This week's news includes some big news for the nascent American offshore wind industry and more calls for updates to the utility business model. Come along with us to the shores of Rhode Island for this week’s news round up.
This is the year, folks, it's finally happening! Offshore wind in the U.S.A.! Off the coast of Rhode Island, the Block Island project, which “broke water” last year, is set to install actual wind turbines that will actually deliver actual wind-generated electricity to the actual grid. This week GE Renewable Energy announced that the company is shipping five 6 MW offshore wind turbines to Rhode Island from the company’s manufacturing facility in France. From there, Deepwater Wind will install the turbines beginning in August, and voila! The race for offshore wind is over… or at least it has finally begun.
“This marks a milestone for the company and we are proud to contribute to the Block Island project, the first offshore wind farm in the United States,” said Jérôme Pécresse, Chairman and CEO of GE Renewable Energy. The shipment from the company’s Saint-Nazaire facility, he continued, “demonstrates our readiness to respond to not only the French but also expanding international demand.”
And expanding it is. As shown in AEE’s Advanced Energy Now 2016 Market Report, offshore wind had a record year globally in 2015, adding 3.7 GW of capacity (up from 995 MW in 2014) and bringing cumulative installations worldwide to approximately 12 GW by year’s end. Over 65% of the 2015 capacity additions was installed in Germany. Other leading offshore wind markets, such as the United Kingdom, the Netherlands, and China, added capacity as well.
The Block Island Tourism Council’s website claims that “getting here is half the adventure of the vacation.” Maybe “getting to” American offshore wind is half the battle.
Now, right behind Little Rhody, here comes New York! This week came the surprise announcement that the Long Island Power Authority (LIPA) would be moving forward with the construction of a wind farm off the coast of Montauk. The 90 MW facility will be developed by Deepwater Wind, the same developer doing the Rhode Island installation.
The Block Island project “probably shaved three years off the development time by going first,” LIPA CEO Tom Falcone told Politico New York.
LIPA trustees had once before rejected the proposed offshore wind project, saying it would be too expensive for Long Islanders. Since then, New York Gov. Andrew Cuomo announced an ambitious statewide goal of 50% renewable energy by 2030. The decision to move forward with offshore wind now was made because “it’s the lowest cost renewable option to meet the governor’s clean energy goal,” LIPA CEO Falcone said. The LIPA board will be voting on the project next week.
The winds of change are blowing onshore as well, and utilities are feeling them. This week Navigant and Public Utilities Fortnightly released a report entitled “State & Future of the Power Industry.” The report, which interviewed industry leaders and surveyed hundreds of industry insiders, signals that utility stakeholders and energy industry professionals see a sea change coming in the utility business model: more than 90% of survey respondents believe that the growth of distributed energy resources (DER) will “force a major shift in utility business models.”
DER is “already growing faster than central station generation this year in North America,” said Jan Vrins, leader of Navigant’s Global Energy segment, but added it varies by region. North American utilities are “at various stages of integrating” these advanced energy technologies into their business models.
The headlines at Utility Dive this week show some examples of utilities trying to make the transition to a more distributed electricity system. Rochester Gas and Electric, a utility based in upstate New York, is looking to add at least 1.5 MW of DER in its territory so it won’t have to spend $11.8 million on an upgrade to a substation. In California, Pacific Gas & Electric has announced a partnership with SolarCity for a pilot solar+storage program in San Jose. At a recent conference, Public Service Electric and Gas CEO Ralph Izzo indicated that he wants to make efficiency and DERs “available to all consumers,” with the New Jersey utility incorporating, and financing, these investments into its customer offerings – a prospect not likely to be welcomed by independent sellers of DER.
As AEE’s webinar yesterday on how utilities make money pointed out, the times, they are a-changin’. Utility business models need to update or risk being left in the dust (or worse, losing out on billions of dollars in advanced energy economic activity). View the webinar at the link below.