To state officials and proponents of “green energy,” Thursday’s ceremony celebrating New England’s newest wind farm was a relatively small yet symbolic step toward greater energy independence in Maine.
But with a construction price tag topping $60 million, First Wind’s Stetson Mountain wind farm also highlights the fact that pollution-free energy doesn’t come cheap.
Between 2006 and 2008, generation of electricity from wind in the United States more than doubled to 21,000 megawatts, according to the American Wind Energy Association. But today wind-power projects nationwide are being delayed or put on the backburner due to economic turmoil.
So will the tightening financial market combined with a return — albeit likely a temporary one — to inexpensive oil undercut Maine’s burgeoning wind-energy industry just as it is poised to take off?
Industry representatives and economic analysts in Maine acknowledge that the recession is already having some impacts on projects in the region.
First Wind, the operator of both the Stetson Mountain and Mars Hill wind-energy facilities, has shelved plans for a wind farm on Grand Manan Island near the Maine-Canadian border as well as one in New York state.
Rising costs could also delay some or all of a proposal from another industry giant, Horizon Wind, that would have made Aroostook County the East Coast’s largest source of wind energy.
But representatives from both companies said they are pushing forward with their Maine projects despite the economic downturn.
“Relative to the rest of the country, Maine is still one of our best states, and we look forward to building those projects,” said Paul Gaynor, president of First Wind.
The Massachusetts-based company has several projects at various stages of development in Maine, but two are pending with state regulators: a 40-turbine wind farm in Lincoln, Lee, Winn, Burlington and Mattawamkeag; and a 17-turbine extension of the Stetson Mountain project outside of Danforth.
Gaynor said he hopes to begin construction on both of those projects later this year, pending regulatory approval. First Wind has already purchased the turbines for both projects. Applications for a third project, consisting of roughly 30 turbines in the southern Aroostook County town of Oakfield, could also be filed with the state this year.
Gaynor acknowledged, however, that the Grand Manan and New York projects have been at least delayed due to the credit crunch and the turmoil among the large financial institutions that back wind projects.
“Every single business in the country is in one way or another affected by what is happening,” Gaynor said. “While demand for renewable energy remains high, … our ability to access capital to be able to keep up with that demand is being hampered by the current financial crisis.”
The potential delays to Horizon Wind’s Aroostook County projects, meanwhile, have more to do with the transmission lines than lining up financial backers, according to the company’s Edward Wright.
Horizon Wind hopes to build up to 400 turbines in the farm fields and forests of The County. That ambitious plan, which could hypothetically produce up to 800 megawatts of pollution-free energy if the turbines are operating at maximum power, would be rolled out in several stages.
The first project was supposed to be a 120- to 140-turbine facility around No. 9 Mountain west of Bridgewater. Wright said the company still hopes to file applications with state and federal regulators for the No. 9 project before summer.
But first, the company would have to resolve an issue about how much it should contribute toward a $600 million transmission line connecting northern Maine to the New England power grid.
Southern New England utilities are also warning that an abrupt interruption of that much wind power feeding into the grid from Aroostook County could disrupt the entire system and cause widespread blackouts. Critics of wind power also contend that the unpredictable nature of the weather makes it impossible to rely on wind-energy facilities as a steady source of electricity.
Wright said the share of the costs that Horizon would be expected to pay to build that new transmission line were much higher than company officials anticipated.
“We are not prepared to do that in this economic climate,” said Wright, the project developer in Horizon’s Presque Isle field office. And when the cost of building transmission lines in Maine increases, that makes projects in this state less competitive compared to other regions of the country, he said.
But Wright said such transmission issues are not unusual or insurmountable. Officials from Horizon, Central Maine Power Co., Maine Public Service Co., and state and regional regulators will continue to negotiate those terms.
“We still think the picture in Maine is very positive, and we are still committed to the projects here,” he said.
Harley Lee, whose company, Endless Energy Corp., has been attempting to win approval for a Carrabassett Valley wind project for several years, said he hopes the markets will stabilize by the time he begins seeking project financing. Development money is harder to come by these days, however.
“It does make life more difficult,” said Lee, who wants to erect 30 turbines in Redington Township.
Some independent analysts predict that Maine’s ample wind and other natural resources — including millions of acres of forests and powerful tides ripe for harnessing — could actually help the state weather the economic downturn.
“I don’t think anybody believes oil is going to stay as low as it is now,” said Charles Colgan, professor of public policy at the University of Southern Maine’s Muskie School of Public Service.
Colgan said it is understandable that the recession could make it more difficult for lesser-developed projects to secure financing. But even that is hard to predict, he said. And a lot could depend on whether the Obama administration follows through on its pledge to attempt to jumpstart the economy, in part, by funneling huge amounts of money into “green energy” projects.
“I would expect that Maine will be a fairly active player in that,” Colgan said.
Jeremy Payne, executive director of the Independent Energy Producers of Maine, a nonprofit industry trade group, agreed that the signals from the Obama administration could be positive for Maine. Current tax incentives also make wind-power more attractive and competitive financially.
While the current price of oil does affect the competitiveness of wind power, he said, renewable energy has other values.
“People in Maine value the environment,” Payne said. “What you have to think about is: Is this a priority for us? Are we concerned about greenhouse gas emissions? … As we consider where we put our resources, I think renewable [energy] is the place to be.”