Evaluation of Proposed Offshore Wind Park

Evaluation of Proposed Offshore Wind Park



Aug. 2007  - 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. 

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