination of a largely outdated contract, however, it is not clear what penalties, if any, Deepwater could incur for failing to meet its commitment to bring 800 jobs to Rhode Island.
Asked if construction on the Deepwater Wind Energy Center in federal waters is likely to begin by Dec. 31, 2016, Deepwater Wind CEO Jeff Grybowski said, “That’s pretty far off. It’s too early to determine.”
Deepwater is still working to get final approvals for the five-turbine Block Island project, which itself might not be completed until 2016.
“I hope and expect we’ll have all the permits approved in the next couple of months,” he said. “We’re hopeful that we’ll get some work started on the Block Island project by the end of the year. We would certainly like to make major equipment orders by the end of the year so we can begin the manufacturing.
“We’re still targeting 2015, but it could slide into 2016 for the Block Island Wind Farm to be completed,” said Grybowski.
Deepwater last week announced that Alstom SA, the French maker of trains and power equipment, has agreed to supply turbines for the Block Island project.
“We are very enthusiastic and committed to getting Block Island up and built and moving forward on the bigger project,” said Grybowski.
Asked about the value of the JDA going forward, Grybowski said it’s no longer the working document for the development of Deepwater Wind projects.
“The value of the JDA was that it was a document set up in 2008 to kick off the relationship. I don’t think it was ever intended to be the first and last word on this relationship,” said Grybowski. “It’s really a historic document at this point because developments have overtaken things being planned in 2008. That was our best guess at the time.”
Gold said the state’s review, concluded in November, determined Deepwater met several obligations outlined in the JDA, including: Deepwater relocated company headquarters to Rhode Island with a staff of eight-to-12, maintained an ongoing lease-option agreement for land at Quonset Point, a $750,000 per year investment beginning in 2009; hired Rhode Island-based marine fabrication and construction firms to construct and deploy a $4 million meteorological buoy, which has been completed; invested $3.2 million in the Ocean SAMP project; and invested more than $25 million as of August 2012 in the Block Island Wind Farm. “We’ve invested in excess of $40 million in the Block Island project to date and a substantial amount in the other project,” added Grybowski.
Unexpected events that have contributed to construction and permitting delays included a one-year delay of a Power Purchase Agreement for the Block Island project in the Rhode Island courts, said Gold.
Tack on to the list of delays a change in the federal agency, from the Minerals Management Service to the Bureau of Ocean Energy Management, responsible for federal approval and permitting. Then there was a change in the permitting and auction process.
The JDA was a critical factor in helping Deepwater Wind win the Bureau of Ocean Energy Management’s first auction of offshore wind farm sites held in July 2013, encouraging the federal award of both available sites to Deepwater, rather than one.
Deepwater’s bid was strengthened by its agreement with the state, Bureau spokeswoman Tracey Moriarty told PBN in August 2013.
“[The Bureau] considers holding these types of agreements to be key indicators of success for a potential project,” Moriarty said.
That JDA also earned Deepwater a 20 percent credit on the cost of one of the two sites located on the Outer Continental Shelf between Block Island and Martha’s Vineyard, identified by BOEM as the north and south lease areas.
Deepwater Wind’s winning bid, originally for $3.8 million, secured 256 square miles of offshore wind farm area. The cost after the discount was $3,089,461 for both areas, said Moriarty. •

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