Energy Director questions Offshore Wind Project's costs to consumers

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Hywind offshore wind projectAUGUSTA – On Wednesday, Patrick Woodcock submitted comments to the Maine Public Utilities Commission regarding the Statoil North America, Inc. proposal for a long-term contract with Maine utilities for the development of an offshore wind project. In those comments, Woodcock raises concerns relative to the cost passed on to Maine consumers and overall economic benefit to the State of Maine.

Described as the Hywind offshore wind pilot project, Statoil North America, Inc. requests Maine ratepayers to absorb above market electricity rates totaling $203 million to subsidize the project. Annual costs to Mainers for this pilot project are estimated to total more than $10 million over a 20 year period, at a time when Maine ratepayers are already paying 24 percent above the national average for electricity.

“First and foremost, this Administration seeks to reduce high electricity costs to Maine families. Our energy costs are among the highest in the nation and if this project adds to that burden I have questions as to how economically viable it is for the State of Maine.”

Furthermore, Woodcock states that Statoil did not prove significant investments would occur in Maine-based manufacturing facilities directly related to the project.

“While this office acknowledges that Statoil has committed to employing 150 persons during the peak construction period, as well as the development of an operations center in Maine, the assurances of the development of manufacturing assets in Maine are tenuous,” wrote Woodcock.   “This office appreciates the intent of the supplier to invest in Maine companies for the development of this project. However, the Ocean Energy Act is explicit that the Commissioner must determine that the supplier has ‘demonstrated’ a commitment to invest in manufacturing in the state. While the supplier certainly indicates the intention of supporting Maine jobs, this office does not believe that the supplier has demonstrated clear investments in the State of Maine.”

The Maine Public Utilities Commission will decide on Thursday if Statoil’s proposal satisfies Maine law and balances ratepayer costs with economic benefits.

1 COMMENT

  1. The MAINE WIND INITIATIVE sought to formalize it’s organization– primarily because its grants have or are just about to run out, at a two hour meeting yesterday. This was a groups formed after the Ocean Energy conference several years ago to develop a manufacturing and service base in Maine; a desire reflected in Woodcock’s commentary.

    The big players CHINBRO, REED&REED, etc. were missing, and BIW had a young guy taking notes. The room was packed with small service(supply side) firms concerned about the intrusion of global players like IBEROLA and STATOIL into Maine, and how to best preserve their ‘edge’ and market their expertise to the world.

    Lot’s of comments about the switch from a grant funded group….Maine Composites Alliance served as the umbrella agency, since the Initiative has no formal org. structure…..dues structure, who gets into the tiers and the intrusion of Democratic ideology by one member who wanted the large ‘rich’ organizations to contribute most of the revenue; but that every member would get equal voting rights and participation in boards.

    The organization is also shifting into ocean & tidal energy generation from Wind—the Maine Composite’s Alliance made the turbine blades for OREC’s installation in Eastport. Siting and permitting ocean and tidal hydro projects presents a host of new obstacles and challenges the Wind farmers haven’t had to deal with. Other problems is the emerge of locally generation of power using natural gas—-in part brought on by the intermittent nature of wind power, in part because it is now fairly inexpensive to use gas and easy to site a turbine next to load, where Wind power needs expensive transmission lines and grid ties.

  2. This is a very influential organization now at a crossroads and what emerges will influence he direction of Maine’s energy producers. If the trends in Europe are any indication, there is a move into other modes of generating power, i.e. waste to energy and hydro.

  3. a comment from Todd Grisett, JD, energy blogger: “Notably, Statoil’s revised offer still proposes to sell electricity from the pilot project at prices 4.5 times higher than current market prices. That translates to a $190 million ratepayer subsidy to Statoil, with annual stranded costs of between $9 million and $10 million according to CMP.

    What does this mean for other ocean energy projects?”

    What it means is that STATOIL may or may not build similar floating platforms in Boothbay, very problematic and ‘our’ subsidy will enable them to export the technology should it prove competitive. That would buoy up one or more shipyards in the region who’ve lost work during the recession.

    The other is that sales of energy are going to be far and few between; remember the cost of maintenance and operation is far higher than other sources; nor have the transmission and distribution costs been factored in.

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