Maine’s involvement in global offshore wind threatened by legislative actions, say industry watchers

PORTLAND — Statoil North America on Wednesday said it was putting its offshore wind energy project on hold because of “the risk and uncertainty” created last week when the Legislature, at Gov. Paul LePage’s behest, made changes that will delay and potentially threaten state approval for the project.

The Norwegian company informed the Maine Public Utilities Commission of its decision on Wednesday in a letter.

Statoil’s departure would be a big loss for the state from an economic development point of view, according to Annette Bossler, an international business consultant based in Bremen.

Bossler, who consults for a German company that is developing a pilot offshore wind energy project in the Baltic Sea, said that in the next two or three years there will be at least a billion dollars invested around the world by offshore wind technology developers. Maine has threatened its ability to receive any part of that investment, Bossler said.

“We have a huge opportunity to be part of a global industry, but there needs to be commitment, and I think now that commitment, you can argue, is questionable,” Bossler told the Bangor Daily News.

Last week, the Maine Legislature approved LD 1472, which reopens a process by which the Maine Public Utilities Commission approved a plan in late January to subsidize Statoil’s project with ratepayer support. The support allowed the Norwegian company to move ahead with its plan to erect four floating turbines in federal waters off the Maine coast by 2016.

The University of Maine, which also is developing offshore wind energy technology, was not prepared to submit a proposal when the PUC first issued a request in 2010. LD 1472 would delay Statoil’s project to allow UMaine to submit its own proposal, and therefore compete with Statoil for that ratepayer support.

The Legislature’s actions sent a message, Bossler said: “If you want to build your full-scale pilot to develop this technology further, Maine is not really a reliable location,” she said.

And the world is watching. The Legislature’s last-minute legislative changes last week was reported throughout the wind energy industry media, including in Europe, Bossler said.

“That is not something only Statoil will notice. Other big players in the industry will notice as well,” she said.

Paul Williamson, executive director of the Maine Ocean & Wind Industry Initiative, confirms that Maine is on the world stage, but not in the best light.

“I’ve had conversations directly with both small and large players in the international offshore wind industry, and I’ve received reaction from those various parties that if the state of Maine doesn’t follow through with Statoil, they would not think of the state of Maine as a good place to invest in offshore wind energy,” Williamson said Wednesday.

Ola Aanestad, Statoil North America’s vice president of communications, wrote in an email to the Bangor Daily News on Wednesday that the company will continue “a robust dialogue with stakeholders related to the Hywind Maine Project.”

“However, given the uncertainty created by the recent law change (LD 1472), Statoil is now preparing to put the Hywind Maine Project on hold, while we assess the changes made to the law, the total risk picture and our progress plan going forward,” he wrote. “We will keep the option open to re-initiate project activity if we should find the total risk picture related to the Maine project acceptable.”

Maine is not the only place the company is looking to launch its pilot project.

“Statoil is considering several locations for building a pilot park based on the Hywind floating concept, in addition to Maine,” he wrote.

Bossler, who in May released a report on the global offshore wind energy industry, said Statoil is looking at a pilot project in Scotland and in November signed an agreement with Hitachi in Japan.

“So Statoil has options. Maine, on the one hand, is a very good market because of the wind resources we have, but you need to have the reliable commitment to have a big company say, ‘this is where we’re going to spend the money.’ Because there are other places in the world you could do this.”

UMaine’s project involves placing 170 6-megawatt floating wind turbines in the Gulf of Maine in an effort to generate up to 20 gigawatts of electricity by 2030, which is some 15 years later than Statoil proposes being online. The UMaine project involves the university’s Advanced Structures and Composites Center and Pittsfield-based building contractor Cianbro, among other entiti es.

Williamson said the state’s desire to support UMaine’s project “is fantastic,” but it should have gone about it another way.

“They have some really brilliant ideas under development at the University of Maine that deserve state support,” he said last week after the Legislature passed LD 1472. “However, it would have been better for the Maine renewable energy climate had the Legislature identified creative ways to support the university without disrupting the state’s agreement with Statoil.”

Tom Welch, chairman of the PUC, wasn’t surprised by Statoil’s decision.

He acknowledged that LD 1472, which will force the PUC to reopen its review process and consider UMaine’s project for ratepayer support, delays the PUC’s approval of Statoil’s contract and therefore creates uncertainty for the company.

“This doesn’t particularly surprise me,” he said. “It may be a rational reaction to a level of uncertainty in terms of timing at the very least of when the contract would be executed. Corporations have to make their own decision.”

There has been some deliberation over whether the PUC could provide ratepayer support to both the Statoil and UMaine projects, but Welch said that isn’t likely, at least if both were the size of Statoil’s project.

“You could certainly not support both of them at the level Statoil is now. The ability just isn’t there,” he said.

Welch wouldn’t comment on what message the Legislature sent when it passed LD 1472, except to say, “Obviously people in the private sector always prefer that things stay exactly the way they are. But that just isn’t the case in the real world.”

Christopher Cousins/Bangor Daily News

More than 70 people turned out for an informational session in June 2012 hosted by Statoil North America.

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Comments

Frank Heller's picture

The role of Land Grant Universities in creating new Industries

I graduated from Penn State, which like UMO, was a land grant university set up under the Morrill Act, which stated:

"without excluding other scientific and classical studies and including military tactic, to teach such branches of learning as are related to agriculture and the mechanic arts, in such manner as the legislatures of the States may respectively prescribe, in order to promote the liberal and practical education of the industrial classes in the several pursuits and professions in life."

PSU has long nourished high tech industry, HR SINGER, etc, and 'spun' them off. It's engineering college is world reknown while the University of Maine seems to have lost its mission and become more of a liberal arts college.

Governor LePage appears to have given them a nudge in the right direction; while the opposition Democrats are endorsing a large foreign energy conglomerate with vested interests in oil and gas exploration and blessing it with subsidies.

Even worse is a PUC which is heading us away from reliable green electricity at 6 cents/KW from Canadian and domestic hydro sources, and into unreliable power sources at the highest rate in the world----off shore power in Europe was heavily subsidized and is now laboring under gradual reductions in these subsidies.

Why should Mainers be forced to subsidize off shore wind when the end result are ever higher electric production and transmission costs? The PUC could well be violating their mission and legally vulnerable.

So, Governor

How's that "Openey for Businessy" thing workin' out for ya?

Edward S Phillips 's picture

T least spend tax payers money at home

Please note that the project was as always to supported by tax payers and rate payers. European companies are famous for picking the pockets of tax payers. Also if people really read up on the termendous costs to build the units and than get the power to land they would not feel so good about another pie in ocean projects at their termenous costs. The size and cost of the copper line to transport to land is unreal. No sensable business would invest in a project like this except if some else guaranteed to pay them even if it was not making a profit. Another example of the Goverment cozy industerial complex just to have a feel good feeling for a few greenies.

JERRY ARIPEZ's picture

15 years for a return?

UMaine’s project involves placing 170 6-megawatt floating wind turbines in the Gulf of Maine in an effort to generate up to 20 gigawatts of electricity by 2030, which is some 15 years later than Statoil proposes being online.

That is one return on investments that buyers/investors will not venture if they have to wait on the U of M and Cianbro.

By that amount of time the project and equipment will be obsolete like the U of M's involvement.

Statoil North America does business in 30 countries and has the ability and investors to perform the operations in the time necessary to get it online and producing.

FRANK EARLEY's picture

Well Jon, here's a Governor hating POV............

I agree, there should be support for University of Maine's attempt to create wind power technology in Maine. I do feel however, that Paul LePage's attempt to show favoritism or support to USM, at the expense of a lucrative established international company, is just another example of his "shooting from the hip" approach to politics.
There is virtually no way, the University of Maine, could compete with the financial investment of "Statoil N America". Once again, throwing away potential investment and financial benefits to the State.
If I were to turn off my logical thought process, twist my emotional thought process, and completely reverse my common sense, I can almost make out LePages reasoning. Like almost everything else he does, he fails to think first, plain and simple.
U Maine's projects could have been supported, while still allowing a much more organized, financially sound international corporation, to invest it's money here. It's called using a balanced approach, not LePages signature, all or nothing stance on everything he does. Thanks again Governor.

 's picture

jobs

Is that the LePage way of attracting new investment and jobs? Make a deal then back out? Businesses should be lining up for that, right?

 's picture

Since when has the PUC asked

Since when has the PUC asked for ratepayer input to any of their decisions, which means using a method that allows maximum participation, like inserting voting requests within our bills or electronic correspondence. I assume their definition of ratepayer support means a hike in our bills.

Jon Cantin's picture

Interesting

It should be interesting to see how haters of both the Governor and large business reply to this story.

Frank Heller's picture

STATOIL's deep water drilling for oil & gas

Progressives are well trained hypocrites or blind to the role Statoil plays in oil & gas exploration and drilling..."Statoil says it has given Noble Corp. the contract to drill the Mariner oil field in a deal estimated at $655 million over four years.

The Norwegian energy company says a new type of rig will enable it to operate at depths of 70 to 150 meters (230-500 feet) and drill wells down to 10,000 meters (32,000 feet)."

or this:.."BP, Shell and Statoil are under investigation by the European Commission over suspected collusion to distort the oil price"

Giving them leases in the Gulf of Maine which could be converted into oil/gas exploration sites would be a major mistake?

Better yet is this fact: "Statoil (STO) says it is leasing more than 1,000 railroad cars to carry crude oil from fields in North Dakota to refiners across North America, another sign of how the U.S. pipeline network is having a hard time keeping up with the region's oil boom. The rail effort will help STO get a better price for its Bakken and Three Forks oil, which trades at $5-$20 discounts due to limited transport capacity."

STATOIL is one of the KOCH brothers better customers.

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