BLOCK ISLAND – The list of suitors lining up to develop renewable-energy projects off Rhode Island’s coastal waters is getting longer.

The Federal Energy Regulatory Commission (FERC) has begun reviewing a permit application from Grays Harbor Ocean Energy Co., a year-old company based in Seattle, to build 100 large towers that would generate electricity from wave energy and wind turbines.

The towers, which Grays Harbor says would use the same support technology as offshore oil platforms, would be located in a 96-square-mile area of federal waters 12 to 25 miles to the south of Block Island. Wind turbines could be placed on top of the towers, although that would require a separate application process.

The company estimates the total cost of the project would be between $400 million and $600 million.

[The project is unrelated to both the wave-energy proposal by Australia-based energy developer Oceanlinx Ltd., with which the state signed a memorandum of understanding last December (READ MORE); and the privately funded offshore wind-turbine project (READ MORE announced this fall by state officials and energy developer Deepwater Wind.]

Grays Harbor asserts that the structures, known as Oscillating Water Columns, “will be visible from shore for only a few days a year under extremely clear visibility conditions.”

The company also says it will not need to utilize the entire 96 square miles designated in its federal permit. Instead, it will determine which section of that area would be the most conducive to wind-energy generation.

News of the proposed project comes as state officials continue work on an Ocean Special Area Management Plan (SAMP) for the coastal waters off Rhode Island - a project undertaken in part to facilitate permitting of a $1.5-billion offshore wind farm backed by Gov. Donald L. Carcieri. (READ MORE) However, the project proposed by Grays Harbor is outside the area to be covered by the Ocean SAMP.

Rhode Island officials said the company’s application took them by surprise: Grover Fugate, executive director of the R.I. Coastal Resources Management Council, found out about it when the U.S. Minerals Management Service (MMS) forwarded a copy of the document to him as a courtesy.

“It was news to us, when we heard from MMS,” said Laura Ricketson-Dwyer, spokeswoman for CRMC. “But that’s not totally uncommon,” since the CRMC does not have jurisdiction over federal waters. “FERC did not have to notify us.”

Each wave-energy converter would be capable of generating 1 megawatt of electricity when operating at peak capacity - typically, during the winter - and about 0.25 megawatts on average. If all 100 were constructed, the wave energy alone would generate an average of 300 gigawatt-hours of electricity per year, according to the FERC.

The electricity would be transmitted from the converters into an offshore substation, and then the power would be sent to Block Island via a single transmission cable buried about 3 feet beneath the sea floor. Part of that energy would be used on Block Island, which has some of the highest electricity costs in the country, and the rest would be transmitted to the mainland, coming ashore in the Narragansett village of Jerusalem.

Grays Harbor says it is already in negotiations “with a consortium of local utilities and companies” for them to purchase electricity from the project, and says existing overhead cables could handle the additional load it creates.

Although local officials have doubts about the prospects for wave energy here, Grays Harbor says prior research has given the company confidence it could work in the area.

“The site proposed therefore is not speculative,” Grays Harbor president W. Burton Hamner wrote in a letter to FERC Secretary Magalie Salas. “It is the best place for the only technology package we believe will work in that region.”

Hamner’s company cites a 2004 study published by the Electric Power Research Institute that said a 100-megawatt wave energy project would be competitive with a 100-megawatt wind farm. But that study looked at wave-energy resources in Massachusetts, not Rhode Island, and Grays Harbor acknowledges in its permit that “Rhode Island wave energy is less than [in] Massachusetts.”

Grays Harbor is specifically applying for a preliminary permit from FERC, which would allow the company to do in-depth research on the project for three years. From there, the company would apply for a pilot project permit, which would allow it to build a 5-megawatt demonstration version of the project. If the pilot project is successful, the company would apply for a standard 30-year FERC permit to build the full-scale development.

If all were to go as Grays Harbor hopes, the company expects to have the 5-megawatt demonstration project up and running in 2011, with the full project to follow in 2016.

Grays Harbor cited two issues that could hamper the project: One is the structures’ possible impact on navigation lanes, although the company downplayed the likelihood of that being a problem. The other is the project’s possible impact on fishermen. “There is no question that where there are wave-energy systems, recreational and commercial fishing will be affected,” the company says in its application. “This is unavoidable because of the conflicting use of the ocean space.”

To reduce the project’s impact on fisheries, Grays Harbor said it is considering turning the wave structures into “artificial reefs … that can support fish and other marine organisms.”

The public has until Jan. 28 to comment on the proposal at the commission’s Web site.

The permit application for the Rhode Island offshore wave-energy project was filed by Grays Harbor on Oct. 22 and processed by FERC on Nov. 28. On the same day it submitted its application to develop the Block Island project, Grays Harbor filed applications for nearly identical projects off Cape Cod, New York, New Jersey, Hawaii, and San Francisco and Ventura, Calif.

And in July, the company was granted a preliminary FERC permit for a similar project in Washington state.

“Our intention in applying for nearly identical projects in several sites is to achieve significant economics of scale in site evaluation and to help federal agencies develop effective agreements regarding management of ocean renewable-energy projects,” Hamner wrote in his letter to Salas.

But all the projects depend in part on the outcome of a bureaucratic turf war between two federal agencies:

• The MMS, which was granted jurisdiction over most offshore energy projects by a 2005 federal energy law to the MMS, but which is still completing its final regulations for offshore projects. (READ MORE)

• And the FERC, which already has jurisdiction over inland hydroelectric projects, and this fall asserted its right to review and permit wave-energy projects as well.

Unsurprisingly, Grays Harbor has sided with FERC and agreed that the commission has authority over wave-energy projects. But the company also said the MMS still has jurisdiction over leasing the area in question - an issue the FERC has promised to work that out with the other agency.

In its permit application, Grays Harbor promised to work closely with state and local authorities. The company raised the prospect of establishing public development authorities with area communities to establish co-ownership of the project, and also says it “will develop a Settlement Agreement with stakeholders.”

Grays Harbor also pledged to hire local workers for the project, if possible. “The Providence area has capabilities for manufacturing wave energy converters and every attempt will be made to locally construct the machinery needed for the project,” the company says in its application.

Ricketson-Dwyer, the CRMC spokeswoman, said she is not surprised to see more companies moving quickly to develop ocean-energy projects.

“People are – no pun intended – entering the waters here and getting into this.” The CRMC plans to keep an eye on what happens over the next few weeks, she said, adding: “It’s really to early for us to even know if we have any role in any of this.”

Meanwhile, Ricketson-Dwyer said, the proposal underlines the need to finish the state’s Ocean SAMP, in order to streamline the permitting process for offshore energy projects.

Grays Harbor Ocean Energy Co., based in Seattle, is a privately-owned renewable-energy developer. For more information, visit www.GraysHarborOceanEnergy.com.

The Federal Energy Regulatory Commission oversees interstate electricity sales; wholesale electric, natural gas and oil pipeline rates; liquified natural gas (LNG) terminals; interstate pipelines; and non-federal hydropower projects. For more information, visit www.ferc.gov.

The R.I. Ocean Special Area Management Plan (SAMP) will define use zones for Rhode Island’s offshore waters. The R.I. Coastal Resources Management Council (CRMC) is leading the effort, with the support of the University of Rhode Island Coastal Resources Center and Rhode Island Sea Grant, and the participation of the U.S. Minerals Management Service, Army Corp of Engineers, R.I. Department of Environmental Management and other agencies with authority in state and federal offshore waters. Additional information is available at SeaGrant.gso.uri.edu/OceanSamp.