Carcieri Signs Development Agreement with Deepwater Wind for Off-Shore Wind Development

01-08-2009

Construction Expected to Commence in 2010

Governor Donald L. Carcieri today announced that the state has signed a joint development agreement with Deepwater Wind Rhode Island, LLC outlining the terms and conditions for the construction of a wind energy development off the shores of Rhode Island that will provide 1.3 million megawatt hours per year of renewable energy – 15 percent of all electricity used in the state. The Governor also announced that as a result of negotiations between the state and Deepwater Wind, the developer has revised the construction schedule to put the development on pace to be the first off-shore wind farm constructed in North America.

“This agreement sets the stage for Rhode Island to be the leader in the emerging renewable energy industry in the Northeast, and brings us one step closer to increasing our use of renewable sources to generate 20 percent of our electricity needs,” said Governor Donald L. Carcieri. “With this agreement, we have set a clear timetable for the development including the construction of a major manufacturing facility at Quonset, bringing an estimated 800 high quality jobs to Rhode Island.”

Deepwater Wind’s Chief Operating Officer, Chris Wissemann, said, “We are delighted to have reached this important milestone with Governor Carcieri and the state of Rhode Island. We are aggressively moving forward with our plan to deliver renewable energy and develop a green collar industry in the state by building North America’s first off-shore wind farm. We are looking forward to working with state and federal authorities to begin construction in late 2010.”

The joint development agreement outlines the terms and conditions under which Deepwater Wind will construct the wind development. Under the agreement, Deepwater Wind will receive preferred developer status, allowing the company first choice of approved sites for the placement and construction of the project. Approved locations will be determined through the Special Area Management Plan (SAMP) being conducted by the Coastal Resources Management Council (CRMC) in partnership with the University of Rhode Island (URI).

“We see this as a game changing solution to Rhode Island’s energy future,” commented Michael Saul, Interim Executive Director of the Economic Development Corporation. “This agreement is the culmination of a rigorous process, which concluded that Deepwater Wind was the preferred developer on a number of fronts. Their experience and capital resources position Rhode Island with a capable partner for this significant project. We are also excited about the presence of a manufacturing headquarters at Quonset which will bring 800 direct jobs associated with a manufacturing facility for the construction and assembly of wind turbine support structures and related parts. Deepwater Wind’s presence in Rhode Island will be a catalyst to attract additional jobs in the renewable energy sector and position our state as a leader in renewable energy efforts.”

In September, the Governor announced that Deepwater Wind was chosen as the developer for the project. Deepwater Wind has pledged a significant private investment in Rhode Island with the establishment of a regional development office and the construction of a manufacturing facility in Quonset and creating approximately 800 direct jobs with annual wages of $60 million. The Quonset facility will manufacture support structures upon which the turbine and its tower are based and will service all of Deepwater Wind’s northeast projects.

Milestones outlined in the agreement include Deepwater Wind establishing a regional development office in Rhode Island within 120 days, executing a lease option on land at the Quonset Development Corporation for the construction of a major manufacturing facility to build the support structures upon which the turbine and its tower are based that will service Deepwater Wind’s northeast projects.

The agreement identifies two major phases of the construction of the wind development, each with independent utility. Phase One will be a 20 megawatt project in state waters, with the exact site selected from locations shown to be acceptable by the SAMP. It is expected that construction of Phase One will begin in late 2010 and be completed in late June 2012.

In Phase Two, Deepwater Wind will construct a utility-scale project in a separate location within the SAMP, capable of producing 1.3 million megawatt-hours per year within three years of approval of Deepwater Wind’s application to the federal Mineral Management Service, a division of the Department of the Interior, for a lease of submerged federal lands on which to construct the larger wind farm.

It is expected that the development will cost in excess of $1.5 billion to construct – all from private investment sources. A team of experts assembled by Governor Carcieri spent several months evaluating the detailed proposals submitted by seven development groups.

“By establishing ourselves as an early leader in off-shore wind energy production, Rhode Island gains an important competitive advantage in attracting alternative energy companies to the state,” continued Governor Carcieri.

Deepwater Wind was established to develop utility-scale off-shore wind projects in the northeastern United States. The company’s major investors are First Wind Energy, LLC, a major developer of on-shore wind projects in the United States and the D. E. Shaw group, a global investment firm with significant experience in the energy sector.

Background On The State’s Path Towards 20 Percent Renewable Energy

In 2006, Governor Carcieri announced an ambitious plan to increase the use of renewable sources of energy to generate 20 percent of the state’s electricity needs. It was expected that approximately 15 percent would be derived from wind energy. The recently announced Ridgewood Energy project at the central landfill will provide another 5 percent of the state’s energy requirement. Together, these projects will be on track to meet the Governor’s renewable energy goals.

In June 2007, the Rhode Island Office of Energy Resources received the results of a report it had commissioned to determine the best locations for the development of wind energy projects. The report ranked ten sites according to the amount and cost of producible energy, whether or not the sites were in federal or state waters, and the visibility of the projects from shore. Factors highlighted in the report would guide the selection of sites. Most importantly, the report projected that 15 percent of Rhode Island’s average energy demand at a competitive cost could be achieved by establishing a wind farm using areas identified as J and K in the study.

Last fall, an extensive stakeholder process was organized to evaluate the study. Participants in the four stakeholder meetings included city and town representatives, environmental organizations, local economic development organizations, commercial and recreational fishing interests, state government agencies, the U.S. Coast Guard, area university representatives, National Grid officials, and consultants to the RI Office of Energy Resources.

In April, the State issued a formal RFP seeking proposals from private companies to construct and operate an off-shore wind farm. In June, Governor Carcieri announced the team of individuals responsible for selecting the contractor to develop and construct a wind energy project off the shores of Rhode Island.

The Wind Energy Proposal Evaluation Team included several state energy and economic development officials, as well as the Dean of the URI Graduate School of Oceanography, Dr. David Farmer. Seven proposals were received.

In June 2008, the Rhode Island Renewable Energy Fund Board of Trustees approved funding for the development of a SAMP covering Rhode Island’s offshore waters, executed by a joint partnership between the Coastal Resources Management Council and the University of Rhode Island. URI will provide data to the CRMC, who will execute the regulatory framework of the SAMP.

Under the federal Coastal Zone Management Act, preparation of a SAMP may enable permitting of projects within the area covered by the SAMP to proceed on the basis of an Environmental Assessment in lieu of an Environmental Impact Statement. The SAMP process is expected to be completed in two years.

Seven proposals were received by the Wind Energy Proposal Evaluation Team. Proposals were evaluated on the basis of total cost to Rhode Island ratepayers, the qualification and experience of the proposer in constructing wind projects, and the number of jobs and the amount of tax dollars to be created. The Evaluation Team was assisted by independent consultants in the area of energy economics and engineering technology, including the National Renewable Energy Laboratory. “The fact that the RFP generated more than double the responses that other states received in similar processes is testimony to the Governor’s foresight in embracing the Special Area Management Planning process,” commented Andrew Dzykewicz, Commissioner of the Office of Energy Resources. “This demonstrates that, given regulatory certainty, the private sector is ready to invest in projects of this nature, and can provide cost-effective renewable energy to consumers.”