The Public Utilities Commission decides to reopen terms of the 2013 contract between Aqua Ventus and CMP because of changing energy markets.
by Tux Turkel, Staff Writer
Long-running efforts to secure a power contract for the first floating wind farm in the United States suffered a setback Tuesday when the Public Utilities Commission decided to delay its approval.
Without a long-term power contract, the experimental project off Maine’s coast near Monhegan Island is in danger of losing future federal funding, making it extremely difficult to finance the project.
The move took place as the three-member panel was meeting to vote on approving a long-term contract for electricity between Maine Aqua Ventus and Central Maine Power Co. It had approved initial terms of the deal in 2013.
But on Tuesday, the panel voted unanimously to seek a new round of public comments before making a final decision on the project. A small-scale prototype of the wind farm was tested off Castine, but construction of a full-scale model has not yet begun.
The Maine Aqua Ventus wind project was first proposed in an era when natural gas and oil prices were high and volatile. Wind and solar power technology were in their early stages. That resulted in a power contract with well-above-market costs, reflecting the energy markets of the time. An average CMP home customer would pay an additional 73 cents a month, or $8.70 in the first year, under the initial terms of the 20-year power agreement.
But things are different in 2018, the commissioners said.
“The world has changed,” Commissioner Bruce Williamson said.
Williamson, along with Randy Davis and the commission’s chairman, Mark Vannoy, voted to request a new round of public comments on whether the agency should reconsider the terms of the proposed power contract. They cited low wholesale natural gas prices created by tapping shale deposits; a recent, large solar contract for power at a fraction of what Maine Aqua Ventus is seeking; and other changes as reasons to step back.
“Since the original term sheet was approved,” PUC spokesman Harry Lanphear said, “the financial partners have changed, the location of the interconnection has changed from Bristol to Port Clyde and the energy markets have significantly changed.”
During the deliberations, the commissioners also noted that current wholesale electric prices are roughly 7 cents per kilowatt-hour, while the demonstration wind project would start at 23 cents per kwh and escalate yearly at more than 2 percent under the initial terms of the power agreement. In contrast, a large solar project recently approved by the PUC, Dirigo Solar, has an initial price of 3.4 cents per kwh.
But Tony Buxton, a lawyer for the project, said the wind farm’s developers remain optimistic despite the PUC’s action. He said the power costs are expensive because the goal is to test a new concept, not compete with today’s commercial gas-fired power plants. With mass production, he said, rates would fall closer to a target of 7.7 cents per kwh.
“As a demonstration project, this is a tremendous investment,” Buxton said.
Buxton said millions of dollars have been invested on the project, and the wisdom of that spending can be seen in Massachusetts, where billions of dollars of public and private investment are pending around a state law to develop 1,600 megawatts of offshore wind power. That initiative is expected to create thousands of jobs, he said.
FITS AND STARTS
Maine Aqua Ventus is being developed by a consortium led by the University of Maine. The project would anchor two, 6-megawatt floating turbines to the seabed roughly 3 miles off Monhegan Island. The patented concrete hulls were designed and would be built at the university to test a lower-cost and more-resilient alternative to steel hulls. The goal is to demonstrate the feasibility of full-scale, floating wind turbines in deep water, where winds are more consistent and the turbines can’t be seen from the mainland.
The technology appears encouraging enough that the project won initial funding from the federal Department of Energy. The department was expected to decide whether to award Maine Aqua Ventus up to $40 million in final funding this year. To gather public input, federal officials came to Maine in 2017 for public meetings and to conduct an environmental assessment.
That federal money, however, is at risk without a power purchase agreement. In other states, offshore wind contenders seeking this funding called it quits in recent years when they failed to sign power contracts.
A leading environmental group that supports the project said it was disappointed but not surprised by the PUC’s action.
“This commission has once again decided to delay or overturn action that supports renewable energy in Maine,” said Dylan Voorhees, clean energy director at the Natural Resources Council of Maine. “They have repeatedly sought to move the goal posts on contracts for renewable energy.”
Voorhees said the commissioners are reflecting the priorities of Gov. Paul LePage, who appointed them. LePage typically opposes renewable energy subsidies because they raise rates for electric customers.
“In voting to delay approval of a contract,” Voorhees added, “the commission cited the intervening years as the reason. But much of the difficulty Maine Aqua Ventus and others have had in those years is attributable to actions of the LePage administration.”
Tuesday’s action is the latest challenge to the project.
Last year, the project dodged a bullet when a proposed law championed by some Monhegan residents that was meant to move the site farther from the island failed in the Legislature. The project now faces fresh opposition from some fishermen and residents in St. George, where the undersea cable would come ashore in the village of Port Clyde to connect with the power grid. A subsea survey of the route between Monhegan and Port Clyde is set for this winter.