Thursday, April 24, 2014
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Plans by the Norwegian energy giant Statoil to develop a $120 million wind turbine demonstration project off Maine's coast depend on whether state regulators approve the company's proposed electricity rate and contract terms at a meeting Thursday. The Maine turbines would look similar to the Hywind test turbine (seen here), now producing power off the coast of Norway.
Photo from Trude Refsahl / Statoil
"At a time when bids for manufactured goods can originate throughout the world, it is essential that when ratepayers are subsidizing a project of this magnitude, the investments in Maine be clear and absolute," Woodcock wrote.
Statoil's proposal is one of two that won $4 million grants from the federal Department of Energy last month to showcase innovative technologies and improve performance for offshore wind power. Both projects are competing for final awards of as much as $47 million.
The other project, Aqua Ventus, is led by the University of Maine and a team that include Cianbro Corp., Bath Iron Works and the Spain-based company Iberdrola, the world's largest wind power developer and the parent of Central Maine Power Co. That pilot project would float two, six-megawatt turbines off Monhegan Island.
The Statoil project is under the microscope now because it submitted a proposal to the PUC last year that included the rate it would charge Maine utilities for the electricity generated by the turbines. That rate worked out to a total of 29 cents per kilowatt hour, roughly double what Maine's household customers now pay for energy and delivery.
In its new proposal, Statoil trims the rate to 27 cents. That's still well above market rates and would total $186 million over the 20-year contract. But Statoil and its supporters point out that the cost would be spread among most Maine power customers. For an average household, which uses 550 kilowatt hours a month, it would add roughly 75 cents to an $82.50 bill.
The above-market rate would help provide capital for Statoil to develop a small-scale wind park that would take what the company has learned in Norway to the next step, said Aamodt, the Maine project manager.
In Norway, the Hywind project has exceeded performance goals, she said, generating power 50 percent of the time while surviving 50-foot waves and hurricane-force winds. But the single 2.3-megawatt turbine was expensive to build, roughly $62 million.
Research and development in Maine would help Statoil reach its goal of producing power at 10 to 15 cents per kilowatt hour in a commercial wind park in this decade.
"The technology is proven," she said. "We know it works. But we want now to cut costs. We want to deploy it in a park setting and use it to look at everything around, such as how to build a local supply chain, how to interact with fishermen."
The commitment to building that supply chain will be a key factor in the PUC's decision. In its new proposal, Statoil says it will aim, "to the greatest extent possible, to utilize local suppliers in the planning and execution phase of the project." It estimates that suppliers would employ 150 people full time during peak construction.
The company also pledges to locate its project operations center in Maine. It already has established a collaborative research and development relationship with UMaine's Advanced Structures & Composites Center for materials testing.
Statoil also says it would involve Maine contractors and suppliers in any large wind park development it undertakes on the Northeast before 2025. It pledges good-faith efforts to award contracts representing at least 10 percent of capital spending, $100 million, to qualified Maine-based suppliers and contractors.
The PUC commissioners will have to decide whether Statoil's commitments, as written, go far enough to satisfy Maine law and balance ratepayers' risk with an acceptable level of economic benefits.
In October, the PUC's chairman, Tom Welch, indicated that Statoil's initial proposal didn't go far enough. His skepticism was echoed by the newest commissioner, Mark Vannoy. Both men were appointed by LePage.
David Littell, the third commissioner and an appointee of Gov. John Baldacci, indicated that he supported the project as originally presented.
Last year, the PUC looked favorably on a pilot ocean-energy project with above-market rates. It approved a contract for Portland-based Ocean Renewable Power Co.'s tidal generator in Eastport. The rate is 21.5 cents per kilowatt hour, but the tiny, 180-kilowatt output of the initial phase has little impact on electricity bills.
Staff Writer Tux Turkel can be contacted at 791-6462 or at: