Deepwater Wind: What’s in it for Rhode Island?
A lot. Or nothing. It depends on your point of view. If you’re solely interested in cleaning up the environment, and you’re willing to pay a price, you win. If you’re interested in economic electric power, you lose.
Deepwater Wind (DWW), a company established by a $26 billion hedge fund, is poised to build a small, demonstration 30 Megawatt (MW), five-turbine, offshore wind farm near Block Island. The project is scheduled to come online in 2015-2016. The company also intends to start construction on a huge, $4 billion to $5 billion, 200-turbine, 1,000 MW farm in federal waters off the coasts of Rhode Island and Massachusetts at an undetermined point in the future.
So, what’s all of this worth to the citizens of Rhode Island?
On the positive side, the two projects will help reduce airborne pollutants, slow global warming and improve health. Wind farms do this by displacing energy generated by coal and gas fueled plants that emit vast of quantities of harmful carbon dioxide, sulphur dioxide, and other gasses. The Block Island undertaking alone is estimated to prevent 800,000 tons of carbon dioxide from entering the atmosphere from pollution-generating facilities during its 20-year life. The imputed value of pollution reduced is $69 million. In addition, the Block Island and federal projects will help move Rhode Island toward its goal of 16 percent renewable energy by 2019.
From an economic point of view, there will be significant use of local labor, goods and services that will help the economy, mostly during the first three years of each project’s life. DWW will establish a base for the substantial job of manufacturing, assembling and staging the equipment for the wind farms at Quonset Point. They will need, among other things, electricians, welders, mechanics, engineers, labor, food service, office space personnel and transportation. DWW estimates that it will employ about 200 short-term employees during the three-year startup phase of the Block Island Project and 6 permanent employees to maintain the installation. An impact study found that wages, goods and services for the Block Island project would add $107 million to the economy over its 20-year life. No projections have been provided for the federal project.
In addition, Quonset could become the hub for developing future wind farms in New England, bringing substantially more business to the State over the next 30 years or so. Quonset will, however, have competition from a similar hub planned for New Bedford, Massachusetts.
That’s the good news. The bad news?
Offshore power is and will continue to be more expensive than most other types of power — coal, hydroelectric, natural gas and land-based wind. The Block Island project will be a stone around the thrifty consumer’s and industry’s necks. A Public Utilities Commission (PUC) document estimates that the project will cost electricity users in Rhode Island an extremely conservative $390 million in increased electricity fees over the twenty-year life of the project. Or, as DWW puts it, $1.35 per month will be added on to each household’s electricity bill.
This is because the initial wholesale price (to National Grid) of Block Island electricity will be 24.4 cents per Kilowatt Hour (escalating by 3.5 percent per year) versus the expected 2014 average of 8.55 cents per KWH. Land- based wind power from Maine, currently being considered for purchase by the state, is eight cents per KWH.* In essence the user is paying a tax, if you will, for green power. Netting the benefits from labor and goods purchases and the imputed benefit from reduced pollution for Block Island, the net loss to the economy is still $ 214 million. As the federal project is expected to yield a price in the “mid-teens,” it too will yield a substantial “green-tax” on users.
So, what should the Rhode Island Government’s policies be? First, continue to support the DWW Block Island venture. We’ve committed to it; it’s virtually a done deal. Second, support, by whatever prudent means, the long-term development of the Quonset hub for servicing future New England wind farm businesses. Finally, don’t make a power purchasing deal with DWW for its Federal project, unless the promised price of energy is competitive with other ready alternatives such as hydroelectric and land-based wind. I would hope that wind power can be environmentally friendly and reasonably priced.
C. Davis Fogg is a writer based in Wakefield.
* Ed. note: This project has not yet been approved or built.