The stakes are rising fast in the fledgling offshore wind-energy industry, as companies jockey for position in the waters from Cape Cod to the Carolinas.
The industry’s mantra: Despite high initial costs, offshore wind can offer an affordable alternative in the long term to conventional sources of electricity. Nowhere could that mean more than in Rhode Island, which is saddled with some of the nation’s highest electricity prices.
“We’re trying to achieve a savings for the Rhode Island consumer,” said R.I. Department of Energy Resources Commissioner Carol Grant.
You can add the recent natural gas emergency on Aquidneck Island to the list of reasons some residents and businesses would welcome faster adoption of renewable-energy sources.
Grant’s department declined to discuss whether the recent temporary suspension of gas service to 7,100 customers shows the need for Rhode Island to lessen dependence on fossil fuels. But it said the state is pursuing offshore wind and other so-called clean- and renewable-energy sources with “a sense of urgency.”
‘The intense competition we’ve seen … is completely unprecedented.’
RYAN ZINKE, U.S. secretary of the interior
“Gov. [Gina M.] Raimondo has demonstrated a sense of urgency since she took office about setting Rhode Island on a path for a clean, affordable, reliable energy future, including nationally leading efficiency programs, the acceleration of clean energy with her 1,000-megawatt goal and the transformation of the power sector,” the department said in a statement. “She will continue to lead the effort to solve the complex challenges involved.”
National Grid Rhode Island’s Jan. 21 suspension of service, mostly in Newport, was due to a dramatic pressure drop. The utility said the loss of pressure extinguished pilot lights, potentially allowing the combustible gas to escape into homes and businesses. Many customers were without heat for days.
Providence Mayor Jorge O. Elorza, who opposes a proposed liquified natural gas plant at the city’s seaport, supports developing offshore wind, but stopped short of citing the Aquidneck Island natural gas outage.
“Rhode Island should lessen its dependence on natural gas, considering the detrimental impact of climate pollution, our aging infrastructure, the potential for job growth, and the city’s carbon reduction and climate commitments,” Elorza said in a statement.
A spokesman for the R.I. Public Utilities Commission declined to discuss the Aquidneck Island situation but said state utility officials are investigating the cause of the incident.
Representing residents and businesses on the island, Fall River lawyer Brian Cunha has filed two class-action lawsuits against National Grid and pipeline operator Enbridge Inc. over the gas outage.
Meanwhile, the potential costs of offshore wind in the Ocean State should become a bit clearer when National Grid submits for state review its power-purchase agreement with Orsted US Offshore Wind, formerly Deepwater Wind. Expected to be filed soon with the Public Utilities Commission, the agreement should spell out prices National Grid will pay for electricity generated by Orsted’s proposed 700-megawatt Revolution Wind turbine farm, to be located 15 miles south of the Rhode Island coast.
“Revolution Wind is about a $1 billion investment,” Grant said. “Stay tuned. It will be an interesting set of discussions.”
National Grid and Orsted have been in negotiations over the agreement. Neither company would discuss the matter before the filing.
Reflecting how much interest in offshore wind energy has grown, three companies – Vineyard Wind, Mayflower Wind and Equinor Wind – collectively bid $405 million, or about $135 million each, in December to lease three sites in federal waters off Martha’s Vineyard for wind-energy farms that will be used to provide electricity in Massachusetts.
Officials seemed stunned by the high bids and called it “a record-smashing” day for the industry.
“We’re truly blown away by this result,” said Walter Cruickshank, acting director of the federal Bureau of Ocean Energy Management, which conducted the auction.
“The intense competition we’ve seen … is completely unprecedented,” added U.S. Secretary of the Interior Ryan Zinke.
Prior to December, there had been seven offshore wind-lease sales from North Carolina to Massachusetts, with an average acquisition fee of $6.7 million. The previous high was $42.5 million by Equinor in 2016 to lease waters off the New York coast, according to Power Advisory LLC, a Boston firm that analyzes electricity markets.
In comparison, Europe has more than 3,500 offshore turbines. As the industry has matured there, it has developed specialized supply chains and economies of scale that have lowered electricity prices, Power Advisory noted.
The American Wind Energy Association in Washington, D.C., is optimistic that wind energy will follow the same path toward affordability in the U.S.
Nancy Sopko, the association’s director of offshore policy and siting, said: “Just like the strides onshore wind made over the past decade [in the U.S], innovation and robust supply chains will continue driving down the cost of offshore wind to the benefit of New England consumers.”
Scott Blake is a PBN staff writer. Email him at Blake@PBN.com.
