Plans to build the first offshore wind farm in Rhode Island have suffered a setback after the developer, Hoboken, New Jersey-based Deepwater Wind, failed to reach an agreement to sell electricity to the state’s largest electric utility, National Grid.
The Providence Journal reports: "National Grid this week rejected a proposal to purchase energy from a small wind farm that Deepwater Wind plans to build off Block Island. In documents filed with the state Public Utilities Commission Thursday, National Grid says that negotiations with Deepwater have so far failed to yield a “commercially reasonable” power-purchase agreement, mainly because the projected cost of electricity generated by the wind farm would be three times the price of energy from traditional sources.
“The [agreement], in pure financial terms, is uneconomic by a significant margin for Rhode Island customers for the entire term,” wrote National Grid attorney Ronald T. Gerwatowski.
The filing, submitted late Thursday afternoon to meet a deadline set by a new state law, does not signal an end to talks between the two sides. It is, however, a blow to Deepwater, which until now had encountered no significant obstacles in its race with other companies to install the first offshore wind turbines in the United States.
The New Jersey-based start-up company needs a contract not just because it would guarantee a buyer for its electricity, but also because such an agreement would help attract additional financing for its two projects in Rhode Island that will cost a total of $1.5 billion.
Deepwater first plans to install up to eight turbines three miles off the Block Island coast by 2012 and would follow that demonstration project with a much larger wind farm consisting of approximately 100 turbines at least 15 miles from the Rhode Island shore.
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