OffshoreMW, based in Princeton, NJ, in competition with several other aspiring offshore wind developers, has responded to a state request for expressions of interest in leasing a 250-square mile part of the outer continental shelf to develop a 1,000 megawatt turbine installation. The OffshoreMW proposal, made in company with Vineyard Power, identifies a site about 14 miles south of the Vineyard.
Cape Wind, whose decade of permitting travails may be coming to an end, is sited about eight miles northeast of Edgartown on Horseshoe Shoals, also, thanks to a geographic quirk, in federal waters.
So, although pressure has diminished to place wind farms in state waters surrounding the Vineyard and the Elizabeth Islands, and although resistance by Vineyard residents to onshore turbines has increased, the Vineyard and Nantucket may very well find themselves bracketed over the next 10 years with perhaps as many as 230 turbines in these two projects, and perhaps more by other developers elsewhere in the now sharply reduced federal lease area where OffshoreMW plans its installation.
Vineyard Power‘s ambition has been to leverage a community determination to supply Island consumers with clean electric power, but the financing, design, construction, and operational hurdles are immense. This 1,000-member cooperative has brought its significant and growing base of support to the table with the big players, of which OffshoreMW, an investment vehicle for a Blackstone Group fund, is a seasoned participant, though not itself an operator of a wind farm anywhere.
Vineyard Power’s board, its professional management, and its members have worked hard to develop a wind power program aimed at serving Vineyard consumers. They have attracted attention from state and federal clean-energy officials to their sensitive, and intensely local approach to the size and location of wind farms to serve the Vineyard, as well as the benefits, including jobs, such an approach may yield.
And now, they have achieved a modest alignment with a big, global player in the wind power development casino, mainly on the strength of their solid groundwork and their effective lobbying.
For instance, as Offshore Wind Wire reported Monday, “The OffshoreMW proposal — for a 1,000 MW wind farm — was submitted as part of a partnership with Vineyard Power, a local offshore wind developer based on Martha’s Vineyard. Vineyard Power is petitioning BOEMRE [the Department of the Interior's Bureau of Ocean Energy Management, Regulation and Enforcement] to alter the offshore wind leasing process to favor community-based organizations. In an early draft of offshore wind leasing rules, BOEMRE officials included a parallel bidding track that considered local community benefit. The agency decided last year to drop that rule, but Vineyard Power representatives are asking them to reinstate it for the current leasing process.”
One can see the appeal that the small, but vigorous Vineyard group had for the big money player in the game. Vineyard Power members plan to intensify lobbying federal officials to regard the 40 MW Vineyard portion of the big turbine field OffshoreMW plans as a unique and compelling advantage in the competition for leases.
And the competition is fierce. The list includes NRG Bluewater Wind, Neptune Wind, Fishermen’s Energy, Ibredrola, Condor Wind Energy, Free Flow Power, No Fossil Fuel LLC, US Wind, and even the as yet unfinanced, unbuilt Cape Wind’s parent company, Energy Management, half of whose prospective electricity product doesn’t yet have a customer.
What does all this promise Vineyard electricity consumers? Not much that’s certain, at least not yet.
OffshoreMW’s application describes its affiliation with Vineyard Power as based on a memorandum of understanding “in which the two entities agree to pursue the joint development of the project” and that “the two allies will further define and detail how they will jointly develop the lease area at a later date.” The memorandum is not included in the application.
The application cites as an objective of the collaboration “furthering economic development and job creation for Martha’s Vineyard and the Commonwealth.” Among the desirable ancillary benefits, according to the application, are the possibilities for support facilities including a headquarters for the Vineyard Power Co-op on the Vineyard, with jobs for managers, energy traders, and marketing and salespeople.
And there may be an investment opportunity. “The CO-OP intends to participate financially in this proposed project by being one of the investors in the special purpose project company that will be organized to finance the project.”
The magnitude of this investment and its source, other than federal financing, is not specified, but at this stage, how could it be?
“Financing thousands of megawatts of any sort of energy generation in a relatively short timeframe is a challenge to industry as a whole, let alone any one company or developer,” the joint OffshoreMW/Vineyard Power venture writes in a supplement to the application. “This is particularly true in the United States, where the finance industry has largely turned away from project finance. Furthermore, offshore wind in particular is a challenge because of the high capital costs and the fact that it is still a maturing technology.”
They might have added the uncertain future of federal and state financing incentives, now caught in the budget-cutting political maelstrom.
For consumers, the price of the electricity produced by these wind farms remains a worry, and the applicants make the stark truth plain: “However,” they write, “it is important to acknowledge that the price will be higher than current market prices.”
Which may have something to do with strategies proposed by the developers that would employ “a number of mechanisms that could be used to arrive at a price that is sufficient to achieve the [state's] policy objectives, and at the same time ensure that ratepayers aren’t overpaying. The details of the mechanism used to arrive at a price are not particularly important.”
Generally, what assures that consumers aren’t overpaying is competition that tries to deliver an attractive product as efficiently and economically as possible, to beat the competitors in the market, not to satisfy policy objectives.
And, to underline the point that there is little in this very early application on which interested Vineyarders can count, remember the possibility for an operations port and a management hub located on the Vineyard, to create jobs for Islanders?
“At the same time,” the applicants note honestly, “there are disadvantages to locating such a facility on Martha’s Vineyard as well, and other suitable ports on the Massachusetts mainland may not be significantly further [sic] from the project area. The location of these support and operations facilities will be closely considered as the project develops, with an emphasis on locating the facility on Martha’s Vineyard whenever feasible.”
Closely considering all this on- and offshore wind power planning is exactly what Vineyarders ought to be doing.