The first operating South Fork Wind farm turbine stands east of Montauk Point, N.Y., in Dec. 2023. It is the first commercial-scale offshore wind farm in the country. Wind energy in the U.S. has grown significantly since 2000, to about 434 billion kilowatt-hours in 2022 from 6 billion kWh, according to the U.S. Department of Energy. Julia Nikhinson/Associated Press
Maine’s offshore wind research project in the Gulf of Maine is the subject of negotiations that are picking up speed among state regulators, the project’s developers and the Public Advocate, who are trying to determine how much the zero-carbon energy will ultimately cost utility customers.
The PUC on July 11 ordered that the price – or how it’s structured for the project in a contract between the developer, Pine Tree Offshore Wind, and CMP or Versant – should be “sufficiently defined and certain” to allow regulators to determine whether the cost to ratepayers is the lowest reasonable amount to finance, build and operate the project. The low-cost provision is required by state law, which mandated that the PUC execute a long-term offshore wind contract between a utility of no less than 20 years.
The project is “intended to be a ‘kick-starter’ for an offshore wind industry in the Gulf of Maine,” regulators said. But it’s still years away from going online.
Jack Shapiro, climate and clean energy director of the Natural Resources Council of Maine, called the research project the “tip of the spear,” helping developers of future commercial wind power determine pricing and other factors.
Federal officials in May offered Maine a lease to research offshore wind turbines in the Gulf of Maine. The site is 15.2 square miles, a fraction of the 2 million-acre location selected in March for a commercial floating offshore wind project. That site is off the coasts of Maine, Massachusetts and New Hampshire.
Up to 12 wind turbines in the Maine Research Array in the Gulf of Maine would generate 144 megawatts of electricity, enough to power more than 100,000 homes. Among the areas being researched, according to Pine Tree Offshore Wind, is how to reduce conflict with other ocean uses, such as fisheries; support education and the development of a workforce and supply chain; maintain coastal community culture and heritage; monitor changes in the ecosystem; and advance floating wind technology and reduce the cost of offshore wind energy.
Power from the research array would not flow for at least another six or seven years, and talks that began in May 2023, a year after Pine Tree Offshore Wind filed its case to the PUC, have been slow, said Tony Buxton, the lawyer for Pine Tree Offshore Wind.
He said his client will put up $1.5 billion to build and deploy wind turbines 40 miles from Maine if it has a power contract with Central Maine Power and Versant Power.
“What we’re doing is a lot more difficult than sticking poles in the ground. We’re sticking poles into the water,” Buxton said.
“We certainly could have been doing more negotiations prior to this time,” he said. “It appears the (Public Utilities Commission) is intent on completing our negotiations now. It’s now proceeding more intently.”
Details being negotiated are confidential, Public Advocate William Harwood said. “Numbers are being floated around with caps and formulas,” he said.
The price and terms for what is reasonable will be based on the PUC’s analysis of the economics of developing an offshore wind project in a “fluctuating financial market” and based on meeting public policy goals, the Office of the Public Advocate told regulators.
ADVOCATE: ENVIRONMENTAL BENEFITS ALSO COUNT
Shapiro said that as the PUC considers the project’s cost to ratepayers, it should not lose sight of the project’s environmental benefits. State law requires greenhouse gas emissions to be cut at least 45% from 1990 levels by 2030 and 80% by 2050, and advocates of wind power say it’s among the most effective tools to achieve those goals.
The Maine Research Array says the project would remove about 978 million pounds of carbon dioxide from the atmosphere each year, the equivalent of taking about 105,000 gas-powered cars off the road. The project also would spur job creation in construction, manufacturing and transportation, according to a June report prepared for Pine Tree Offshore Wind.
In a filing with regulators, CMP said negotiations in December, January, February and March generally reached agreement on non-pricing terms. But the utility reported a ” lack of agreement” on pricing terms and a pricing framework. PUC staff and Pine Tree Offshore Wind exchanged additional proposed pricing terms and frameworks, but the issues remain unresolved, CMP said. The utility would not provide details in its documents.
CMP and Versant are at the table as Pine Tree Power and state regulators negotiate a deal. The utilities will ultimately pass on to ratepayers the costs of wind power determined by the PUC.
PUC Chairman Philip Bartlett said at a recent meeting with Harwood and representatives of the Governor’s Energy Office, CMP and Versant that participants “seem like we’re a long way from having any real certainty” on determining the project’s costs.
But Dan Burgess, director of the Governor’s Energy Office, said at the PUC meeting that “significant progress has been made over the last year and a half, two years.” He cited the offer in late May by federal officials for a lease to research offshore wind turbines in the Gulf of Maine. He and Buxton believe the parties will agree on key terms of a contract by the end of the year.
Harwood said in an interview his office is in a “tough spot.”
“I’m not sure we can afford offshore wind,” he said. “I’m not sure we can afford not to with our climate goals.”
“The simple fact that these things float miles offshore and somehow electrons get back to the mainland has never been done in this part of the world,” he said. “What do you do with that uncertainty?”
“One of the things we’re trying to figure out is how to end up with an agreement with enough certainty . . . (that) ratepayers are not paying through the nose, but gives developers enough flexibility.”
WIND TURBINES OR A PORT: WHAT COMES FIRST?
One potential problem is balancing a timeline for wind turbine assembly and installation with construction of a wind energy port. The administration of Gov. Janet Mills is seeking $456 million from the U.S. Department of Transportation to build a port on Sears Island. Which comes first – an agreement on the cost of selling wind power or construction of a wind port – is among the unknowns, Harwood said.
“It’s a classic chicken and egg problem,” Harwood said. “If we don’t have a project, why stir up everyone at Sears Island? If we don’t have Sears Island, why set up turbines in the Gulf of Maine?”
The selection of Sears Island as the state’s preferred site for a terminal to accept and dispatch ships with wind turbine components that are assembled on site has divided environmentalists. They support wind power, but disagree on siting the terminal on Sears Island; many instead urge that it be built at nearby Mack Point.
A beach on the northwestern side of Sears Island shows the proximity to Mack Point, right, on May 2. The selection of Sears Island as the state’s preferred site for a terminal to accept and dispatch ships with wind turbine components that are assembled on site has divided environmentalists. Ben McCanna/Staff Photographer
Buxton said Pine Tree Offshore Wind expects it would not make a profit on 80% of the project that is competitively bid, such as construction of the offshore platforms, the towers and turbines. Where it would make a profit is on the rate of return for the project’s operation. That must be negotiated with the PUC.
In addition, the developer can save money by selling tax credits, such as energy investment tax credits available in the federal Inflation Reduction Act that has made available hundreds of billions of dollars for clean energy programs, Buxton said.
Wind energy has grown significantly since 2000, to about 434 billion kilowatt-hours in 2022 from 6 billion kWh, according to the U.S. Department of Energy. Wind turbines were the source of about 10.3% of U.S. utility-scale electricity generation in 2022, the government said.
Still, wind power projects are buffeted by economic factors that blow hot and cold. The first commercial-scale offshore wind farm in the U.S. opened in March with Danish wind energy developer Ørsted and Eversource building a 12-turbine wind farm, South Fork Wind, 35 miles east of New York’s Long Island. A month later, New York state officials announced that final agreements could not be reached with three other projects that had received provisional awards in October 2023.
Shapiro warned that in Maine, the “downside of a contract falling apart is significant.” He cited the collapse last December of a proposed transmission line that would have brought wind power from northern Maine to the New England grid.
“If this falls apart, it will send a message that Maine is not the place you want to invest,” he said.
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