Deepwater to add wind turbines to project off Block Island

PROVIDENCE, Oct 31, 2009 (The Providence Journal - McClatchy-Tribune Information Services via COMTEX) -- NGG | Quote | Chart | News | PowerRating -- One issue disputed by Deepwater Wind and National Grid in their negotiations over a power purchase agreement has been resolved by an amendment to a state renewable energy law.

Both chambers of the General Assembly approved new language in the law late Thursday night.

The change will allow Deepwater to install up to eight 3.6-megawatt turbines off the coast of Block Island rather than the six machines that National Grid argued was the maximum number allowed under the original version of the law. Deepwater says that by putting up more turbines it will be able to offer a lower price for its power.

"This amendment...is in the best interests of Rhode Island ratepayers," said Paul Rich, Deepwater's chief development officer.

Negotiations over a power purchase agreement stalled earlier this month. National Grid, Rhode Island's largest electric utility, contended that the price Deepwater quoted for the energy from its wind farm was far too high. According to National Grid's calculations, the price was more than three times the cost of electricity from conventional sources, including natural gas power plants.

Since talks stalled two weeks ago, Deepwater executives have maintained that the price of energy from the project was higher in part because National Grid believed that only six turbines were allowed off Block Island. Because of economies of scale, more turbines would mean lower prices, Deepwater said.

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National Grid based its position on language in the energy law that allowed a 10-megawatt wind farm off Block Island. Industry standards for power output from a wind turbine generally assume that it will operate at 40-percent capacity; when the wind is not blowing, it will not produce power.

Therefore, a wind farm with six 3.6-megawatt turbines would produce 8.6 megawatts of power. Adding one more turbine would generate more than the 10-megawatt limit.

The amendment passed by the House and Senate on Thursday specifies that Deepwater can install eight turbines in its Block Island project. The new legislation also extends by a month the deadline for the state Public Utilities Commission to rule on an agreement, until Jan. 31.

On Friday, Governor Carcieri sent a letter to the commission encouraging its members to facilitate an agreement between Deepwater and National Grid. The governor acknowledged the high price of energy proposed by Deepwater, calling it "excessive."

"I have always stated that I support cost-effective renewable energy, not renewable energy at any cost," he said in the letter.

But he also emphasized that the state made a policy decision to support renewable energy development last June when he signed the law requiring National Grid to buy clean power.

"As I stated when this law was enacted, this important effort will accelerate our efforts to be the first state in the nation to take our energy needs into our own hands, through the development of clean, sustainable renewable energy off our shores," the letter said. "This legislation places Rhode Island at the epicenter for renewable energy on the East Coast, where we have estimated planned projects (beginning with this Block Island project) to produce well over $1.5 billion in private investment in Rhode Island and the creation of a minimum of 800 jobs with an estimated annual wages of $60 million. The Block Island project is the first step toward energy security as well as achieving our environmental and economic goals. Our focus must be to ensure that the long-term contract between National Grid and the developer is completed expeditiously."

The Block Island development is crucial for Deepwater because the company is planning it as a precursor to a much larger project. The company is proposing a100-turbine wind farm at least 15 miles off the Rhode Island coast some time after the project near Block Island is completed.

akuffner@projo.com

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