Rhode Island Offshore Wind Experiment At Risk

Yesterday the Rhode Island Public Utilities Commission unanimously rejected the recently negotiated power-purchase agreement between the developer of the offshore wind project and National Grid, the state's electricity retailer.  The three members of the commission spoke out during the public hearing, each claiming that the proposed contract contained a power price that was too high and that the overall deal, based on the standard set by statute for evaluating power price agreements, was not "commercially reasonable." 

The PUC has been examining this contract and held several hearings to seek comments from the public over the past four months.  The conclusion of this effort was the rejection of the agreement, which puts into question the future of the demonstration offshore wind project planned off the coast of Block Island.  The demonstration project consisting of eight wind turbines that would have provided power to Block Island with any surplus power being sold to National Grid, was designed to test the economics and development challenges for a much larger offshore wind project consisting of 100 wind turbines that would have supplied Rhode Island electricity customers.

The power price negotiated in the agreement called for 24.4 cents per kilowatt-hour, nearly three times the current price that National Grid can buy wholesale power from natural gas-fired power plants.  The price was programmed to escalate by 3.5 percent annually over the life of the 20-year contract.  That feature would have pushed the price to 48.6 cents per kilowatt-hour by the end of the contract.  Additionally, there was a 2.75 percent mark-up on clean energy allowed under Rhode Island rules that would have further boosted the cost for the 480,000 ratepayers in the state.

Comments from the commissioners questioned the commerciality of the project and why the developer needed a demonstration project for offshore wind when the technology has been developed in Europe.  This latter point is not true because the weather and water demands for offshore wind turbines along the Atlantic coast is considerably different and more challenging than any existing offshore wind project in Europe.  Altantic coast wind turbines will need to be able to withstand hurricanes that European wind turbines do not encounter.

Both Deepwater Wind, the project's developer, and National Grid expressed diappointment with the ruling.  Now the question is what becomes of Rhode Island's plan to be a leader in offshore wind?  Once again economics and public attitudes trump idealistic government plans for alternative energy.