Deepwater Wind sets first of five foundations for wind farm project

PEOPLE LOOK out at a Deepwater Wind LLC offshore wind farm under construction off the coast of Block Island on Monday. Deepwater Wind LLC is installing a massive steel frame, more than 1,500 tons, that sits on the seabed and juts about 70 feet from the water south of Rhode Island. By the end of next year there will be five of these platforms, each supporting a huge turbine, the first offshore wind farm in U.S. waters. / BLOOMBER NEWS/SHIHO FUKADA
PEOPLE LOOK out at a Deepwater Wind LLC offshore wind farm under construction off the coast of Block Island on Monday. Deepwater Wind LLC is installing a massive steel frame, more than 1,500 tons, that sits on the seabed and juts about 70 feet from the water south of Rhode Island. By the end of next year there will be five of these platforms, each supporting a huge turbine, the first offshore wind farm in U.S. waters. / BLOOMBER NEWS/SHIHO FUKADA

BLOCK ISLAND – Deepwater Wind LLC reached a milestone this weekend after successfully setting a 400-ton wind turbine frame – or “steel jacket” – into the seabed approximately three miles off the coast of Block Island.
The installation marks the first of five foundations to be set, which would eventually support the company’s five-turbine, 30-megawatt Block Island Wind Farm project. The wind farm is scheduled to come online in the fourth quarter of 2016, becoming the country’s first offshore wind farm. Deepwater Wind leaders and offshore wind advocates hope the project will prove the model in the United States and pave the way for more projects to fill out the fledgling industry.
“We know the world is watching closely what we do here, and we’re incredibly proud to be at the forefront of a new American clean-tech industry launching right here in the Ocean State,” Jeffrey Grybowski, Deepwater Wind CEO, said in a prepared statement. “This moment has been years in the making – and it’s just the start of something very big.”
Indeed, Grybowski and Deepwater Wind aim to use the Block Island project as a springboard toward the development of larger wind farm projects off the shores of Rhode Island, Massachusetts, New York and New Jersey.
The Block Island project, if successful, would generate about 125,000 megawatt hours annually, which is enough to power nearly 90 percent of Block Island’s electricity demand and about 1 percent of Rhode Island’s.
But the offshore wind energy doesn’t come without a cost.
National Grid Plc, Rhode Island’s largest electricity utility, is slated to build a bidirectional transmission line for the project from Block Island to the mainland costing about $107 million. The utility has locked into a contract to pay Deepwater Wind 24.4 cents per kilowatt hour in the first year of production, a rate that will increase 3.5 percent each year for the duration of the 20-year contract.
To compare, this year, National Grid’s residential standard offer – or blended rate – is 10.4 cents per kilowatt hour, which includes a renewable energy standard surcharge designed to help subsidize the construction of new alternative energy projects in Rhode Island.
The high cost of offshore wind has largely stymied the U.S. offshore wind industry to date, perhaps most notably happening earlier this year when Cape Wind LLC – a Massachusetts-based offshore wind company – lost contracts with two Massachusetts utilities – National Grid and Northeast Utilities NSTAR – after failing to meet financing deadlines. The contractual fall-through effectively killed its proposed $2.6 billion, 468-megawatt project, which for more than a decade was fought against by opponents ranging from local fishermen to political giants, such as the Kennedy family and billionaire Bill Koch.
Onshore wind turbines generate some of the cheapest sources of electricity at about $85 a megawatt hour, according to an analysis done by Bloomberg News, but “installing equipment at sea is much more difficult, driving up costs to about $175 a megawatt hour.” Grybowski told Providence Business News earlier this year that the cost of offshore wind development could fall by 40 percent once the industry matures.
Deepwater Wind has projected the Block Island project would cost about $225 million, and earlier this year secured more than $290 million in debt and equity financing, adding to the company’s more than $70 million in equity provided by company owners.
Success of the Block Island project would signal a major step forward for the offshore industry in the United States. But looking ahead, a question mark hangs over the financing of Deepwater’s next project, Deepwater One, proposed for federal waters more than 12 miles off the coasts of Rhode Island and Massachusetts, an area between Block Island and Martha’s Vineyard. Now in its planning stage, the company hasn’t announced any financing packages to date and Grybowski could not be reached for comment.
Grybowski celebrated the weekend milestone on Monday with a ferry tour of the construction site with Gov. Gina M. Raimondo, U.S. Secretary of the Interior Sally Jewell, U.S. Bureau of Ocean Energy Management Director Abigail Ross Hopper and more than 100 other elected officials, regulators and environmentalists.

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