IN DEPTH: Maine mulls Aqua Ventus

State regulators will “most likely” hold public hearings in January to help decide whether ratepayers should subsidize the proposed two-turbine, 12MW pilot Maine Aqua Ventus I offshore wind project, a Public Utilities Commission (PUC) official tells Recharge.

Earlier this month, the consortium behind the first phase floating project submitted a draft agreement that seeks PUC approval for the annual sale of up to 43,099MWh of electricity to the state grid at a price of 23 cents per kWh, plus a 2.25% yearly inflation adjustment. About 6,000 homes would obtain electricity from the project.

Maine Aqua Ventus GP, LLC, consists of three general partners: Maine Prime Technologies, a spin-off company representing the University of Maine; Emera, an energy and services firm with headquarters in Halifax, Nova Scotia; and Cianbro, a Maine-based construction services provider.

The University of Maine’s Advanced Structures and Composites Center developed the VolturnUS proprietary offshore floating wind turbine technology that Maine Aqua Ventus I is based upon.  The VolturnUS 1:8, a one-eighth scale fully operating version of the full-scale concept, was launched on 31 May. It now operates in state waters in the Atlantic Ocean off the coast of Castine, Maine.

Maine Aqua Ventus I, if funded, will demonstrate the submersible concrete hull technology starting in 2018. No final decision has been made for a turbine supplier, according to Elizabeth Viselli, a spokeswoman for the Advanced Structures and Composites Center. The consortium plans to deploy a second phase utility-scale floating wind project in federal waters as large as 500MW from 2025.

The consortium’s proposed selling price for Maine Aqua Ventus I power is more than double what Maine households now pay, but below 27 cents per kWh that PUC commissioners approved in a 2-1 January vote for Statoil’s four-turbine, 12MW Hywind project.  

The state’s tentative deal with the Norweigan oil giant unraveled after Governor Paul LePage signed a bill into law that reopened the bidding process to enable participation by Maine Aqua Ventus. LePage argued that Hywind’s estimated $175m subsidy over 20 years was too high compared with the potential economic benefits for Maine. He also said the state should favor a project whose driving force has been its leading university, not one put forward by a foreign company.

Critics of LePage contend that Statoil negotiated in good faith with his administration and the previous one, only to have its proposal torpedoed for political reasons. Statoil in October pulled out of Maine, citing policy uncertainties for the sector.

It remains unclear to what extent the LePage administration will now support Maine Aqua Ventus I. Statoil’s exit was a blow to Maine’s effort to become a global leader in deepwater offshore wind development, as stability of its policy framework to encourage private investment  proved to be short-lived.

The consortium’s strongest argument for political and ratepayer support would appear to be economic. Todd Gabe, a professor at the University of Maine, did a study in August on the project’s potential economic impact in Maine.

It found that Maine Aqua Ventus I would create at least 340 full- and part-time jobs during the planning and construction phases over three years, and generate a minimum $120m capital investment.

Gabe found other significant impacts would include:

*Total economic output of at least $150.2m over 23 years of construction and operation.

*At least 50% of the investment would be paid to Maine-based entities. This corresponds to 70% of the non-turbine capital expenditures.

*A project-wide preference for hiring Maine-based suppliers and contractors. The concrete platform hulls and 270-foot-long composite towers will be fabricated dockside in the state.

*A commitment to spend at least $7m on research and development, design and engineering, and environmental monitoring provided by the University of Maine, its faculty and students.

*The project will connect Monhegan Island to the electric grid for the first time and also to the mainland by fiber optic cable. The turbines would be moored off the island.

*Make the project’s intellectual property available to the University of Maine for the state’s ongoing benefit.

The report does not estimate possible ratepayer support levels that would be required to launch the project. LePage’s administration has not indicated a subsidy amount that it would find to be politically acceptable.

Both Hywind and Maine Aqua Ventus I were competing with five other demonstration wind projects for funding under the US Energy Department’s Advanced Technology Demonstration Program.  The seven each received $4m to begin so-called front end engineering and design work, which must be 50% completed by February 2014. This also includes an economic analysis for the levelized cost of energy (LCOE) for a commercial wind farm of 100MW to 500MW.

DOE in May is scheduled to select up to three of the seven proposals to go forward and provide each with $46.6m in additional funding. The winners would be required to match that amount with their own money on a 1:1basis. This money will be used to complete remaining engineering and design work, plus to help complete construction and grid integration of the pilot projects by 2017.

Viselli says if PUC approves the proposed PPA, then the consortium will add that to its proposal in February for additional project funding.

Gabe’s report strongly implies that if authorities approve Maine Aqua Ventus I, the state will reap abundant economic “multiplier effects” from the planning and construction of a second project phase. Among them are $338m in annual economic output over five years of the project and $123.`m in labor income.

 With Statoil gone, a lot is riding on Maine Aqua Ventus I if the state still hopes to deploy 5GW of offshore wind by 2030.