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    Request for offshore wind power contract raises ratepayer concerns


    June 8, 2022 - Tux Turkel, Portland Press Herald, Maine

     

      Jun. 8—The developers of a planned offshore wind energy research array have asked state regulators to approve a 20-year electricity supply contract with terms they say are essential to their investing $1.2 billion in a project that could help launch a new renewable energy industry in Maine.

      But Public Advocate William Harwood said this week that while he supports the state's renewable energy ambitions, he's concerned that the power contract could add to the bills of struggling Maine electricity customers if the proposed price is significantly above wholesale market rates.

      "We've got an affordability issue," Harwood said. "There are a lot of people excited about offshore wind, but my job is to make sure people aren't paying too much for electricity."

      As a practical matter, any impact on electric rates would be far off. The research array wouldn't be built until late in the decade, at the earliest. But a 2021 law requires a contract to be negotiated within nine months of filing at the Maine Public Utilities Commission. That timeline will make the upcoming process a near-term test of the state's ability to balance its climate and renewable electrification goals with the imperative to protect ratepayers.

      At this point, details of the contract — including the potential cost to ratepayers — are confidential. The proposed terms are redacted in the public version of the filing. The developers asked the PUC to shield that information from public view, in recognition of global competition to develop cost-effective floating offshore wind technology.

      The agency agreed to honor the request, which is common practice to protect proprietary information and intellectual property. But the protective order is temporary, according to Susan Faloon, the PUC's spokeswoman. Once the proposal is filed, the agency can determine whether any protected information can be made public.

      The developers say that they have performed extensive due diligence to comply with the law's directive to "determine the lowest reasonable cost to ratepayers that is sufficient to enable the financing, construction and operation (of the project)." That figure can be adjusted due to changing costs prior to a final investment decision, according to the law.

      "We've tried very hard to make as much of this public as we could," said Tony Buxton, an attorney representing the developers.

      Buxton noted that the Office of Public Advocate and the Governor's Energy Office will participate in the negotiations, and that the PUC will hire an expert consultant.

      "There will be pretty tough scrutiny of the costs," he said.

      Still, state law doesn't specify the process for considering the contract or whether it will be subject to a public hearing. Those decisions haven't been made yet, Faloon said.

      OFFSHORE WIND AMBITIONS

      The filing was made by Pine Tree Offshore Wind, a partnership between global energy companies Diamond Offshore Wind and RWE Renewables. In documents filed in late May, the partnership laid out how the deal, known as a power purchase agreement, is vital to Maine's ability to develop a major new industry based on a patented floating concrete platform designed at the University of Maine.

      The power agreement, the filing says, is essential to the array, "which in turn is essential to Maine's development of its port infrastructure, to Maine's economy, and to achievement of its climate goals."

      The purpose of the array is to study the operation of a multi-turbine wind farm floating in deep water in the Gulf of Maine. It will help determine the impacts of larger-scale projects and subsea cables to the mainland on the marine environment and existing uses, such as fishing.

      Pine Tree is an affiliate of New England Aqua Ventus, which has been working for more than a decade to build a one-turbine floating demonstration project 14 miles off Monhegan, using the UMaine technology. It will be a full-size version of the one-eighth-scale prototype tested off Castine in 2013 and 2014.

      New England Aqua Ventus is in the process of preparing applications for various permits. The estimated operation date has been pushed back several times, but construction is now projected to begin in 2023.

      When finally operational, the 11-megawatt turbine would have the capacity to meet the yearly electricity needs of more than 5,000 Maine homes. The cost of the demonstration project for a typical CMP household would be roughly 70 cents per month in the project's first year of operation, based on a power purchase agreement approved by the PUC in 2019.

      Many lobstermen have opposed the Monhegan project, as well. Last year, they engaged in a dispute with survey vessels setting out the route of an underwater cable to the mainland.

      JOBS AND REVENUE PROMISED

      The research array would be built in federally leased waters 45 miles east of Portland. It would consist of 10 floating turbines with a capacity of 144 megawatts. The project is planned for commercial operation in 2028.

      Building the array would trigger at least $500 million in spending in the state, create 3,250 jobs and generate $43 million in tax revenue, the developer's estimate. It would generate enough power to meet the annual needs of roughly 80,000 homes.

      The filing comes as Maine is in the midst of developing a so-called Offshore Wind Roadmap, a federally funded effort to balance the state's energy and climate goals with protection of fisheries and coastal environments. It's part of the Maine Offshore Wind Initiative, overseen by the Governor's Energy Office.

      Maine is also part of a three-state task force set up by the U.S. Bureau of Ocean Energy Management to help plan for commercial offshore wind farms in the Gulf of Maine. The bureau plans to hold a lease sale in 2024.

      But lobster fishing interests have pushed back against the prospect of offshore wind power in the gulf, fearing it would put their traditional harvest areas off limits. And some environmental advocates are opposed to the potential siting of a wind port facility at Sears Island in Searsport.

      A FAST-GROWING INDUSTRY

      The research array would help lay the groundwork for a multibillion-dollar buildout of floating offshore wind in the Gulf of Maine and the economic benefits to the state that would come with it, the developers say in an extensive petition filed with the power purchase request.

      They use Denmark as a model: It was the first country to install a commercial offshore wind farm 30 years ago. Today, after building up its ports and manufacturing sector, Denmark employs 33,000 people in its wind industry, and the port of Esbjerg has staged more than 50 wind farm projects. At the same time, Denmark remains the largest fishing nation in the European Union.

      "To capitalize on its decade worth of work on offshore wind, Maine now needs to act to consolidate its leadership position, build a port, and become the hub for construction, operations, and maintenance for floating offshore wind," the petition filed with the PUC states.

      Offshore wind is ramping up to become a multibillion-dollar energy sector along the Eastern Seaboard, with projects planned or taking shape from the Carolinas to Massachusetts. All those projects, however, are in shallow water using technology pioneered decades ago in Europe. Maine isn't striving to compete with them.

      The proposals in Maine are for the next generation of wind energy, using semisubmersible platforms floating far offshore, where winds are stronger and steadier. The UMaine technology relies on a patented concrete hull that can be built locally and compete with steel construction and ports being developed in Europe and Asia.

      "Building the nation's first purpose-built floating offshore wind port would give Maine an insurmountable lead and the ability not only to build projects for its own needs but also to build projects that will deliver power to the rest of New England," the petition states. "The combination of the research array and port construction is how Maine wins the floating offshore wind race."

      ___

      (c)2022 the Portland Press Herald (Portland, Maine)

      Visit the Portland Press Herald (Portland, Maine) at www.pressherald.com

      Distributed by Tribune Content Agency, LLC.

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