Deepwater Wind pitches 120 MW Maryland offshore wind project
Developer says its experience with Block Island project a big help
The Skipjack Offshore Energy unit of Deepwater Wind Holdings on Jan. 4 filed with the Maryland Public Service Commission additional testimony in support of a November 2016 application for approval of a 120 MW wind power project in the Atlantic Ocean offshore of Maryland.
Jeffrey Grybowski, the CEO of both Deepwater Wind Holdings and Skipjack Offshore Energy, testified in support of Skipjack's application for the approval of a Qualified Offshore Wind Project.
One part of his testimony focused on lessons the company learned from the development of the Block Island Wind Farm, which when it went commercial in December 2016 became the first commercial U.S. offshore wind project.
Grybowski wrote that Deepwater Wind's notable achievements include:
· The development and construction of the BIWF, the first offshore wind farm in America
· The development of the Block Island Transmission System (now known as "sea2shore" under new owner National Grid), the first offshore transmission system to serve offshore wind energy in the U.S.
· Winning the first competitive lease auction held by the U.S. Department of the Interior for an offshore wind energy area on the Outer Continental Shelf— to acquire two leases off the coast of southern New England
· Winning a revenue contract from the Long Island Power Authority (LIPA) for what it expects to be the second offshore wind farm to be built in the United States, the 90 MW South Fork Wind Farm to be located 30 miles east of Montauk, N.Y.
· Acquisition of a federal lease off the coasts of Maryland and Delaware where it plans to locate the Skipjack Wind Farm
He added: "These achievements were possible only because Deepwater Wind was able to successfully navigate the complex legal, commercial, political, and operational challenges that face this emerging industry. This experience makes Deepwater Wind uniquely qualified to successfully develop the Skipjack Wind Farm."
The Skipjack Wind Farm is a new 120 MW offshore wind farm that will be located between 17 and 21 nautical miles off the coast of Maryland in BOEM Lease OCS-A0482 and will interconnect with Delmarva Power' and Light's 138-kV transmission system in Ocean City, Maryland.
Wrote Grybowski about the project size: "We believe that a 120 MW offshore wind farm is the right size for Maryland at the outset of its implementation of its offshore wind program. At this project size, costs to ratepayers will be significantly lower than permitted under Maryland's 2013 Offshore Wind Energy Act ('OWEA' or 'Act').
At 120 MW, the Skipjack Wind Farm will be less than half the size authorized under OWEA and will have a unit energy price that is far less than allowed by the Act — resulting in a much lower cost to ratepayers than the caps established in the Act. Deepwater Wind proposed the Skipjack Wind Farm as an appropriately-sized, cost-effective new offshore wind farm designed to help the State of Maryland meet its clean energy needs, while satisfying the requirements of OWEA."
He added about financing of such a project: "A robust market exists for the financing of properly structured offshore wind projects that are being developed by credible entities with a proven track record. Currently, more than 30 banks are active in the offshore wind sector, six of which participated in the financing for BIWF. Each year, over $4 billion of debt financing is available for offshore wind projects.
"Global project finance experts project this capacity to grow to about $8 billion annually in the coming years. In each of the last two years, about $3 billion of non-recourse financings for offshore wind have been successfully completed.
"However, because offshore wind is new to the U.S., securing financing under the unique legal, regulatory and commercial structures in the U.S. is something that will continue to require a high level of expertise. We believe that Deepwater Wind is extremely well qualified to secure that financing."
Christian van Beek, the president of Deepwater Wind, said in accompanying testimony: "Skipjack believes a project of this modest size appropriately reduces project risk and increases the likelihood of project success. At this time, the supply chain in the U.S. has not matured to a point where it can support a large offshore wind project.
"By limiting the number of wind turbines to be installed, Deepwater Wind has been able to provide its contractors with more flexibility to account for weather and other delays, while still maintaining the target in-service date in 2022. Additionally, the smaller project size allowed Deepwater Wind to work with more local contractors who did not have the capacity to support a larger project.
"Similarly, with only fifteen wind turbines, the Skipjack Wind Farm represents a modest increase in size from the Block Island Wind Farm that can be executed with the same degree of schedule flexibility while also providing a larger role for local contractors in Maryland," van Beek said.