The Block Island Times
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Windpower heavyhitters meet in Providence

Proponents believe the time to invest in American renewable energy is now
By Derek Gomes, Special to The Block Island Times | Oct 27, 2013

PROVIDENCE — With years of experience in the European marketplace under its belt, the offshore wind energy industry has now turned its eyes toward North American waters, hoping the timing is right for expansion.

Industry leaders descended upon Providence for the American Wind Energy Association’s Offshore Windpower Conference & Expedition because they feel the success of the American market will partially hinge upon the Providence-based Deepwater Wind project and construction of its 200-turbine wind farm in federal waters off the coast of Rhode Island and Massachusetts — the first of its kind in the country.

The three-day conference allowed industry leaders — from manufacturers to consulting firms — to network, but more importantly, gave them a forum to hone the message it will send to America. Deepwater knows all too well the repercussions of losing a potential support base.

“We must advocate clearly in a strong way the business case for offshore wind to the political leaders of this country and all Americans,” said the association’s Chief Executive Officer, Tom Kiernan, at Tuesday’s opening session. “We need to come together with some very clear, concise messaging of the proven benefits of offshore wind.”

Kiernan’s message had four points: Offshore wind helps diversify the country’s energy portfolio; it will lower prices; it relieves the transmission costs of other forms of energy; and the eastern coast typically has strong winds during hours of peak energy use.

Bryan Martin, managing director of D.E. Shaw & Company, Deepwater’s chief financial backer, spoke about why New England, in particular, is a logical market for expansion in a Wednesday morning presentation. He cited increased energy prices, high winds, a concentrated population and a relatively low risk for tropical storms to support his claim that the northeast is the ideal testing ground in the United States for the offshore industry.

“We see coal plants [closing] in the Midwest, very quietly… Brayton Point just announced it’s being closed. You really don’t see a lot of press, but these old plants in these coastal areas are coming down, and they need to be replaced with something,” Martin said.

Gov. Chafee and U.S. Sen. Sheldon Whitehouse (D-R.I.) spoke in support of the offshore wind industry on Tuesday, telling attendees Rhode Island is a receptive market for expansion. Chafee referred to Rhode Island’s history as the birthplace of the Industrial Revolution and said he hopes the state is ripe for a second revolution.

“As you’ve heard, Rhode Island has a long tradition of innovation,” added Whitehouse. “We hope to have a renewal of that spirit here in Rhode Island with wind energy. It also is a state that has a long tradition of living and working on and by the sea.”

Deepwater CEO Jeffrey Grybowski updated the audience on the company’s progress with its proposed five-turbine demonstration site off the coast of Block Island. The company is in the final stages of closing on the financials for the project, he said, including inking contracts with vessels to transport building materials to the installation site.

He also acknowledged his company’s victory in the first lease auction for 164,000 acres in federal waters off the coast of Rhode Island and Massachusetts to develop a 200-turbine farm, which will power approximately 350,000 homes in southeastern New England and Long Island, New York.

During his address, Grybowski did not refer to his company’s failure to reach an agreement with the town of Narragansett to land and run a transmission line through town property, or the recent relocation of the proposed landing site to Scarborough State Beach, on state-owned land in Narragansett.

He recognized Whitehouse as a pivotal ally in Washington D.C., saying the senator has advocated for renewable energy and to extend the deadline for tax credits — a crucial funding piece for the company’s demonstration-scale wind farm.

Kiernan, the windpower association CEO, said extending the production and investment tax credits must remain the industry’s top priority “so there is a stable tax policy framework for the industry.” These tax credits are scheduled to expire Dec. 31, but the industry hopes Whitehouse and other renewable energy proponents will advocate for an extension.

Senior Vice President Sebastian Chivers of PMSS, a London-based international consulting firm that works exclusively in renewable energy, echoed Kiernan’s emphasis.

“Without extension of the [tax credits], there is going to be a difficulty generating a domestic offshore market here,” Chivers said in an interview with The South County Independent. “Extension is at the top of the list for everyone right now.”

Nicolas Gourvitch, of Paris-based Green Giraffe Energy Bankers, agreed, saying at a session on Wednesday uncertainty about whether the federal government will extend the deadline leaves a confidence void.

Martin made light of “tax credits,” the repeated buzzwords of the conference. “It’s not often you hear someone say, ‘Offshore wind: economic.’ Usually you hear people say, ‘Offshore wind: Are the subsidies going to get extended?’” Martin joked.

The Scottish Development International’s delegation — bureaucrats, bankers and company officials – showed a more coordinated, stable relationship between the public and private sectors to endorse offshore wind projects. Legislation in Scotland mandates that the country produce 100 percent of its electricity from renewable sources by 2020.

To reach this ambitious goal, the government opened the Green Investment Bank, charged with investing public money solely in green energy projects and make returns on those investments. Opened in 2012, the government deposited 3 billion pounds, and the bank has 3.8 billion now in its coffers.

Without a similar commitment from the U.S. federal government, securing millions of dollars in investments to spur the new offshore market will remain a challenge because companies are wary until they can see a proven track record of success, Chivers said.

“Encouraging supply chain development is crucial. We will not build a sustainable, domestic offshore wind industry here without a local supply chain,” Chivers said. Transporting the infrastructure and personnel from Europe is not a long-term solution, he added.

Deepwater’s success or failure may determine the country’s future because, Chivers said, it can start a trend of success that will be accompanied by a willingness to invest.

Deepwater and other American companies not only have to prove their worth to investors, but also to the residents and municipalities they must partner with to connect their farms to the mainland grids.

Instead of bringing forth an inflexible, ironclad plan for wind farms to towns, consultant Tony Pike of the Boston-based company P2 Offshore Consulting said companies must assume an inclusive stance and invite participation from the beginning of the process.

“Stakeholder management is one of the keys,” Pike said, in an interview with the Independent. “If you don’t start early enough and do it right, then you shoot yourself in the foot.”

The European industry didn’t always understand the importance of reaching out to its stakeholders; it was something learned through failures, Pike said.

Wednesday’s sessions were more sparsely attended than Tuesday’s —something Martin referenced at the start of his address.

“I’d ask everyone to lift up your heads and look around a little bit. Look at how many people are in this room,” he directed the approximately 60 people in the large conference hall. “There aren’t a lot, and that’s ironic to me that we’ve actually had more positive progress on specific projects this last year than we’ve had in many years.”

“I found it ironic that the population in this room is so small compared to past years because oftentimes it is darkest before dawn, and I feel like that’s where we are with offshore wind right now,” he concluded.

As the United States’ foray into offshore wind begins in earnest, the industry hopes it has found a new market, but the conference proved many unanswered questions – from government involvement to supply chains – must be resolved before offshore wind breaks into a new day.

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