Costs May Capsize Long Island Offshore Wind Project

UNIONDALE, New York, August 27, 2007 (ENS) - High construction and financing costs appear to have put an offshore wind park proposed for Long Island's South Shore out of reach.

The Long Island Power Authority, LIPA, Thursday released a study prepared by Pace Global Energy Services evaluating the economics of its proposed 140 megawatt Offshore Wind Park.

Pace estimates that the project’s cost could reach $811 million, which includes the construction and financing costs, and the cost for the transmission cable needed to bring the power produced by the wind turbines to a land-based LIPA substation.

When compared with the cost of Long Island-based combined cycle natural gas-fired generating plant, the Pace study concludes that the "levelized green premium" for wind-generated power, when spread out over a 20 year period, would come to about $66 million per year or about $2.50 per month for the typical residential consumer.

The Pace study, found that the costs for the proposed offshore wind project are "in line with market expectations for North American offshore projects given the early stage development of such a market and the overall lack of a well-defined national energy policy to support these kinds of projects."

Costs for developing offshore wind projects in Europe are considerably lower due to the experience in building such projects there and the government incentives offered for such alternative energy resources, Pace remarked.

LIPA requested the study after FPL Energy had given LIPA an updated cost estimate of $697 million, as of the end of 2006, to construct the 40 wind turbines near Jones Beach.

The FPL estimate did not include financing or transmission cable costs.

"Obviously, there is a premium for building an offshore wind project when compared to conventional energy projects," said LIPA CEO and President Richard Kessel.

"Long Island must decide where it wants to go with its energy future," Kessel said. "Should we continue on as we have in the past by adding more and more fossil fuel power plants or do we give a large-scale renewable energy project a chance to help break the grip of oil and natural gas as the primary fuels used to keep our lights on?"

But LIPA's new Chairman Kevin Law is recommending that the agency cancel the wind park project and said he expects the other board members to go along with his suggestion at their next meeting Sepember 25.

"My decision is based strictly on the costs," Law told "Newsday," citing the Pace study.

Appointed by Governor Eliot Spitzer, a proponent of renewable energy, Law is serving as LIPA chairman without compensation until he assumes the post of CEO sometime this fall.

Until then, Law will continue in his current position as chief deputy county executive and general counsel for the Suffolk County Executive, with direct oversight of all county departments and a $2.5 billion budget.

Copyright Environment News Service (ENS) 2007. All rights reserved.