Deepwater Wind Signs PPA for First Offshore Wind Farm

Deepwater Wind and National Grid have signed a 20-year, power-purchase agreement for the electricity to be produced by the Block Island Wind Farm off the coast of Rhode Island. 

Under the terms of the agreement, National Grid will purchase the
energy generated from Deepwater Wind’s Block Island Wind Farm at a cost
of 24.4 cents per kilowatt hour (kWh) in the first full year of operation
expected to occur in 2013, escalating at 3.5% per year.

This would translate into an increase on the typical 500 kilowatt-hour
residential customer monthly bill for National Grid customers of
approximately $1.35 per month in that year, according to a release issued by the office of Rhode Island Governor Donald L. Carcieri.

National Grid had previously rejected a bid of 25.3 cents per kWh in November.

The agreement marks only the nation’s second such power-purchase agreement for renewable, offshore wind energy. The agreement is still subject to the review and approval of the Rhode Island Public Utilities Commission.

“This is a tremendous accomplishment and ensures that Rhode Island remains the leader in developing the nation’s first offshore wind farm,” said Governor Donald L. Carcieri. “I commend National Grid and Deepwater Wind for recognizing the importance of this agreement both to the ratepayer and the Rhode Island economy. Investing in renewable energy reduces our exposure to the volatility of energy prices on the world market, and this agreement establishes confidence in the financial feasibility of the project.”

In 2005, the Carcieri, with the support of the General Assembly, established the Office of Energy Resources, which is responsible for engaging the stakeholder and scientific community, creating the parameters for viable wind farm proposals, and choosing the best offshore wind project developer for Rhode Island. In 2008, Deepwater Wind was selected as the state’s preferred offshore-wind developer. In 2009, the General Assembly passed historic long-term contracting legislation that set the conditions for today’s power-purchase agreement between National Grid and Deepwater Wind.

Deepwater Wind plans to develop the Block Island Wind Farm in state waters, about three miles off the southeastern coast of Block Island. This demonstration project will include up to eight turbines and provide power for Block Island residents, who now pay some of the nation’s highest electric prices.

Deepwater Wind later plans to build a large-scale wind farm, with about 106 turbines, located in federal waters about 15 miles from nearest landfall. The energy cost for the utility-scale Rhode Island Wind Farm is expected to be lower than that of the Block Island Wind Farm because of the economies of scale, the shortening of the supply chain from a more developed industry, and the creation of a robust, sustainable local workforce.

Deepwater must execute a separate power-purchase agreement for the power generated from the larger wind farm.

Last summer, Deepwater Wind reached an agreement to develop 117 acres at Quonset Point, in North Kingstown, as a hub of manufacturing operations for the offshore wind industry.

In Related News…

The head of Asia’s largest wind turbine maker said that the demand for wind power is likely to far surpass supply in the years ahead. Tulsi Tanti, founder and chairman of Suzlon Energy (SUZLON.BO) spoke on the sidelines of UN climate talks in Copenhagen. He said he does not view other wind turbine manufacturers as competition and called for new manufacturers to help fill demand. 

Read the full Reuters report at the link below.

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