RI Supreme Court Upholds Block Island Wind Farm Power Contract
A Rhode Island Supreme Court ruling today paves the way for Deepwater Wind to advance the permitting and development of its planned Block Island Wind Farm, which remains on track to be the first offshore wind farm in the nation.
The Supreme Court upheld Deepwater Wind’s power purchase agreement with National Grid for the renewable energy generated from the planned Block Island Wind Farm. The Rhode Island Public Utilities Commission had approved the power purchase contract in August 2010.
“Today’s ruling solidifies Rhode Island’s position as a national leader in building a clean energy future for our country,” said Deepwater Wind Chief Executive Officer William M. Moore. “We’re gratified by today’s ruling and what the Block Island Wind Farm will mean not only for the offshore wind industry but also for Rhode Island’s environment and economy. We’ll now proceed to the permitting and construction planning phases of the project, working closely over the coming months with state and federal agencies as well as Block Island residents and other stakeholders.”
The Block Island Wind Farm, one of two Rhode Island-area offshore wind farms being developed by Deepwater Wind, is a demonstration-scale, 30-megawatt offshore wind farm with five wind turbines. The farm will be located in Rhode Island state waters, about three miles off of the southeastern coast of Block Island.
The wind farm will produce more than 100 million kilowatt hours of clean energy annually. It is expected that the wind farm will supply approximately 90% of the island’s power needs, with the remainder supplied from the mainland grid via the Block Island Transmission System being developed in conjunction with the wind farm. This project will allow the island to power down and place on standby the expensive diesel fuel generators that now power the island. Even while supplying the island with the majority of its power needs, the wind farm will export 90% of the power it generates back to the mainland grid through the new undersea transmission cable.
Site preparation work, at Deepwater Wind’s Quonset Point manufacturing hub, is planned to begin in 2012, with the wind farm in commercial operations in 2013 or 2014.
The approved power agreement caps the energy cost at $0.24/kilowatt hour in the first full year of commercial operations, which translates to a $1.35 charge per month for a typical Rhode Island household. Under the “open book” pricing structure, Deepwater Wind cannot exceed that cap and must return any cost savings reaped during construction to ratepayers. Conversely, Deepwater Wind must absorb any construction cost overruns.
The Block Island Wind Farm and the transmission cable linking the windfarm, the island, and the mainland are expected to require a capital investment of approximately $250 million, all of which will be raised from the private sector. Deepwater Wind has invested in excess of $10 million in the Block Island Wind Farm to date.
According to an independent expert hired by the Rhode Island Economic Development Corporation, the project is expected to inject over $100 million in economic activity in the state and create approximately 200 construction period jobs locally, as well as permanent operations and maintenance jobs. In addition, as the nation’s first wind offshore wind farm, the project will position Rhode Island as a natural hub for the emerging offshore wind industry, and the hundreds of jobs associated with the construction of a utility-scale project. Neighboring states, especially Massachusetts, will also economically benefit from a utility- scale wind farm in the region, which will require coordination between the states to supply workers and make port infrastructure available.
Deepwater Wind is the State of Rhode Island’s “preferred developer” for offshore wind, having won a competitive bidding process in 2008.
The developer is also actively planning offshore wind projects located 15 to 25 miles offshore to serve multiple East Coast markets, including New York, New Jersey, Massachusetts, Connecticut and mainland Rhode Island.
The 1,000-megawatt Deepwater Wind Energy Center, located off the coasts of Massachusetts and Rhode Island, would be the nation’s first regional offshore wind farm, capable of serving multiple markets. The developer plans a similarly sized regional offshore wind farm off the coast of Long Island, New York.
For its project serving New Jersey, Deepwater Wind has formed Garden State Offshore Energy in partnership with PSEG Global, a wholly owned subsidiary of PSEG (NYSE: PEG).