Maine regulators have directed three utilities to buy 4 megawatts (MW) of tidal electricity from Ocean Renewable Power Company, making it the first state to commercialize ocean energy.
Installation of the first unit began in March and in Cobscook Bay and will be finished by late summer, feeding electricity to the grid by October 1.
In fall 2013, the company will add four more devices with a total capacity of 900 kilowatts, enough to power about 100 homes.
The 4 MW project will suppy electricity for over 1000 homes by 2016.
Power Purchase Agreement
The Maine Public Utilities Commission (PUC) approved a term sheet for the nation's first power purchase contract for tidal energy, to be in place for 20 years.
The term sheet sets the price to be paid for tidal power at 21.5 cents per kilowatt hour, much higher than typical rates of 11-12 cents. The rate will rise 2% a year and makes the project feasible.
In making the decision, regulators looked at what the cost of fossil fuels would be over 20 years and decided they would likely be even higher. In fact, they see tidal energy being cost-competitive in as little as five years.
The International Energy Agency's International Vision for Ocean Energy sets a goal for the technology to be cost-competitive by 2020.
PUC has directed Maine's three investor-owned utilities - Bangor Hydro, CMP and Maine Public Service - to negotiate 20-year power purchase agreements for 4 MW of tidal energy based on the term sheet.
Ocean Renewable expects the agreement to be in place in the next several weeks.
The long-term agreement will make it much easier for Ocean Renewable to attract the additional investment needed to complete the project's build-out over the next four years.
"Today is a major milestone in the 80-year effort to commercially harness the vast power of the tides. For longer than most of us have been alive, it has been a dream deferred. Now that dream will finally be realized," says Maine Senate President Kevin Raye, who represents Washington County and eastern areas of Hancock and Penobscot Counties, and a Senate member of the Ocean Energy Task Force.
Ocean Renewable installed a pilot project in 2010, the largest ocean energy device ever installed in US waters at the time. It received $1.3 million from the US Dept of Energy and 300,000 from the Maine Technology Institute.
The Maine Tidal Energy Project is funded in part by the U.S. Department of Energy and the Maine Technology Institute.
The area is one of the world's top tidal sites, where the tide rises and falls 20 feet twice each day.
Earlier this year, the Federal Energy Regulatory Commission (FERC) approved licenses for two tidal projects, Ocean Renewable's Maine project and Verdant Power's project in New York City's East River.
Ocean Renewable and Fundy Tidal are planning a similar project in Nova Scotia - Maine and Nova Scotia signed an agreement to work together to develop the resource. It has also received preliminary permits in Alaska.
The enabling legislation for Maine's approved term sheet was established in April 2010, when Maine's Legislature unanimously passed the Recommendations of the Governor's Ocean Energy Task Force, making tidal energy a state priority.
Ocean energy has the potential to supply 10% of US electricity demand - the federal government has invested over $50 million in ocean technologies since 2008. The US Roadmap spells out the steps necessary to achieve at least 15 gigawatts of grid-connected ocean energy by 2030.
Listen to our podcast interview with Chris Sauer, CEO of Ocean Renewable Power Company: