First State takes a second look at offshore wind
A working group set up by Gov. John Carney began fast-track talks on whether an offshore wind farm would improve Delaware’s environment and economy without exposing electric ratepayers or tax payers to excessive costs.
After the failure of the last attempt to boost renewable energy output by harvesting some of the state’s abundant offshore wind resources, the 19-member Offshore Wind Working Group is charged with recommending whether or how to restart that process.
By Dec. 15, the group must report on whether the benefits of building such a farm would outweigh the costs. Questions include whether to join with a proposed wind farm in Maryland; whether new or revised legislation would be needed to incorporate offshore wind into Delaware’s power mix; whether offshore wind turbines threaten wildlife or the view from the beaches, and whether the additional power is even needed.
“There are no preconceived notions that offshore wind is great for Delaware,” said chairman Bruce Barcut, former executive director of the Public Service Commission, at the start of the three-hour meeting in Dover on Oct. 6. “Our hope is to make sure that we consider all of the issues that are in front of us. “
Offshore wind enthusiasts like Dr. Jeremy Firestone of the University of Delaware argue that the industry has made big technological advances since the last instigator, Bluewater Wind, pulled out of a power-purchase agreement with Delmarva Power in 2011, saying that it was unable to attract investors because of the ending of a federal loan-guarantee program. That project would have built a 150-turbine farm at an estimated cost of $1.6 billion.
Turbines, especially in Europe, have got bigger and more efficient, while demand for emissions-free energy has been rising from cities and states like Delaware that are seeking ways of reducing their output of greenhouse gases.
Bluewater would have had a better chance of succeeding if current market conditions had been in effect six or seven years ago, Firestone said.
“We are in a completely different world than we were when we were talking with Bluewater Wind,” he told the meeting. “Prices have come down much more rapidly than anyone thought possible, let alone predicted.”
Doubling the capacity of a turbine from 5 mw to 10 mw reduces costs for the operator by a third “at least,” Firestone said.
Other advocates for offshore wind say it could create thousands of jobs for Delaware. Collin O’Mara, former secretary of the Department of Natural Resources and Environmental Control, told the meeting that such a project could be “huge” for jobs.
But state Sen. Harris McDowell, (D., Wilmington North), who chairs the senate’s Environmental, Natural Resources and Energy Committee, questioned whether more energy production is even needed given a decline in demand over the last decade, thanks to increased efficiency.
“Do we need it?” he asked, in an interview. “I think the careful analysis right now would probably conclude that we don’t.”
McDowell said the expense of building an offshore wind farm would expose electric ratepayers to the risk of having to pay much higher charges at a time when other sources of clean energy such as solar and energy-efficiency measures are available at a lower cost.
And he said a wind farm wouldn’t have significant health benefits to Delawareans because most of the state’s air pollution comes from out of state.
“There are there alternatives that would allow the same benefits to be brought to the table that don’t need expensive support from the ratepayer or the taxpayer,” he told the working group.
But McDowell said Delaware could try out the concept of offshore wind at relatively low risk by taking a piece of proposed projects in Maryland or New Jersey, and treating them as pilot projects.
The prospect of joining with two Maryland projects – which were recently approved by that state’s Public Service Commission – seems a likely option for Delaware if the working group wants to minimize the financial risks.
Governor Carney himself, in an August executive order setting up the working group, held out the Maryland projects as a way of developing offshore wind “at a scale and on a timetable that could create value at a reasonable balance of costs and benefits for Delaware.”
Any offshore wind farm would help the state meet its goal of having 25 percent of its electricity from renewable sources by 2025, as required in the Renewable Energy Portfolio Standards Act of 2005. Delaware utilities currently procure about 10.8 percent of their power from renewables, according to Thomas Noyes, Principal Planner for Utility Policy in the Department of Natural Resources and Environmental Control, who is facilitating the working group’s discussions.
The Maryland projects, which will be located off the Delaware coastline, would not use all of the wind resources in the areas where they will be developed, and so could allow Delaware to generate offshore wind for its own consumers, Carney said.
But David Stevenson, director of the Center for Energy Competitiveness at the Caesar Rodney Institute, a free-market think tank, argued that Maryland ratepayers will end up paying for that state’s offshore wind projects in the same way that Delaware ratepayers did with the Bloom Energy fuel cell operation at the University of Delaware – a project that has produced far fewer jobs than it promised when it opened in 2012.
“Approval committed Maryland ratepayers to pay $5 billion; that is a primary risk for the developers and it was shifted to the electric customers,” Stevenson told the meeting in a public-comment session. “The same thing happened with Bloom.”
Burcat said he didn’t know whether negative publicity over the Bloom project would affect support for a wind farm, but the offshore wind group would be looking for “substantial public input” in all its deliberations.
An independent analysis of the Maryland proposal for that state’s Public Service Commission showed the average ratepayer would pay an increase of $760 over the lifetime of the project, Stevenson said. He said cost caps required by legislation to ensure PSC approval were only achieved by ignoring indirect costs such as jobs lost because of higher electric rates.
By contrast, the increased production of renewable fuels could be achieved through onshore wind or solar in both states at a fraction of the cost, Stevenson said. While Delaware does not have the potential for onshore wind, as in western Maryland, it could develop utility-scale solar with little or no subsidy from taxpayers or ratepayers.
For Burcat, the Maryland projects represent an “opportunity” for Delaware, but he would not be drawn on whether they are at the top of the panel’s list of possible recommendations.
“I’m not pre-supposing anything,” he said, in an interview. “It’s this working group that’s going to make the decision.”
The panel will be doing a cost-benefit analysis that considers all of the effects of offshore wind, Burcat said.
“We have to make sure that the cost impacts are not significant and that they are offset substantially by the economic benefits that you might get out of it such as jobs and supply-chain benefits, environmental benefits, health benefits for Delaware citizens,” he said.
The panel includes lawmakers and state officials as well as utility regulators and state officials as well as representatives from academia, labor and environmental nonprofits. Their deliberations will be recorded and tracked on a state website, which will contain meeting schedules, briefing materials, contact information, and opportunities for public comment.
UD’s Firestone described the meeting as a “good start”, and said he was not surprised that concern about potential costs to ratepayers was a prominent part of the discussion.
“The question is: does Delaware want to play in the offshore wind sector?” he said.