Natural Gas, Fuel Cells, Off-Shore Wind and Solar Projects Are Competiting For Legislative and Regulator Support

 Eversource Invests in Massive Wind Project Off Martha’s Vineyard Mass Governor Opens Sea Passage For Off-shore Wind Power

 

By Mitchell Young

Dong Sept 16

BOSTON: Hartford based, Eversource [NYSE: ES, previously Northeast Utilities] has announced a 50-50 partnership with Dong Energy of Fredericia, Denmark, to develop Bay State Wind, a proposed offshore wind power installation. Located approximately 15 to 20 miles south of Martha’s Vineyard it is estimated to include 100 wind turbines and cost at least $1 billion. Eversource has committed $10 million to get the project rolling.

Eversource CEO, Jim Judge hailed the project and positioned it as a regional innovation saying, “New England is setting the pace for a national clean energy future with its proven track record in energy efficiency and bold clean energy goals,” adding, “our partnership with DONG Energy on Bay State Wind represents a significant opportunity to help make those goals a reality and we look forward to delivering this renewable and reliable source of power to customers.”

Jim Judge

New Eversource CEO Jim Judge, is a Massachusetts native and the son of a Boston Police Officer. Judge took over in April and quickly put the utility into a large scale and potentially controversial off-shore wind energy development.

and Dong are putting this plan forward in spite of widespread opposition in Massachusetts to what some opponents call the  “industrialization” of Cape Cod Bay. For more than ten years, Cape Cod residents, some environmentalists, business groups and Republican lawmakers have opposed another huge wind power plant, Cape Wind.

The Baystate’s very popular Republican Governor, Charlie Baker however shifted the direction of off-shore wind power plants, rejecting his party’s long standing opposition to off-shore wind energy power off the Cape.

In August, Baker signed a bill requiring Massachusetts to purchase 1,600 megawatts of offshore wind power and another 1,200 megawatts of hydropower or other renewable resources, such as land-based wind or solar.

The new power purchase requirements, make up just under one half of all electricity consumed in the Baystate, an amount nearly equal to the output of the Seabrook and Millstone nuclear power plants combined.

If history is a guide however, in spite of Baker’s popularity, getting off-shore turbines spinning won’t be easy. Opposition is likely to be widespread, driven by potentially increased electricity costs, environmental concerns and a new federal government not expected to be friendly to “alternate” energy projects.

Cape Wind Associates, the off-shore developer has been battling cost and environmental issues for more than a decade and in spite of receiving all necessary state and federal approvals, the project appears dead.

Cape Wind was to cover 24 square miles, 4.8 miles off Mashbe on Cape Cod, in Nantucket Sound, 16 miles from Nantucket.

The Bank of Tokyo was to provide $2 billion of financing and the Siemens company was expected to supply the turbines. Financing delays gave then Northeast Utilities and National Grid [NYSE:NGG based in Warwick, England], the opportunity to pull their power purchase agreements in late 2015 and they did. With no power  purchase agreements, the project can’t go forward. 

Baker’s new law doesn’t seem to have resurrected the plan however, even as power purchase agreements for the wind power are now essentially required by state law. Several new off-shore wind proposals are now being floated, in addition to the Eversource/Dong’s proposal.

Unlike any new off-shore power plants, Cape Wind would be able to qualify for federal production tax credits because some limited construction was begun before the expiration of the credits. The Eversource/Dong and other competing proposed projects do not qualify for existing credits. New Federal win power tax credits will face a Republican Congress that let the existing credits expire.

President Elect Donald Trump has said he has a preference for fossil fuel development and though a Republican, Baker did not support Trump’s candidacy.

Another Federal roadblock is an existing law, the Merchant Marine Act of 1920 is expected to be an impediment to Dong’s efforts to reduce construction costs. Under the act, all boats that service the off-shore wind power plants, have to be built to US standards and won’t necessarily be usable by Dong in their home European market.

Cape residents and business opponents to off-shore wind power will likely be citing its high electricity costs. Cape Wind power was expected to cost ratepayers 18.7 cents per kilowatt hour the first year, with annual increases of 3.5% for 15 years [eventually 32 cents per kilowatt]. The initial cost is almost twice the current average cost of electricity in Massachusetts, the final cost could make it the most expensive electricity in the US.

The US Energy Information Administration in a report released in June 2016, said that the 2018 costs to develop an off-shore power plant would be 2 times the cost of solar panels, 3 times land based wind and 4.5 times more than a new natural gas power plant.

Off-shore wind power is the predominant power generation in Dong’s home country of Denmark, producing 42% of power for the country’s population of 5.7 million, [Connecticut’s population is 3.6 million, Massachusetts’ 6.75 million]. Denmark has the highest percentage of off-shore wind power of any country in the world. That distinction appears to come with a steep cost to Danish residential consumers who pay among the highest electricity costs in the world of any developed country, 41 cents per kilowatt.

Electricity in France and the UK is less than half that cost and the average US price is 12.5 cents per kilowatt.

Dong claims that at least in Europe’s North Atlantic, the costs have come down and it has been able to bid out electricity at only 8 cents per kilowatt, on a more recent development off the coast of Holland.

The price Eversource’s Massachusetts’ customers’ currently pay is 10.5 cents per kilowatt.

Massachusetts’ along with Rhode Island and New Hampshire legislators recently moved to stop increased Natural Gas into New England, by blocking new gas pipelines. That controversial decision was in opposition to power producers, the region’s utilities and Connecticut officials. The lawmakers and several environmental groups claimed that existing gas supplies were sufficient for power generation and consumer use.

Eversource and Dong, haven’t said exactly how big their wind power field will be eventually, but DONG has secured development rights to 300 square miles of ocean off Martha’s Vineyard. 

Baker’s support is an anomaly for Baystate Republicans, former Republican Governor Mitt Romney and former US Senator Scott Brown both opposed the project, former Senator and Cape Cod resident Ted Kennedy was also opposed at the time of his death.

Off-shore wind power is not well supported by businesses on the Cape either, the Cape Cod Chamber of Commerce was officially against the Cape Wind project but left the door open to other efforts.

The chamber said, the power costs were too high and the economic benefits meager, citing the 130 turbines to be built overseas and only 50 post construction jobs on the Cape.

Massachusetts’ current US Senators, Ed Markey and Elizabeth Warren, both Democrats and former Democrat Governor Deval Patrick all supported the Cape Wind and off-shore power plants.

While the wind energy may be clean, opponents have questioned whether the political machinery supporting the projects could say the same. In 2014 the Boston Herald reported that prominent lobbyists received more than $700,000 from the Cape Wind developers, and $50,000 was funneled into the re-election of Senator Markey alone. The newspaper reported that the project was seeking more than $1.5 billion in loan guarantees.

markey

Massachusetts Senator Edward Markey received a good chunk of the more than $700,000 dollars of lobbying funds from just one company, Cape Wind Associates. Much of the funds went to Democratic lawmakers for off-shore power support, Markey’s take was $50,000 for his latest reelection bid.

the other big cash recipients with ties to energy committees included Democrats; Senator Cory Booker [$69,400] NJ, Senator Al Franken [$21,500] MN, Representative Joe Kennedy III [$14,000] MA, Senator Jack Reed [$16,000] RI. 

A New Mexico Senator with no ties to off-shore power was still a big recipient of off-shore energy cash, Democrat Senator Tom Udall, NM, received more than $15,000 – his cousin however is Senator Mark Udall, of Colorado and a big player on the Senate’s Appropriation’s Committee.

Under 1990’s deregulation then Northeast Utilities was required to sell off its generation assets to avoid conflict of interests. Today Eversource is allowed under Connecticut law to build small scale power plants. In Massachusetts, the utility can invest in major power generation through an unregulated subsidiary that does not pass costs on to regulated consumers. Opponents will likely be questioning the nature of any proposed purchase agreements however.

Consumer advocates in Massachusetts have called for a third party or the state to bid for Eversource. Dan Dolan president of the New England Power Generators Association told the New Haven Register approving the “Bay State Wind project would give Eversource an unfair advantage.” BNH