Deepwater Wind wins auction to develop offshore wind energy in federal waters - in the Windfair Newsletter

Providence, R.I.-based Deepwater Wind last week said it had been selected as the provisional winner of two offshore wind energy sites located in federal waters off the coasts of Rhode Island and Massachusetts.

A competitive lease auction–the first ever held in the U.S. for commercial offshore wind development–was conducted by the U.S. Department of the Interior’s Bureau of Ocean Energy Management (BOEM) for two parcels totaling more than 164,000 acres in BOEM’s Wind Energy Area on the Outer Continental Shelf roughly 17 miles south of Rhode Island, between Block Island, R.I., and Martha’s Vineyard, Mass.

Deepwater Wind said in a press release that it plans to develop the Deepwater Wind Energy Center (DWEC), a utility-scale wind farm of up to 200 turbines, with a regional transmission system linking Long Island, N.Y., to southeastern New England.

“This is an enormous step forward for the industry. This is the best site for offshore wind in the United States, bar none,” said company CEO Jeffrey Grybowski. “Our Deepwater Wind Energy Center Project will produce clean power and jobs for an entire region. It’s very exciting.

“We commend Governors [Lincoln] Chafee [I-R.I.] and [Deval] Patrick [D-Mass.] and the Rhode Island and Massachusetts Congressional delegations for their shared commitment to advancing offshore wind development and the nation’s energy independence.”

Deepwater Wind’s winning bid of $3.8 million for the two sites came in the 11th round of the competition. The firm previously paid a $900,000 deposit to participate in the auction, with the remainder of the bid amount to be paid in the coming months when the official lease is signed for the sites. In addition, Deepwater Wind will pay the federal government annual rent payments of approximately $500,000 beginning this year, until a wind farm is operational on the site. Once the wind farm is operational, Deepwater Wind is obligated to pay the federal government an annual royalty fee based on the value of the energy produced.

DWEC is the largest offshore wind farm ever planned in the U.S., located in deeper ocean waters and farther from shore than any other project.

At a capacity of up to 1,000 megawatts (MW) and with the ability to provide reliable, clean energy to multiple power markets, DWEC is an important step in moving the United States to a clean-energy future. Because of the economies of scale and the continuing maturity of the American offshore wind industry, DWEC’s power price will be competitive with traditional fossil fuel power and lower than the first generation of offshore wind farms.

Construction could begin as early as 2017, with commercial operations by 2018. DWEC will produce enough energy to power approximately 350,000 homes, and displace over 1.7 million tons of carbon dioxide emissions annually.

Most of DWEC’s turbines will be located 20 to 25 miles from the nearest landfall –virtually invisible from shore. No turbine will be located any closer than roughly 13 miles from land.

In the BOEM auction, Deepwater Wind qualified for a credit as being the only developer holding a Joint Development Agreement with a neighboring state (Rhode Island). Deepwater Wind became Rhode Island’s preferred developer for offshore wind after a competitive process in 2008, and Massachusetts acknowledged that selection. DWEC is the utility-scale offshore wind farm referred to in the JDA, and the project site is located within the Area of Mutual Interest identified by the governments of Rhode Island and Massachusetts.

Deepwater Wind is also actively developing the 30-MW Block Island Wind Farm, about three miles off the coast of Block Island, R.I. The permits for this demonstration-scale wind farm are currently under review by state and federal agencies. Construction activities are expected to start in 2013, with the wind farm in service by 2015.