RenewablesOffshore

Offshore Wind RoundUp

Here's a quick round up on U.S. offshore wind activity that we've been covering here (Cape Wind) and here (Delaware).

Deja Vu All Over Again...DEIS for Cape Wind from MMS In November 2004, the Corps issued a 3000 page Draft Environmental Impact Statement (DEIS) for the Cape Wind offshore wind project. Thereafter, the Energy Policy Act was passed, giving MMS jurisdiction over the project and necessitating another DEIS. MMS released its DEIS two weeks ago, giving the thumbs up to the project. To the extent that the DEIS identified impacts on birds or fish, it found that most could be mitigated or would not be significant. The public has an opportunity to comment on the DEIS, and Cape Wind still needs to obtain several state and local permits, so don't expect project construction to start anytime soon!

Delmarva now considering onshore wind With Bluewater Wind's offshore wind proposal now stalled pending further study of costs, Delmarva, the utility which had been ordered by the PSC to enter into negotiations with Bluewater for a PPA, is now examining onshore wind options. Source: Capewind Gazette (1/25/08). According to the article, Delmarva Power has invested $3.7 million investigating Bluewater’s offer, and as a result of this expenditure, now says that it can more effectively shop around for and compare onshore wind options. But some quoted in the article wonder whether Delmarva Power's newfound excitement about offshore wind is a diversionary tactic to block the offshore project.

Delaware PSC Support for Offshore Wind Is Intermittent

Just like wind power is characterized by intermittency, so too, it appears that the Delaware Public Service Commission's support for Bluewater Wind's offshore wind proposal is intermittent as well. As discussed here, back in May, the Delaware PSC ordered Delmarva Power to enter into power supply negotiations with Bluewind, after it was selected as the winner in a competitive, head to head bidding process with a natural gas fired plant and coal gasification plant. Though the PSC recognized that in the short run, the offshore wind farm was more expensive than the other options, it concluded that the project would mitigate greenhouse gas emissions and help to promote energy independence.

But in October, the PSC seemingly changed its tune, according to articles here and here. In reviewing the results of the negotiations between Bluewind and Delmarva, the PSC found that Bluewind's proposal bore little resemblance to the one that had been submitted back in May. Among other things, Bluewind reduced the size of the project from 200 to 150 turbines, which pushed the costs up to 11 cents/kwh rather than the original 10 cents. And LIPA's decision to cancel its offshore wind farm in light of rising costs heightened concerns over construction costs associated with Bluewind's project.

One Offshore Wind Farm, Two Sets of Customer Surveys?

A recent study by University of Delaware researchers (we've discussed their public opinion surveys on offshore wind earlier here)shows that Delaware residents are willing to pay a premium for offshore wind energy. (9/21/07) The researchers evaluated the cost of a power purchase agreement between Delmarva Power and Bluewater Wind, which won the right to negotiate a contract with the utility following this competitive bidding process. The proposed contract rates showed that Bluewater's offshore wind project would cost ratepayers an average of $5.04 per month more than conventional power sources over the 25 year contract term.

But the University of Delaware survey results may be nothing more than academic - literally. According to this
article from Delaware Online(9/21/07), Delmarva, which has been compelled by the Delaware Public Service Commission to enter in to the purchase agreement, has announced that it will do some research of its own. The article describes that Delmarva is conducting a telephone survey of Delaware ratepayers on wind power, asking, among other things whether they would prefer to pay more for wind power.

"We'd have submitted an offshore wind farm if we'd known you'd have considered it!"

"We'd have submitted a proposal for offshore wind if we'd have known the Delaware Commission would have considered it" is apparently the essence of Connectiv Energy's request for reconsideration of the Delaware PSC's selection of Bluewater Wind's offshore wind proposal in a head to head competitive bid with a coal gasification and natural gas fired plants, according to this article,

Wind farm competition bid denied (7/4/07). The PSC rejected the argument as untimely, since it had already directed Delmarva Power to enter into negotiations with Bluewater Wind for a power purchase. Bluewater's attorney, quoted in the article, best summarizes the situation:

"They're too late," said Thomas McGonigle, an attorney who represents Bluewater Wind. "Bluewater took the risk. Conectiv did not."

NRG and Conectiv are now competing for the right to build a natural gas plant to back up the wind farm, providing power when the wind is not blowing at its peak.

Offshore Wind Round Up: DOD Approval for Cape Wind, Challenge To Delaware Project

Here's the latest offshore wind news round up. There's good news for Cape Wind according to this story from Renewable Energy Access, as the Department of Defense determined that the project would not interfere with radar missile defense systems. On the other hand, news for Bluewater Wind is not so promising;
Delmarva Power has challenged the Delaware Public Service Commission's order (6/20/07) which selected Bluewater's proposed offshore wind project as the winner in a competitive bid process and directed Delmarva to enter into contract negotiations. (See our earlier coverage here.
Delmarva argues the Commission did not apply its own criteria in choosing the bid (the independent consultant had chosen another proposal) and that the option selected (the wind plant, with gas back up) was not a formal bid.

I haven't reviewed Delmarva's petition but based on the description in the article, Delmarva's arguments sound plausible. Public utility commissions typically have broad discretion, but courts keep them on a tight leash when it comes to compliance with their own rules. If the PSC changed the rules of the bidding process (and again, I haven't followed the procedure closely enough to know), that's strong grounds for vacating the decision. Which would be a huge setback for offshore wind in Delaware.

Winds Blowing In Favor of Offshore Wind in Delaware

Sometimes, a desire to do the green thing trumps pure, short term cost considerations. Despite an earlier recommendation from a consultant, which ranked a proposed natural gas fired plant as superior to an offshore wind proposal in a competitive bid conducted by the Delaware Public Service Commission (see earlier posts here , the Delaware PSC, relying on a 73 page report from staff, voted to open negotiations with Bluewater Wind for the construction of an offshore wind farm to supply power to Delaware utility, Delmarva. The story is reported in this
article from the Delawareonline.com (May 9, 2007). The proposed natural gas plant would supply back up power, provided that Connectiv, which proposed the plant, is willing to serve in that role. The deal is not final yet, as other state agencies must also weigh in on the decision.

So, what motivated staff to reject the consultant's recommendations? You can read staff's report here, as well as a summary of the salient points from Carol Overland's Legalectric Blog. But basically, staff's report focused on the importance of building diverse energy supply. Staff noted that its proposal, while not the cheapest, will mitigate global warming and reduce dependence on fossil fuel. And using the natural gas plant as back up addresses any objections about reliability or intermittency (see our previous post on hybrids.

Offshore Wind, Up for A Challenge

A few weeks ago, I pondered whether offshore renewables, even more tested forms like offshore wind could compete head to head with conventional power sources in a competitive bid and prevail.   And at least preliminarily, the verdict is no, with conventional fuel sources like natural gas favored in a quest for cheaper power.  (Delaware Online, 2/23/07).

If you've not been following my posts on this topic, here's the back story.  The Delaware Public Service Commission is conducting a competitive bid on behalf of Delmarva Power for 400 MW of power from in-state suppliers.  (Delmarva claims that 400 MW will supply more power than it needs, but that's a side issue for now).  Three bidders responded to an RFP, with proposals described in detail here:  Bluewater Wind with a 600 MW offshore wind farm (with actual capacity more like 127 MW), NRG Energy with a coal gasification plant of 600 MW, and Connectiv, with a 180 MW natural gas fueled plant.