Power from UM wind pilot project still expected to cost much more than current rates

VolturnUS, the wind turbine designed and built at the University of Maine, became the first grid-connected offshore wind turbine in the Americas to provide electricity to the power grid in June.
VolturnUS, the wind turbine designed and built at the University of Maine, became the first grid-connected offshore wind turbine in the Americas to provide electricity to the power grid in June. Buy Photo
Posted Dec. 04, 2013, at 5:24 a.m.
Last modified Dec. 04, 2013, at 4:25 p.m.

AUGUSTA, Maine — An offshore wind power pilot project for the Gulf of Maine could still cost the state’s electric ratepayers hundreds of millions of dollars over the course of a 20-year power purchase agreement now on the table before the state’s Public Utilities Commission.

The project, headed by the University of Maine, replaces a similar one proposed by Norwegian energy company Statoil, which dropped its plans for Maine several weeks ago after a political battle over its project.

But the economic benefits to the state in terms of job creation and the possibility of being the birthplace of an innovative floating turbine technology far outstrip any of the cost to Maine consumers, project advocates said Tuesday.

The PUC and a consortium of private industry headed by the University of Maine is expected Wednesday to release a draft term sheet for the VolturnUS I project. That effort would feature a pair of 6-megawatt turbines floating off the coast of Monhegan Island and would potentially build to a full-scale energy industry sparked in Maine, officials say.

“We try to maximize the local benefits as much as practicable,” said Jeff Thaler, an attorney working for the university for the project. “The cost for ratepayers when you work it out on an annual basis would be about a movie ticket a year — so about $8.70 per year impact.”

In return, the project would bring $120 million to $166 million of capital investment, with at least 50 percent of that paid to Maine-based companies or workers.

“With costs, you have to look at benefits,” Thaler said.

The project would sell its power for $230 per megawatt-hour or kilowatt price of 23 cents, about 14 cents more than the current standard offer rate set by the PUC. The aim is to bring the cost of energy produced by future offshore wind turbine developments down to 10 cents per kilowatt-hour by 2020, making it competitive with other energy sources.

The public release of the term sheet comes just weeks after the Norwegian energy giant Statoil announced it was no longer pursuing a floating turbine project off the coast of Maine and turning instead to Scotland. A previously agreed-to term sheet between the PUC and Statoil would have seen offshore power produced for $270 per megawatt-hour. But that deal became a political football as Republican Gov. Paul LePage opposed the project during the last lawmaking session in Augusta. LePage led efforts to change state law to reopen a previously closed bidding process for offshore wind in Maine so the university could compete for the federal grant against Statoil, and that led to Statoil’s withdrawal from Maine.

Several Democratic lawmakers criticized LePage for interfering, but his Energy Director Patrick Woodcock has said the governor’s primary goal has always been to reduce ratepayer costs. He’s cited Maine’s high energy costs, among the highest in the country, as a disincentive for business development and job creation here.

Woodcock said Tuesday that the LePage administration would be carefully reviewing the proposed term sheet and planned to weigh in on it before the PUC with specific observations in the weeks ahead.

He said it was important to note that the new term sheet seemed to hold specific benefits that were spelled out clearly, including benefits to the state’s flagship research university.

“We are encouraged that Maine companies were able to come together and be successful in this national competition,” Woodcock said.

The university’s term sheet, which still needs to be approved by a vote of the PUC’s board, details everything from how much the project will be paid for its power to how much of the project must be built by Maine hands and with Maine materials.

The PUC is expected to make a decision on the term sheet and move toward a full contract with the consortium by Dec. 31. Having that contract in hand is key to the project’s efforts to win a federal Department of Energy grant worth $47 million over the next four years.

In most cases, the draft term sheet requires that more than 50 percent of the project’s materials and labor be locally sourced.

Construction of the project is expected to create up to 341 full- and part-time jobs, according to a new economic analysis of the project’s impact by University of Maine Economist Todd Gabe, also being released Wednesday.

Monhegan Island, the nearest neighbor to the new development, will see benefits of its own, according to the term sheet. Monhegan — about 2½ miles from the future VolturnUS site — will receive free energy from the turbines. The consortium also has committed to bring a fiber optic Internet connection to the island.

The consortium stresses the opportunities a new offshore wind energy industry would bring to Maine’s universities and colleges. The industry would attract students to Maine’s universities, building new courses of study and degree paths that would attract more tuitioned students to institutions that have seen declining enrollment in recent years. Maine’s universities, community colleges and Maine Maritime Academy would play an important role in creating a workforce to build, maintain and move these turbines, according to Jake Ward, vice president for Innovation and economic development at the University of Maine.

The release of the draft term sheet marks the next step in a project that’s been in the works for several years and follows the university’s successful launch of a one-eighth-scale version of a floating wind turbine it designed and launched in May.

In June, that test model became the first floating wind turbine to be connected to the U.S. power grid, and it continues to reliably produce power, project officials said Tuesday.

Ward, speaking for the consortium’s limited liability company, Maine Aqua Ventus 1, said the state’s offshore wind resource coupled with the project’s unique design makes it very competitive compared with the five other projects around the U.S. that are vying for federal funding.

BDN writer Nick McCrea contributed to this report.

SEE COMMENTS →

ADVERTISEMENT | Grow your business
ADVERTISEMENT | Grow your business

Similar Articles

More in Business