The US's First Offshore Wind Farm Will Slash Local Power Prices by 40 Percent

America is finally getting its first offshore wind farm—by next fall, five floating turbines in Rhode Island will break open a new cleantech market in the United States.

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Mar 3 2015, 5:00pm

​The US is finally getting its first offshore wind farm. Deepwater Wind has announced that its Block Island wind project in Rhode Island has been fully financed, passed the permitting process, and is ready to begin putting "steel in water" this summer.

Five floating turbines will be built off the coast of the island, which currently relies on diesel generators for its power—and pays a dollar more per gallon than the mainland does to get it. Those turbines will be connected to an undersea power cable that links not just the island, but to the US mainland.

The result will be a huge price drop in the islanders' electricity bills, and an influx of clean energy piped into the grid from across the sound. The 30 megawatt plant is expected be generating power for thousands of New England homes by fall next year.

"The project is indeed on track to be the first offshore wind farm in the US—in operation by fall 2016," Meagan Wims, the US subsidiary of Deepwater Wind's account supervisor told me in an email. "We're already under construction."

The company has secured $290 million in financing, with funding from the likes of Key Bank and France's Société Générale, in part on the strength of its long-term power purchase agreement with US utility National Grid.

"We are on the cusp of bringing offshore wind from theory to reality in the US," Deepwater Wind CEO Jeffery Grybowski said in a statement. "We're poised to launch a new American cleantech industry, and it all starts here with our work on the Block Island Wind Farm."

Block Island has thus surpassed the much-publicized Cape Wind project, long touted as "the nation's first offshore wind farm," but that has been stalled out for over a decade in Massachusetts, held up by a tangle of clean power foes, regulatory and financing woes, and Cape Cod homeowners afraid it'd ruin the view.

Meanwhile, offshore wind farms have already sprung up around the world, in places like Denmark, China, Germany, and the UK, where the largest operates. Their proliferation makes sense. Wind tends to blow harder and more consistently offshore than over land, as the Bureau of Ocean Management explains. So offshore wind farms tend to generate more power—potentially, a lot more power—and on a more predictable schedule than their land-bound counterparts.

That's why Deepwater's Block Island announcement is so encouraging. Offshore wind is one of the most promising sources clean power currently going. But it's also expensive, and the construction process complicated. Building turbines offshore makes them more difficult to maintain and repair, and installing cables to transmit the power can prove difficult. Communities are prone to oppose projects (see again, Cape Wind) and all that, combined with the lack of US precedent, means that financing can be difficult.

But once an offshore wind farm is up and running, they're steady and reliable. And Block Island is fully funded and already being built. "It's got all the permits, all the money and all the contracts it needs," Jérôme Guillet, of Green Giraffe, a French financial firm that advised the project, told me. "It's a nice example also of France-US friendship, with Alstom turbines and Société Générale doing a big part of the financing." Alstom, which is partially owned by GE, is manufacturing the blades.

"[I]t is the first offshore wind project to be financed in the US, and it will be the first one to be built," Guillet said, "and as such, it is an essential precedent for the industry, simply to show how it can be done."

A spate of other offshore wind projects are awaiting approval and/or financing in the US, and one of them is Deepwater's own, much, much larger Deepwater One proposal.

Deepwater One is a potentially enormous wind project that could be built off the coast of New England.

But that's a ways off yet.

So how did Deepwater Wind manage to beat out the competition and get the nation's first offshore wind farm under construction? A combination of size and smarts; sort of like Tesla did, Deepwater identified a way to make expensive new cleantech attractive to a new market—​unlike Tesla, it also promised long-term savings. That's something everyone could get behind.

"Community support for the project has been consistently strong," Wims told me. "Block Island faces some of the highest electric rates in the country, and the project is expected to reduce rates by an estimated 40 percent for Island residents." (Politifact checked the math, and ​confirmed the claim.)

That's an easy sell. Of course, most wind farms won't ever see that sort of savings. But Block Island, if executed properly, could demonstrate that offshore wind is a safe, viable, and reliable power source, and beckon further investment in a sector that's long overdue a gust of goodwill.