From: Ocean & Offshore Energy Projects and Policy Blog
If approved, the Deepwater Wind Energy Center will be installed in four phases, with construction starting in 2014. The first 50-turbine phase will go on line in 2015 with additional construction phases to follow.
The Deepwater Wind Energy Center proposal replaces Deepwater Wind’s 2008 proposal to construct a 350-megawatt, 100-turbine project. Deepwater Wind reports that the aggressive new proposal was motivated by technological innovations that increase energy generation potential while diminishing costs, as well as DOI’s recently announced “Smart from the Start” regulatory initiative.
Diminished timelines for regulatory approvals may help to overcome investor reluctance. Regulators previously predicted time frames of 7 to 9 years before an offshore wind project could be brought online. Investors typically shy away from projects with start-up timelines longer than (at the most) 5-6 years. Deepwater Wind, along with most U.S. offshore wind developers, has lauded the proposed revisions to the regulatory process under the Smart from the Start program which among other things, promises expedite permitting for qualifying offshore renewable energy projects and may enable regulators to issue the first submerged land leases to developers by late 2011 or early 2012. See also here.
In addition, technological improvements to wind turbines have the potential to materially impact economy of scale analysis of offshore wind projects and make larger projects far more cost-effective. Here, Deepwater’s 200-turbine plan will produce more than triple the energy wattage than the 100-turbine plan. This is in part due to innovations in turbine design. While most existing European and Asian offshore wind installations have used 3 to 3.6 megawatt turbines, manufacturers (including Areva Renewables and REpower Systems) have now made 5 and 6-megawatt turbines available.
Using larger turbines improves the economies of scale for developers like Deepwater Wind and can translate into better pricing for rate-payers. Deepwater Wind CEO Bill Moore has predicted that the 200-turbine project will be more cost-effective than Deepwater’s much smaller Block Island wind farm (turbines, wattage) and could reduce prices a third lower than the 24.4 cents/kWh rate set under Deepwater Wind’s Block Island project power purchase agreement with National Grid. “This ‘second generation’ of offshore wind farms will be larger and farther from shore, and will produce lower priced power, using more advanced technology than the offshore projects announced to date. We expect the offshore wind industry in the United States to follow the European experience, where a more mature industry is building larger projects farther from shore,” Moore said in a press release.
Provided the project obtains a myriad of state and federal regulatory approvals, the Deepwater Wind Energy Center will be located in a 270 square-mile area between Rhode Island and Massachusetts in federal waters directly south of Sakonnet Point between Block Island to the west and Martha’s Vineyard to the northeast. This area is subject to a Memorandum of Understanding between the states of Massachusetts and Rhode Island, and is referred to as the “area of mutual interest.” The proposed project area is consistent with Rhode Island’s recently issued and approved Special Area Management Plan (SAMP)—essentially, an ocean-zoning plan designed to identify and protect fishing grounds, shipping lanes and glacial rock formations. Deepwater Wind submitted an application for a submerged land lease on the area of mutual interest in October 2010.
The multi-state transmission network, known as the New England-Long Island Interconnector (NELI) will extend from Massachusetts to New York and would enable Deepwater Wind to sell power to any of the states located along the seaboard where the network will be located including Connecticut, Massachusetts, New York and Rhode Island. The ability to distribute and sell energy to multiple states ensures that Deepwater will be able to sell all of the power produced by its project and also ensures that the investment cost of construction that is factored into power rates will not fall on ratepayers in Rhode Island alone.
As of this writing, it is not clear whether the NELI transmission system will ultimately interconnect with the planned Atlantic Wind Connection subsea transmission system which is planned to extend from New Jersey south to Virginia.