National Grid-Cape Wind PPA deal challenged

Boston, Massachusetts-based Associated Industries of Massachusetts (AIM) has decided to ask the Massachusetts Supreme Judicial Court to set aside the commonwealth’s recent approval of a power-purchase agreement between National Grid and Cape Wind.

Last month, the Massachusetts Department of Public Utilities (DPU) approved terms of a 15-year power purchase agreement under which the grid will buy Cape Wind’s energy, capacity and renewable energy credits. It was the first such agreement ever approved under a provision of the Green Communities Act (GCA) allowing utilities to sign long-term contracts for renewable power directly with generators.

AIM will argue in its appeal that approval of the National Grid/Cape Wind deal by the DPU was “arbitrary, capricious,” an “abuse of discretion and not otherwise in accordance with the law.” AIM believes the agreement sets a dangerous precedent for allowing utilities to negotiate expensive power agreements outside of the competitive bidding process and to allocate the costs of those contracts unfairly to commercial and industrial customers.

National Grid agreed to purchase 50% of the output of Cape Wind at a cost beginning at 18.7 cents per kWh and increasing 3.5% each year for 15 years (extensions possible). Ratepayers also face the prospect of making up any shortfall if anticipated tax credits are not realised, or if they are reduced. The cost does not include a 4% fee that National Grid gets just for signing the contract, emphasised AIM.

The kWh price increases if fewer than 130 windmills are built. AIM also highlighted that the price outlined in the agreement is almost three times the cost of currently available power and almost double the cost of other renewable power. The above market costs of Cape Wind total almost $1 billion over the life of the contract. National Grid ratepayers will assume all of those costs. 

AIM also stated that DPU approval is critical to Cape Wind’s ability to obtain financing for the project, even though other permitting issues remain pending in various state/federal agencies. AIM is not involved in these issues. AIM does not oppose Cape Wind because of its location and has never opposed any permitting for the project.

• The legal challenge by AIM to the Cape Wind/National Grid contract is based upon the following three issues:
• The contract was not competitively bid. AIM believes the intent of the Green Communities Act requires a competitive solicitation for renewable power contracts. The utilities and DPU jointly developed a model Request for Proposals (RFP) that outlined the review standards for reasonableness of price and other criteria so that each project would be judged objectively and consistently across utility regions. National Grid and Cape Wind negotiated the contract outside the competitive process. There is ample evidence that Cape Wind would not have met the articulated standards in the RFP had it gone through the competitive process. Massachusetts electric utilities have together received hundreds of bids under competitive requests for proposals. National Grid and Cape Wind were the only entities to negotiate outside the competitive process.
• The amount of the Power-Purchase Agreement exceeds 3% of National Grid’s load. The Green Communities Act limits long-term contracts to 3% of a utility’s total electricity load. The Cape Wind contract represents 3.5% of National Grid’s load. Lowering the contract to the lawful 3% would save ratepayers millions of dollars. We also believe that the Legislature intended utilities to reach the 3% limit with multiple suppliers rather than a single contract. AIM considers it to be a bad policy that one contract would subject the utility and its customers to such financial exposure.
• National Grid’s ratepayer allocation of the above-market costs of Cape Wind is inconsistent with the law and harms ratepayers on competitive energy supply. National Grid is using the power from Cape Wind to satisfy requirements for basic service customers (those not on competitive supply) while charging the above-market costs to all ratepayers. For example, if National Grid buys power from Cape Wind at 20 cents per kWh and the market price to buy electricity for basic service customers is 10 cents per kWh, all National Grid customers, even those who buy electricity from competitive suppliers, will have to pay the 10-cent-per kWh difference. The allocation adds almost $500 million to the electricity costs of ratepayers on competitive supply, with no benefit. AIM considers this to be an incorrect interpretation of the law and one that harms our members.

The 420 MW wind park is America’s first offshore wind farm on Horseshoe Shoal. Cape Wind, the 130-turbine project that will span 25 square miles of the Nantucket Sound, is expected to begin construction next year.

NGenTec investment to scale turbines to 6MW and beyond

Amsterdam-based SET Venture Partners and Scottish Enterprise’s Scottish Co-investment Fund (SCF) have contributed £1 million each as part of Edinburgh-based NGenTec’s £2 million latest funding.

This investment will enable NGenTec, spin-off company from the University of Edinburgh, to design, manufacture and test its generator technology for the offshore wind turbine market.

This £2m equity investment will allow the company to prove its generator technology at a 6MW scale in order to deliver the product to the global wind energy market in 2012. 

NGenTec intends to design, build and test a 1MW generator that could be stacked along the shaft of a wind turbine to produce a 6MW generator.  NGenTec believes its generator technology is scalable to 6MW and beyond without the limitations of conventional generator technology.

The company says it has created a solution that is up to 50% lighter compared to existing direct-drive generators. This lower weight translates fully into lower costs for the construction of offshore direct drive wind turbines. The key technological advantage is that NGenTec’s generator arrangement eliminates the undesirable magnetic forces between the moving and stationary parts, minimising the possibility of failure and reducing wind turbine downtime.

The investment follows a recent £800,000 grant from the Department of Energy and Climate Change’s (DECC) Environmental Transformation Fund.

EOWDC clinches funding

The European Union has confirmed that a grant award of up to €40 million within the European Economic Recovery Plan has been made to the proposed European Offshore Wind Deployment Centre (EOWDC).

The Centre is being developed by Aberdeen Offshore Wind Farm Ltd. (AOWFL). The grant will provide a major boost to the development of the centre, which is planned to be located offshore in Aberdeen Bay. In August of this year, AOWFL was awarded exclusive rights by The Crown Estate to develop the project in a zone off the City of Aberdeen.

European energy company Vattenfall, subsea engineering and construction specialist Technip and Aberdeen Renewable Energy Group are jointly working on the EOWDC. This opportunity is the first offshore wind project for Technip in Aberdeen.

With provision for up to 11 offshore wind turbines, EOWDC would enable the accelerated development of offshore wind power. The Deployment Centre will allow offshore wind farm developers and associated supply chain companies to test new designs, prove existing products, and receive independent validation and accreditation before commercial deployment.

This will reduce development risks and capital costs and provide an opportunity to test reliability and capacity in a real time, offshore environment. The project will provide electricity to the national grid and will disseminate lessons learned to the EU industry at large. 

The EU Grant will support both development and capital costs associated with the EOWDC.

Final plans for the scheme are due to be submitted in the New Year by developers Vattenfall, Technip and the Aberdeen Renewable Energy Group. The first turbines could be up and running within the next couple of years.

SERL signs deal with Crown Estate

SeaEnergy’s 80% subsidiary SeaEnergy Renewables Limited (SERL) has signed an Interim Development Agreement (IDA) with The Crown Estate regarding certain Inch Cape wind farm development activities.

The IDA formalises the Heads of Terms agreement announced in September this year. As per the information available, The Crown Estate will directly invest up to £1.4 million in key surveys and reports for the Inch Cape project, which will be directly contracted and managed by SERL.

The Inch Cape site was awarded to a consortium comprised of RWE npower renewables (npower) and SERL in February last year as a part of the Scottish Territorial Waters leasing round conducted by the Crown Estate in association with the Scottish government. Following the site award, the consortium entered into an exclusivity agreement with the Crown Estate to negotiate a lease deal once the Scottish government had concluded the environmental assessment process. Npower notified SERL and the Crown Estate earlier this year of its desire to exit the Inch Cape project. This was due to the considerable size of its other onshore and offshore renewable generation commitments.

SERL was awarded the Inch Cape Offshore Wind Farm site in the outer Firth of Tay region. The site is located approximately 15 - 22 km to the east of the Angus coastline in Scotland. The site is expected to consist of around 180 wind turbines covering an area of about 150 km2 with an estimated installed capacity of 1,000 MW.

UK electricity reforms boost investor certainty

The Department of Energy and Climate Change (DECC) and HM Treasury have together launched consultations on fundamental reforms to the electricity market to ensure the UK can meet its climate goals and have a secure, affordable supply of electricity in the long term.

Reforms aimed at moving the UK to the front of the global race for electricity investment, driving the growth of clean energy industries in the UK, and ensuring the best possible deal for consumers have been proposed by coalition Ministers.

Energy and Climate Change Secretary Chris Huhne said: “More than £110 billion of investment is needed in new power stations and grid upgrades over the next decade, that’s double the rate of the last 10 years. Put simply, the current market is not fit to deliver this. The UK was first to put binding carbon reduction targets into law. Now the coalition is taking the historic step of introducing, permanently, a level playing field for low carbon technologies in the UK’s electricity market.”

Economic Secretary to the Treasury Justine Greening said that the launch of this consultation “demonstrates our continued commitment to being the greenest government ever”.

“This is the first step towards getting the investment we need in low carbon technology,” said Greening.

There is widespread consensus that reform of the electricity market is needed. “About 30% of our electricity must come from renewables by 2020, up from 7% today, to meet our contribution to Europe’s target on renewable energy,” added Greening.

It has been mentioned that under the reforms outlined, the competitive market will remain intact but four inter-locking policy instruments are proposed to change the returns generators can expect for the power stations they build and the electricity they generate:

Greater long-term certainty around the additional cost of running polluting plant through a carbon price floor. Proposals from the Treasury to provide greater support and certainty to the carbon price will increase investment in low carbon generation by providing a clearer long term price for carbon in the power sector.

Long term contracts for low carbon generation will make clean energy investment more attractive still. Through a proposed ‘contract for difference’ Feed In Tariff, the Government will agree clear, long term contracts, resulting in a top up payment to low carbon generators if wholesale prices are low but clawing back money for consumers if prices become higher than the cost of low carbon generation. An alternative ‘premium’ Feed In Tariff is also set out in the consultation document.

Additional payments to encourage the construction of reserve plants or demand reduction measures (so-called ‘negawatts’) to ensure the lights stay on. A Capacity Mechanism will ensure there remains an adequate safety cushion of capacity as the amount of intermittent and inflexible low carbon generation increases.

A back-stop to limit how much carbon the most dirty power stations - coal - can emit. An Emissions Performance Standard will reinforce the existing requirement that no new coal is built without carbon capture and storage.

 
France delays offshore wind opportunity

A report issued by consultancy firm PriceWaterhouseCooper’s urges France to launch its first tender for the construction of offshore wind farms if it is to keep in the running for offshore wind innovation.

PriceWaterhouseCooper’s latest report stressed that France must not miss the opportunity to develop its offshore wind power sector. France aims to build a wind power output capacity of 25,000 MW by 2020, including 6,000 MW in offshore capacity for a €20 billion investment.

But it has yet to launch its long-awaited tender for the first 3,000 MW in offshore capacity, threatening the competitiveness of French firms in Europe, where 20% of wind power is expected to come from offshore output by 2015.

Repower, PMSS sign HSE pact on Ormonde

Wind turbine manufacturer REpower Systems and renewable energy consulting firm PMSS have signed an agreement for Health, Safety and Environmental (HSE) management of the 150MW Ormonde Offshore Wind Farm.

PMSS will provide REpower with a custom HSE solution for the installation and commissioning of the wind turbines. This will include the provision of the Project HSE Manager, initially based from REpower’s Hamburg office and subsequently the onshore and offshore HSE Representatives for both Belfast & Barrow locations. PMSS is also to provide specialist advice on lifting operations and electrical control.

The Ormonde project, owned by Vattenfall is located approximately 10km from the coast of Barrow-in-Furness and features 30 REpower 5MW offshore wind turbines, in water depths between 17 and 30m, and with a total project capacity of 150MW is REpower’s largest project to date.

Vestas chosen for Rockland wind energy project

Vestas has bagged a 79.2 MW order for 44 V100-1.8 MW turbines from Ridgeline Energy, for the Rockland windenergy project near American Falls, Idaho, USA.

The contract includes delivery and commissioning along with a 10-year service and maintenance agreement. Delivery is scheduled for mid-2011 and commissioning is expected in late 2011.

BMT Nigel Gee to Design and Develop Four New Wind Farm Support Catamarans

BMT Nigel Gee Ltd, a subsidiary of BMT Group Ltd, the leading international maritime design, engineering and risk management consultancy, announces that it has signed a design and development contract for the construction of an initial batch of four Wind Farm Support Catamarans to be built by VeKa Shipbuilding BV at their yard in Jongert for operation by SeaZip Offshore Service BV.

SeaZip Offshore Service BV is a Dutch company founded in 2010 by the shipping entrepreneurs J.R. Arends and S. D. Schakelaar to focus on the development and operation of specialised vessels for the Offshore Renewable Industry in European waters. SeaZip has identified the need for a new design of Wind Farms Support vessel to service their target market and selected BMT as the world’s leading independent designer of catamarans to undertake the design in conjunction with VeKa.

Developed from BMT’s range of Turbine Support Vessels the SeaZip catamarans will be 19.5m in length with a beam of 7m powered by two 720kW MTU diesel engines via waterjets to achieve a service speed of 24 knots and a range of 300 nm. The design has been specifically configured to meet SeaZip’s requirement to carry 12 passengers and enable the vessels to carry a combination of up to three standard 10’ ISO containers, one aft & two forward. The ISO containers will carry the necessary supplies and equipment for the offshore servicing tasks. In addition the foredeck layout has been expressly configured to incorporate the new Turbine Access System (TAS) being developed by BMT and Houlder to provide safer access to the turbine structures.

Construction of the four vessels has commenced at the Jongert shipyard in the Netherlands with BMT providing a full production design service including cut part information. The first vessel will be delivered to SeaZip by mid 2011.