Uncertainty has its costs.  Clinical studies confirm what we all know intuitively: uncertainty about what may happen in the future makes it harder for us not only to make plans but also to achieve them.

Uncertainty can impact offshore wind projects in several ways.  Developers face uncertainty over regulatory regimes, the availability of leases for sites, and whether they will find counterparties for long-term power purchase agreements.

Utilities and electricity consumers interested in buying power from offshore wind projects face similar uncertainties.  Will a given offshore wind project actually be built?  When a utility enters into a contract to buy power from an offshore wind project, the utility typically has the right to expect that it will actually be able to take delivery of that power to serve its customers.  Despite the reality of European offshore wind, the fact that the first American offshore wind project has yet to be constructed makes some potential purchasers uncertain as to whether US projects will be built.

For example, consider Block Island off Rhode Island.  The island – not connected to the mainland by electricity cables – is looking for a better solution to its energy needs than the expensive diesel generators that have served it for years.  An offshore wind pilot project by Deepwater Wind has been proposed as part of a possible solution.  As the town of New Shoreham plans for its energy future, questions have arisen over whether Block Island should expect to be able to tap into the power produced by the offshore wind pilot project.  Some islanders oppose the Block Island offshore wind project, while others more open to the concept are skeptical that the project will ultimately be constructed.  Uncertainty about the Block Island project is thus leading to the consideration of alternatives, such as an underwater cable to import power from the mainland.

As recently reported in the Wilmington News Journal, uncertainty also surrounds a possible offshore wind project off Delaware.  Faced with a 2012 state deadline to procure renewable power, the Delaware Municipal Electric Corporation (DEMEC) entered into a contract with offshore wind developer Bluewater Wind to buy part of the output of its proposed offshore wind project.  While DEMEC’s contract is for a much smaller share of the Bluewater Wind project’s output than that purchased by Delmarva Power in 2008, DEMEC nevertheless needs to buy renewable power to comply with Delaware’s renewable portfolio standard.  Now, faced with what DEMEC has called “the increasingly unlikely chances the Bluewater Wind project will be built anytime soon”, DEMEC has entered into a contract with Duke Energy Renewables to purchase all power produced by a 69 megawatt land-based wind facility to be built in Pennsylvania.  DEMEC pointed to “increasing federal uncertainty about offshore wind subsidies” to explain its decision to hedge its offshore wind contract with terrestrial wind.  While DEMEC’s move does not mean it will not gladly pay for the Bluewater Wind project’s output if and when it is built, the utility’s perceived need to hedge its offshore wind contract with terrestrial wind highlights the uncertainty surrounding offshore wind in the U.S.

Uncertainty about U.S. offshore wind may not be a barrier to its ultimate development, but these examples demonstrate how uncertainty affects the choices people make.  Time will tell whether offshore wind will power consumers lives in Rhode Island and Delaware in the near future.  In the meantime, many eyes will be watching the sea for a sign of what the future will bring.

Todd J. Griset practices energy law with Preti Flaherty Beliveau & Pachios in Maine. He also writes a blog on offshore wind, renewable energy and policy issues.

The Rhode Island Supreme Court today upheld Deepwater Wind’s power purchase agreement with National Grid for the planned Block Island Wind Farm. The Rhode Island Public Utilities Commission had approved the power purchase contract in August 2010, but the deal was challenged in court by two local manufacturers.

“Today’s ruling solidifies Rhode Island’s position as a national leader in building a clean energy future for our country,” said Deepwater Wind Chief Executive Officer William Moore. “We’re gratified by today’s ruling and what the Block Island Wind Farm will mean not only for the offshore wind industry but also for Rhode Island’s environment and economy. We’ll now proceed to the permitting and construction planning phases of the project, working closely over the coming months with state and federal agencies as well as Block Island residents and other stakeholders.”

The Block Island project is a demonstration-scale, 30MW wind farm in state waters roughly 3 miles off the southern coast of Block Island. Site preparation work, at Deepwater Wind’s Quonset Point manufacturing hub, is planned to begin in 2012, with the wind farm in commercial operation by 2013 or 2014, according to a statement released by Deepwater Wind.

Today’s ruling marks a major victory for the Block Island project, and sets a favorable legal precedent as other projects move forward. It also lends credence to D.E. Shaw Managing Director Bryan Martin’s claim that Rhode Island will win the “Race to the Water.”

Michael McElroy, who is representing Toray Plastics and Polytop Corp. in their appeal of the Block Island power purchase agreement, said that the cost of the project should include the cost of the undersea cable from Block Island to the mainland. The demonstration project is estimated to cost $205 million and the undersea cable would cost another $50 million, according to the Journal report.

“We’d like to be first in the water, but you can’t do it at any cost,” McElroy said.

The Journal reported that a decision is expected in a few weeks.

Michigan Offshore Wind Debate Put On Hold

Michigan Gov. Rick Snyder’s administration will turn its attention to developing offshore wind regulations in the Fall, the Muskegon Chronicle reported today.

Patricia Birkholz — the director of Michigan’s Office of the Great Lakes — said that Snyder is open to offshore wind development in the state.  As a state senator last year, Birkholz introduced legislation to develop offshore wind regulations. The bill was not voted on.

Cape Wind parent company Energy Management Inc., intends to finance 80 percent of the project with Department of Energy loans, according to the Dow Jones report. The company has also reportedly applied for a grant to cover a separate credit charge for the risk on the loan not being repaid.

The project’s financial adviser — Barclay’s Capital — has been seeking the remaining 20 percent, or about $400 million.

Activists Want Long Island Utility To Buy Offshore Wind

Renewable energy activists are calling on the Long Island Power Authority to buy electricity from offshore wind farms, the Long Island Press reported yesterday.

Deepwater Wind submitted a bid — in response to a recent request for proposals — to provide 600 megawatts of offshore wind capacity to the Power Authority.

“This is the perfect opportunity for LIPA to begin to repower Long Island’s antiquated fleet of polluting power plants with clean 21st century technology at predictable prices,” said Gordian Raacke, Executive Director of the not-for-profit group Renewable Energy Long Island. “Investing in renewable energy sources with known long-term cost makes much more sense than committing unknown amounts of ratepayer dollars to 20 year power purchase contracts for price-volatile fossil fueled power supplies.”

Providence Journal Profiles Block Island Appellants

The Providence Journal published a profile Sunday of the two remaining challengers to the power purchase agreement between Deepwater Wind’s Block Island wind farm and National Grid.

The agreement calls for the utility to pay 24.4 cents per kilowatt hour for electricity in the first year of the wind farm’s operation. The Rhode Island Supreme Court recently allowed Polytop Corp. and Toray Plastics to continue their appeal against the PPA.  Although neither company buys their power from National Grid, state legislation allows the utility to spread the cost of the project across its entire distribution base.

“The point of deregulation was to let us choose a lower price for ourselves,” said Toray senior vice president Shigeru Osada. “In the [Deepwater contract], we don’t have a choice.”

NGOs Launch Virginia Offshore Wind Campaign

Several advocacy and environmental groups launched a new campaign today — called VA4Wind — to spur offshore wind development in Virginia.

“The primary objective of the VA4Wind campaign is to convince Dominion Virginia Power to develop offshore wind energy off Virginia’s coast,” campaign leaders said in a press release.

The initiative was organized by the Virginia Chapter of the Sierra Club, the Chesapeake Climate Action Network, the Green Jobs Alliance and Virginia Interfaith Power & Light.

Aerial teams from the National Marine Fisheries Service spotted the whales, and a voluntary mariner speed reduction to 10 knots or less was put into effect, according to the report.

The Alliance — which has a long history of latching onto any available topic to criticize the planned wind farm — said that their major concern was the disturbance caused during construction. Cape Wind’s construction plan includes mitigation strategies if the whales are nearby during construction.

“Right whale sightings in Nantucket Sound are comparatively rare compared with neighboring water bodies,” said Cape Wind spokesman Mark Rodgers. “There are protocols we’ll have to follow during construction to make sure there aren’t any marine mammals in close proximity, particularly for acoustics.”

Maryland Chamber of Commerce Opposes Offshore Wind Bill

The Maryland Chamber of Commerce has publicly opposed Gov. Martin O’Malley’s proposed legislation to support offshore wind development in the state, the Wilmington News-Journal reported Tuesday.

The bill was postponed for “study” and will be reintroduced in the legislature’s next session.

“This bill would be very costly to all customers and areas in Maryland. This is not the appropriate tool to address increased wind generation,” the Chamber wrote on its Web site.

National Grid Revises Block Island Wind Farm Cost Estimate

Utility National Grid — which has contracted to buy power from Deepwater Wind’s Block Island wind farm — last week revised its estimate for the above-market cost of the electricity, the Providence Business News reported.

In a filing to the state’s Public Utilities Commission, National Grid said the electricity would cost $409 million or $415 million more than market rates. The previous estimate was $390 million, but the company cautioned that these numbers are a “snapshot in time, and we would expect [that] a long-term forecast would fluctuate each time the forecast is performed over the course of six months to a year.”

Virginia Republicans Differ On Offshore Wind

Virginia Republican Senate candidate George Allen and Virginia Republican Gov. Bob McDonnell apparently differ on offshore wind development, the Washington Examiner reported yesterday.

Allen published an op-ed in which he disparaged renewable energy generation, while McDonnell has recently affirmed his support for offshore wind development in the state, according to the report.

The organizations will research wind patterns on Lake Michigan and will eventually develop advanced wind mapping for the lake, according to the report.

“It’s not only significant for MAREC because it takes advantage of our location and our mission, but it brings on board some significant expertise, and it brings on board an international relationship,” said MAREC Director Arn Boezaart.

Deepwater Wind Deploys Monitoring Buoy Near Block Island

Last month, Deepwater Wind deployed a Sea ZephIR spar buoy west of Block Island to collect data for an eventual offshore wind farm, the Block Island Times reported.

The buoy will collect data on wind speed, direction, sheer, wave height and frequency and bird and bat activity according to the report.

It will eventually be reused for an offshore wind site 20 miles off the coast of New Jersey, which is being jointly developed by Garden State Offshore Energy — a partnership between Deepwater Wind and Public Service Electric and Gas.

According to a summary of the governor’s proposed legislation, the bill will direct the state’s Public Service Commission “to require Maryland’s five distribution utilities to award long-term contracts to procure between 400 to 600 megawatts of offshore wind energy.”

The contracts must be for at least 20 years and the Commission will oversee the procurement process and approve the final power purchase agreements. According to the summary, “additional costs” from offshore wind will be spread across the state’s entire rate base.

Legal Briefs Defend Rhode Island Offshore Pricing Approval

Deepwater Wind and National Grid filed legal briefs to the Rhode Island Supreme Court last Friday defending the approval of their power purchase agreement for the planned Block Island wind farm, the Block Island Times reported.

Briefs were also filed on behalf of Rhode Island Speaker of the House Gordon Fox, Senate President M. Teresa Paiva-Weed, and Gov. Lincoln Chafee’s office.   The power purchase agreement was initially rejected, but state lawmakers directed the regulators to review the deal while considering a broader range of benefits.  The previous attorney general, the Conservation Law Foundation and two manufacturers have protested the Public Utilities Commission’s reconsideration and approval of the contract.

“This dynamic interaction should be encouraged, not discouraged … If it takes several attempts by the General Assembly, the [PUC], the utility and the developer, that is good, not bad. The point is to get it right, not to preserve a failed proposal in judicial amber,” one of the supporting briefs read.

As attorney general, Lynch appealed the state Public Utilities Commission’s approval of a power purchase agreement between National Grid and Deepwater Wind.  The PPA calls for a 24.4 cent per kilowatt hour purchase price in the first year and was initially rejected.  Rhode Island lawmakers directed the commission to review it again with a broader view of the project’s benefits.  The approval was also appealed by two manufacturers and the Conservation Law Foundation.

Peter Kilmartin, the incoming attorney general, has said that he plans to drop the appeal.

Anti-Cape Wind Group Opposes New Federal Offshore Wind Plan

The Alliance to Protect Nantucket Sound — the controversial anti-Cape Wind organization — has signaled its opposition to the new federal offshore wind development plan for the ocean near Massachusetts, the Providence Journal reported on Saturday.

“It’s more of the same,” said Alliance President Audra Parker.  “It’s all about costs and siting.”

The Bureau of Ocean Energy Management, Regulation and Enforcement released a request for interest last week for the ocean south of Nantucket and Martha’s Vineyard.

Providence Journal Decries Tax Exempt Status For Opposition Group

The Providence Journal’s editorial page sharply criticized the Alliance to Protect Nantucket Sound’s tax-exempt non-profit status today, citing the group’s political opposition to Massachusetts’ pro-Cape Wind Gov. Deval Patrick.

The page specifically criticized William Koch — who received his inherited wealth from the oil and gas industries and founded energy conglomerate Oxbow.  The editorial said that taxpayers are “subsidizing the political activities of the fossil-fuel industry and rich yachtsmen through tax-exempt organizations.”

“Everyone is entitled to his political opinion. But the taxpayers shouldn’t be forced to pay to promote it by covering the taxes that the ‘nonprofit’ Alliance doesn’t pay,” the editorial said.  “There are many perversions among 501(c)3s, but Mr. Koch’s group is particularly brazen.”

The company is developing two projects in the area — the five to eight turbine Block Island project and a 1,000 megawatt project in between Rhode Island and Massachusetts.

During a meeting of the Block Island Energy Plan Committee, a Deepwater Wind representative said that the company is committed to building a transmission line to the mainland as part of the project and that the Block Island wind farm had been moved as far south as possible to avoid minimize visibility from the island.

Principal Power Floating Turbine Platform Could Deploy By June

Floating wind turbine technology designed by a San Francisco company is on track to be deployed off the coast of Portugal within the next six months, Renewable Energy World reported today.

The technology, which is known as WindFloat, was developed by the engineering firm Principal Power.

The platform includes a floating triangular structure with submerged floating columns under each vertex of the triangle tethered to the seabed.

Anti-Deval Patrick, Anti-Cape Wind Ad Backed By Republican Fund Raiser

A controversial radio ad attacking Massachusetts Gov. Deval Patrick and the Cape Wind offshore wind project was partially funded by a donation from a fund-raiser for Patrick’s Republican rival, Charles D. Baker, the Boston Globe reported on Friday.

The running of the ad — by the anti-Cape Wind group Alliance to Protect Nantucket Sound — has called that group’s nonprofit status into question because of the direct involvement in a political contest.  The Baker campaign denied a coordinated effort with the Alliance.

“The Baker campaign never consulted with any entity that has to be independent about advertising,’’ said Rob Gray, a top strategist for the Baker campaign.

The new agreement, however, is essentially the same as the deal rejected earlier this year by the PUC for being too expensive, according to the Block Island Times.  The Rhode Island legislature passed a law earlier this year effectively ordering the commission to reconsider the power purchase agreement.

The newspaper says the difference is that “any savings in the project would go to the ratepayers of Rhode Island, not to the developer” and an independent third party will “act as a verification agent to confirm the project’s costs.”

Paul Rich, chief development officer for Deepwater, is quoted saying the company has agreed to “unprecedented concessions to make this affordable.”

Rhode Island Attorney General Patrick Lynch and the Conservation Law Foundation both protested the legislatively mandated second hearing for the Deepwater Contract, according to the Providence Business News.

“Deepwater had its chance to prove to an impartial panel, the PUC, that this deal had any merit for Rhode Islanders, and Deepwater couldn’t do it,” Lynch was quoted as saying. “They had an appeal process by which they could have asked our Supreme Court to help them, and they didn’t even try to use it. It is wrong for legislation to ‘overrule’ a final judicial decision.”

Delaware Project Delayed By Federal Permitting

The NRG-Bluewater offshore wind project off Delaware is having trouble getting federal approval for its met tower, according to the Wilmington News-Journal.  The permit snags relates to emissions associated with building the met tower.

The delay could potentially lead to construction delays as well, the newspaper said.

NSTAR Passes On Cape Wind Electricity

The NSTAR utility company is not yet planning to buy electricity from the Cape Wind offshore wind farm, according to the Boston Globe.

The company sent proposed contracts to Massachusetts regulators for three land-based wind farms but not with Cape Wind, despite meeting with the offshore developer last month.