Offshore wind suffers setback in Virginia

Bill Opalka | May 07, 2012

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Gamesa and a development partner are suspending further development of an offshore wind turbine off the coast of Virginia, citing the massive amounts of capital needed to pursue a project with a cloudy future due to uncertain federal support.

Since September 2010, Spanish turbine manufacturer Gamesa, with operations in Pennsylvania,  has been working with Newport News Shipbuilding to design a 5-MW prototype with plans to erect a test turbine off the mid-Atlantic coast. The design phase is expected to be completed this year.

The collaborative effort has focused on turbine reliability, low maintenance and servicing requirements, civil engineering efficiencies in infrastructure development, and cost of energy. The companies said on May 7 they are approaching the end of the critical design review (CDR) for the turbine.

“An analysis of current conditions indicates that a viable commercial market in the United States is still farther out, as much as three or four years away, at the earliest,” the companies said in a statement, making further investment impractical.

Developers in New England said they don’t expect the news in Virginia to impact their own plans in Massachusetts and Rhode Island.

“Every project is different as Cape Wind continues to move forward.  We have selected our construction contractors, and with our two power purchase agreements, we have entered our project financing phase, assisted by our financial advisors at Barclays Capital,” Cape Wind Associates Spokesman Mark Rodgers told GenerationHub.

 In Rhode Island, Deepwater Wind's Chief Administrative Officer Jeffrey Grybowski told GenerationHub its Northeast projects are full speed ahead.

“The Block Island Wind Farm has a fully-approved power purchase agreement and we expect to receive final governmental approvals in early 2013.  In addition, our Deepwater Wind Energy Center represents the best utility-scale wind farm opportunity on the Atlantic coast and as the State of Rhode Island's preferred developer of that site, we are also developing this project aggressively," he said.
Deepwater already has a contract with Siemens for five 6-MW turbines for its Block Island Wind Farm.

Gamesa and Newport News said the regulatory climate has improved in recent years, but the lack of an offshore grid, uncertainty surrounding the production tax credit (PTC) extension, which will expire at the end of the year without congressional action, and the lack of a federal energy policy, hamper companies’ ability to secure financing for projects.

After the design is completed, plans to build the prototype near Cape Charles, Va., which the Virginia Marine Resources Commission (VMRC) approved in March, have been postponed. The joint Offshore Wind Technology Center, opened in February 2011 in Chesapeake, Va., will be closed at the end of the year.

“I want to commend Virginia Gov. Bob McDonnell and his administration, especially the VMRC, for the time and effort they put into approving the permit for this project,” said David Flitterman, Chairman, Gamesa North America. “The Governor is a leader for his vision to utilize clean, renewable energy, and his team did everything in their power to fast track this offshore wind development.”

Gamesa said it remains committed to offshore wind globally.  If favorable conditions return, “Gamesa has an advantage to act quickly on future opportunities for a 60 Hz version should the U.S. market develop,” its statement said.

Meanwhile, the American Wind Energy Association lamented the continued policy quagmire and its effect on wind development, offshore and onshore.

“Businesses need certainty to invest and this is another example of how policy uncertainty is affecting business decisions.  Wind power is an American success story, supporting nearly 500 manufacturing facilities in 43 states and employing 75,000 Americans. Urgent extensions of the production tax credit for land-based wind energy and the investment tax credit for offshore wind will allow the American wind energy success story to continue.  Without such extensions, tens of thousands of jobs and tens of billions of dollars of private investment in the U.S. will be lost,” it said in a statement.

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Comments

The viable will stand the test, the weaning

The US can celebrate the success of the government investment to get the wind generation industry up and running. Now the weaning time appears to have arrived and for a while both parties have their temporary discomfort but it is for the longterm good that weaning be accomplished. Clean and green is appealing even if man's activities are not the driving force in the continuing climate change. Asking people if they would agree to pay a little more to get clean and green seems like a very reasonable and doable approach to financing without federal government subsidy. I think most boomers would like to leave this country in better shape clean energy wise than we recieved it. If there is not enough momentum in this industry by now to survive the critics were right, it was never a viable idea during our days. I hope that is not the case. After they are weaned the clean energy companies will find their own place in the fabric of our interwoven national energy industry. 

So, where are they going to put the coal fired plants at?

Seeing this makes me sad!  When we should be moving full speed towards developing these resources, we're allowing the politicians who are in the fossil fuel industry's hip pocket to twart this development by dragging their feet!

Mark my words, before long you're hear somebody on Fox News referencing the fact that this development not moving forward as another example of wind not being a viable resource! 

The fossil fuel industry is subsidized $7,00 for every $1.00 that renewable energy is subsidized.  Would it really be that difficult to take a dollar or two of their subsidy and apply it towards funding the production or investment tax credits for wind?

 

Bob "The Clean Energy Guy" Mitchell

Bandying the subsidy word

There is a big, big difference between income tax deductions and production tax credits.  There is also a big difference between the total amount of energy delivered by the fossil-fuel industries and the "green energy" industries.