National Grid OKs 400-megawatt offshore wind project as costs drop

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PROVIDENCE, R.I. (WPRI) — Rhode Island’s offshore wind dreams are getting cheaper.

National Grid and Ørsted U.S. Offshore Wind said Thursday they have agreed on a 20-year contract for the utility to buy power from Ørsted’s proposed 400-megawatt Revolution Wind project at a cost of 9.8 cents per kilowatt-hour.

To put that number in perspective, power from Ørsted’s 30-megawatt Block Island Wind Farm — the country’s only active offshore wind farm — currently costs 26.1 cents per kilowatt-hour, more than twice as much. (National Grid’s standard offer rate is 10.99 cents, though company officials say the comparison isn’t apples-to-apples.)

Democratic Gov. Gina Raimondo’s administration picked Revolution Wind last year as part of a competitive bidding process led by Massachusetts. She hailed Thursday’s announcement as another step toward her goal of increasing the amount of renewable energy in Rhode Island to 1,000 megawatts by the end of next year.

“This is a triple-win for our state because it provides affordable, clean energy for Rhode Islanders, adds jobs to our economy, and dramatically reduces carbon emissions,” Raimondo said in a statement. She described the proposed cost of 9.8 cents as “far lower than we anticipated.”

The Block Island project was originally developed by Deepwater Wind, which was selected back in 2008 by the Carcieri administration to handle offshore wind for Rhode Island; Ørsted acquired Deepwater last year.

“We’re keeping our promise to Rhode Island to bring down the cost of offshore wind in a big way,” said Ørsted Co-CEO Jeff Grybowski, who previously led Deepwater.

The proposed Grid-Ørsted contract will now go before the R.I. Public Utilities Commission, which is expected to decide whether to approve it in the next four months.

Revolution Wind will be built at least 15 miles south of Rhode Island’s shoreline in Atlantic waters that Ørsted has leased from the federal government. Officials said the 400 megawatts the project will generate is enough to power about 270,000 Rhode Island homes each year. (Connecticut has since committed to buy 300 megawatts from Revolution Wind, as well.)

“It will have the kind of capacity that we would normally expect from a big traditional power plant, a big gas plant or something like that,” Grybowski said during Thursday’s taping of Executive Suite.

In addition to the environmental benefits of carbon-free energy, Grybowski said National Grid estimates the project will lower the average Rhode Island household’s electric bill by about 50 cents a month over the 20-year life of the contract.

As another cost comparison, officials pointed to Vineyard Wind, the project that Massachusetts officials selected in the same bidding process. Vineyard Wind has filed a contract to sell its power at an inflation-adjusted cost of 6.5 cents per kilowatt-hour; Revolution Wind’s cost is 7.4 cents when measured in the same way.

Grybowski cited three factors that have pushed down the cost of offshore wind in recent years: improvements in turbine technology; scale as projects get larger; and experience now that Block Island is up and running.

“We have now proven to the world, to the finance markets, to utilities, to regulators, that we can build these kinds of projects and they can be successful,” he said.

Deepwater’s purchase by Ørsted has not changed its commitment to Rhode Island, Grybowski said, though the company also has an office in Boston where its other CEO works. “We have large ambitions for Rhode Island, and it’s going to be our home,” he said.

Ørsted is currently expanding its Providence office space and expects to have more than 50 employees in the state within a few years. The company plans to spend $250 million locally on the Revolution Wind project, which is supposed to create 800 temporary construction jobs and 50 permanent jobs.

The governor’s office also said Ørsted will seek no tax incentives for Revolution Wind.

Ted Nesi (tnesi@wpri.com) covers politics and the economy for WPRI.com. He is a weekly panelist on Newsmakers and hosts Executive Suite. Follow him on Twitter and Facebook

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