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Fresh power deal for $205m Rhode Island offshore wind farm

A map of Rhode Island, showing Block Island in the south-west

Developers Deepwater Wind and utility National Grid have come forward with a fresh power purchase agreement for the proposed $205m Block Island offshore wind farm in Rhode Island.

The 20-year deal is broadly similar to the previous PPA, which was rejected by state regulators in April because it wasn’t “commercially reasonable”.

The main difference this time is that if the developers can build the eight proposed wind turbines more cheaply than the expected $205 million budget, they promise to pass on the savings to electricity consumers.

The amended PPA comes following the passing of a new law to effectively bypass April’s rejection of the project by the Rhode Island Public Utilities Commission.

The legislation was passed by Rhode Island lawmakers last month, calling for a new PPA from the offshore wind developers capped at 24.4 cents per kilowatt-hour of energy produced – the cost contained within the PPA rejected by the PUC.

National Grid and Deepwater Wind have now come up with a new PPA priced at 23.5 cents per kilowatt-hour, rising at 3.5% a year from 2013.

Under the law, the developers are required to develop and construct the 20MW wind project through an “open book” procedure, revealing their costs as they proceed.

And, if the project proves more expensive than expected, Deepwater Wind would have to absorb the overrun.

Decision

The state’s Public Utilities Commission will now have another attempt at approving the offshore wind project proposal, obliged by law to take a decision within the next 45 days, and also obliged to consider the economic and environmental benefits of the project.

Rhode Island Governor, Donald L Carcieri, and other supporters of the project, believe the high costs of the relatively smallscale Block Island project are justified because the project would pave the way for a much larger second phase of the wind farm, boasting 106 turbines.

We have the opportunity to once again control our economic destiny” – Governor Donald Carcieri

With the larger project offering up to 1.3% of Rhode Island’s electricity supply, the economies of scale could bring down costs. If future fossil fuel prices rise, the Block Island project could also prove more competitive.

It could also, potentially, attract a major offshore wind manufacturing and service industry to Rhode Island.

Governor Carcieri said: “We have the opportunity to once again control our economic destiny, to lead the nation in the creation of a new industry, and to create hundreds, if not thousands, of good paying jobs for Rhode Islanders.”

Under a $22 million Transportation Investment Generating Economic Recovery (TIGER) grant from the federal government, more than 120 jobs have already been created in Rhode Island making port improvements at Quonset Point.