The Norwegian energy company that planned to build a $120 million wind farm off Maine’s coast has pulled the plug on the project, citing a controversial political maneuver in Maine.
A spokesman for Statoil said Tuesday that a vote in the final days of this year’s legislative session to reopen bids for offshore wind projects, an initiative prompted by Gov. Paul LePage, was a “key factor” in the company’s decision to leave Maine.
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Now, Statoil will focus its research and development efforts on a similar project in Scotland, where the government’s policy is more clear, Ola Morten Aanestad told the Portland Press Herald.
“The change (in Maine law) was definitely something that creates a lot of uncertainty from our point of view,” he said. “What could happen if we went ahead, and there were new changes in the future?”
In a news release, Statoil cited “changes in the framework conditions in the state, uncertainty around the commercial framework and schedule implications of project delays.” In total, those factors made the project’s outlook too uncertain to proceed, the company said.
In an interview, Anaestad said there were “no technical show stoppers” with the wind resources in Statoil’s project test area off Boothbay Harbor. The overriding factor was the “political uncertainty” created by Maine’s mixed signals, he said.
PUTTING WORK ON HOLD
Early this year, Statoil won a power purchase contract from the Maine Public Utilities Commission, but LePage criticized the contract’s above-market rate for the electricity.
In exchange for not vetoing a sweeping energy bill at the end of the legislative session, LePage set in motion a process that led to the PUC seeking additional bids.
That cleared the way for an application from a business partnership led by the University of Maine and its offshore wind project, called Maine Aqua Ventus. The partners launched a one-eighth-scale version of their technology last summer off Castine.
Statoil put its work on hold soon after the Legislature voted, and hinted at the time that it might leave the state because of the change.
Statoil’s departure leaves Maine with only one prospect for developing a deepwater, offshore wind industry.
The Maine Aqua Ventus proposal now is being reviewed by the PUC. The commission is set to decide by year’s end if the project has the financial and technical capacity to get a power purchase agreement, a critical step in winning a $46 million federal energy grant next year.
GOVERNOR WELCOMES DECISION
Statoil’s decision to leave was welcomed by LePage, who had been critical of the above-market power contract’s impact on ratepayers, pegged at $200 million over 20 years. He also said Statoil was “ambiguous” in its commitment to expanding Maine’s economy.
In a prepared statement, Le- Page said, “Through bipartisan legislation, the governor and the Legislature worked to ensure that additional competition could be considered prior to embarking on a 20-year plan for Maine’s offshore wind industry and to finalize the best contract for Maine by the end of the year. With electric rates the 12th-highest in the country we must continue to attract lower-cost electricity that will grow Maine jobs.”
LePage didn’t mention that the power costs from Maine Aqua Ventus remain unknown, if the project wins PUC approval. The information remains confidential, and isn’t likely to be revealed when the PUC makes public an edited version of the project’s application later this month.
Following Statoil’s announcement, Maine Aqua Ventus noted that the university initially worked as a partner with Statoil, and only recently was in competition.
“Throughout our work on our project,” the partnership said in a statement, “we have been focused on building the best possible project for Maine, not on the maneuvering of other interests in the process. Whatever Statoil’s reasons for leaving Maine, we will continue to move forward with our mission of developing the state’s offshore wind potential.”
It said it will continue to pursue a contract with the PUC and grant funding from the U.S. Department of Energy.
“We are regional institutions committed to developing a Gulf of Maine resource for the benefit of the region,” Maine Aqua Ventus said. “We are here to stay and look forward to competing against other projects nationally and helping to realize Maine’s full offshore wind development opportunity.”
King, Pingree DISAPPOINTED
Environmental groups that supported Statoil’s effort and have fought to make the Maine Aqua Ventus proposal public expressed frustration Tuesday.
“It is extremely disappointing that the LePage administration and the Legislature moved the goal posts as part of a last-minute exercise in legislative sausage making,” said Sean Mahoney, executive vice president of the Conservation Law Foundation-Maine. “A transparent and consistent regulatory process is what the people and the businesses of Maine not only want but deserve. In this case, the administration and the Legislature delivered just the opposite.”
Beth Nagusky, Maine director for Environment Northeast, said she hopes that Statoil’s departure won’t end Maine’s best hopes of developing a new, clean source of renewable energy.
“We are sad but not totally surprised by Statoil’s decision,” she said. “The governor and state Legislature did not exactly roll out the red carpet to them over the past few months.”
Independent U.S. Sen. Angus King of Maine expressed disappointment at the news.
“I strongly believe that the floating offshore wind industry, including Statoil’s proposal, presents Maine with a once-in-a-hundred-year opportunity to become a global leader in an emerging energy field that would not only put Mainers to work, but also grow our state’s economy for years to come,” he said in a prepared statement.
He said the state should continue to seize the opportunity to harvest wind energy.
U.S. Rep. Chellie Pingree, D-Maine, had a similar reaction.
“It’s extremely disappointing to hear that Statoil is pulling the plug on what would have been a multimillion-dollar investment in our state,” she said. “It’s unfortunate that this major international company was made to feel unwelcome in Maine and I’m hopeful that this won’t be a major setback in the future development of a new offshore wind industry in our state.”
Pingree also noted that the University of Maine has a strong record on clean energy technologies, and said Maine Aqua Ventus could help establish Maine as a leader in renewable energy.
TURNING TO SCOTLAND, ELSEWHERE
Statoil is a large oil and gas producer that’s using its experience in the North Sea to develop renewable energy projects around the world. It launched the world’s first floating turbine three years ago, off Norway.
Its Hywind Maine was being designed to put four 3-megawatt wind turbines on floating spar-buoy structures that would be tethered to the seabed in 460 feet of water off Boothbay Harbor. They were to be assembled on shore and towed to the site. Power was expected to flow into the grid, via undersea cable, by 2016.
Last month, Statoil said it would install five, six-megawatt floating turbines off northeast Scotland. In a news release, the company said it was “encouraged by a positive and constructive dialogue with Scottish authorities.”
Regarding Maine, Aanestad said Statoil is grateful to the broad range of businesses, officials and lawmakers who supported the company’s efforts. He said Statoil will explore opportunities for offshore wind power elsewhere in the United States.
Asked whether the company might return to Maine, if the political dynamics change, Aanestad said, “We would not rule anything out.”
Tux Turkel can be contacted at 791-6462 or at:tturkel@pressherald.com
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