Race is on for First U.S. Offshore Wind Farm

Competition for the first offshore wind farm in the United States is heating up with the The Long Island Power Authority’s (LIPA) recently announced portfolio of new energy projects. Part of this diversity of generation LIPA is seeking would be realized through an offshore wind farm reaching as much as 140 MW capacity. This could be the first offshore wind farm development in the United States.

Uniondale, New York – June 8, 2004 [SolarAccess.com] LIPA’s portfolio of new energy resources could add over 1,000 megawatts (MW) of new energy to LIPA’s full portfolio over the next eight to ten years. LIPA said their plan is the most resource-diverse energy supply plan in Long Island’s history, and is designed to help meet the region’s growing demand for electricity in the most cost efficient way possible. “Over the last six years, Long Island’s appetite for electricity has continued to grow,” said LIPA Chairman Richard M. Kessel. “We’ve been making gains with energy conservation and efficiency programs, while adding more than 600 megawatts of new on-island generation over the last three years. Nevertheless, consumption continues to grow at an unprecedented pace of more than 100 megawatts per year. “While we’ve kept pace with demand, we need efficient resources to meet the anticipated growth over the next eight to ten years,” said Mr. Kessel. “The comprehensive energy resource plan we’re announcing today, when fully implemented, will provide Long Island with the resources it will need to meet customer demand while providing a prudent margin for contingencies.” Kessel indicated that, as a matter of routine, all of the proposed project contracts will be submitted to the offices of the State Comptroller and the Attorney General for review and approval. He also indicated that the Comptroller’s Office will be asked to undertake a complete review of LIPA’s entire RFP evaluation process to ensure that it was fair, impartial, and competitive. The LIPA Board of Trustees must also review and vote to accept the recommendations of LIPA’s project Selection Committee. Results of Four Competitive Process The announcement of the selection of preferred projects culminates nearly 18 months of review and analysis by an interdisciplinary team of engineering, financial, fuel, environmental and legal professionals who served as the Selection Committee. The team evaluated all of the individual responses to the four different LIPA Requests for Proposals (RFP) between January 2003 and February 2004, and then reviewed and evaluated the top contenders who responded to each RFP to ensure that the overall selections conform with LIPA’s planning criteria as contained in its Energy Master Plan while complimenting the multi-faceted state and federal planning and regulatory requirements. The comprehensive energy resource plan announced by LIPA contains five key elements: 1) Energy Efficiency and Demand Reduction; 2) Renewables and Distributed Generation; 3) On-Island Power Supply for Summer 2005; 4) New On- and Off-Island “base-load” resources linked to Long Island via a cable to New Jersey capable of being available in 2007; 5) Risk Mitigation to increase fuel and energy diversity. 1) Energy Efficiency and Demand Reduction Plan On October 7, 2003 at the urging of Governor George Pataki, LIPA issued an RFP seeking proposals that would help LIPA achieve up to 75 MWs of energy and capacity savings through long-term energy efficiency initiatives. LIPA received a total of 12 proposals. Of the 12, six responses will be recommended to LIPA’s Board of Trustees for acceptance. The six approved contractors will implement a wide range of energy efficiency programs that will target both small and large commercial and industrial customers, publicly owned buildings and multi-family dwellings to help these assets achieve long-term energy savings through the use of more energy efficient heating and air conditioning technologies, lighting systems, pumps and motor drives. The companies selected include: Aspen Systems Corporation, Custom Energy, Ameresco, CSGServices, Inc., Honeywell and Johnson Controls. The energy efficiency programs proposed by these six companies will collectively achieve about 73 MWs of long-term energy savings. 2) Renewable Offshore Wind Resources As a result of the Governor’s initiative to develop a statewide renewable portfolio standard and to increase the diversity of its energy portfolio through greater use of alternative energy resources, LIPA will seek to have an offshore wind park built that will be capable of generating approximately 100 to 140 MWs of electricity. On January 22, 2003, LIPA issued an RFP seeking proposals to build, own and operate an Offshore Wind Park. Of the two very comprehensive proposals submitted to LIPA for evaluation, the Selection Team recommends that negotiations on a power purchase agreement should commence with FPL Energy on its plan to build 39, 3.6 megawatt GE wind turbines in a cluster design three miles Southwest of Robert Moses State Park. The wind park concept will undergo extensive environmental and regulatory review by numerous regulatory entities before any construction can begin. 3) 2005 Combined-Cycle Generation On February 23, 2004, LIPA issued an RFP seeking proposals for new combined cycle generation to be in operation by early summer 2005. Fifteen proposals were received and five were short listed for a comprehensive review of their economic, technical, environmental and community merits. Based on the Selection Committee’s evaluation, Calpine’s Bethpage project and Pinelawn Power’s Babylon project, which will each be capable of producing a maximum of 79.9 MWs of electricity, will be recommended to the LIPA Board of Trustees as the projects to advance for next summer. The Board will review this recommendation at its May 26th meeting. The selection of Calpine and Pinelawn Power continues to diversify the number of companies with on-island generation assets, which is one of LIPA’s strategic objectives. 4) 2007 Based-Load Generation and Supply Projects On May 30, 2003, LIPA issued an RFP seeking proposals for 250 to 600 MWs of “base-load” supply to help meet Long Island’s long-term energy needs. The new energy resources could come from either on-island generation assets or off-island sources linked to Long Island via a new cable. LIPA’s evaluation team reviewed a total of 14 responses and selected a combination of two projects that will provide both on- and off-island solutions. The Caithness Bellport proposal, which will be capable of generating 326 MWs of power, emerged as the on-island generation proposal with the greatest long-term benefits for Long Island. LIPA will seek a Power Purchase Agreement for 277 MWs of the plant’s output, which will make 49 MWs available for merchant transactions. This will be the first power plant on Long Island with a dedicated merchant power component. The Neptune cable project, which can link Long Island to a diverse source of supply from markets southwest of the region, emerged as the off-island resource with the greatest long-term benefits for Long Island. The 67-mile-long Neptune cable will be capable of transporting some 660 MWs of supply, and will open up an energy corridor from the North Atlantic states through Long Island on into New England and Canada. 5) Risk Mitigation With the selection of the Neptune project as a cable link to resources Southwest of Long Island, existing electricity generators in that region with excess capacity, and project developers eager to tap new markets should become more interested in the Long Island market as an outlet. As a result, LIPA will issue a new RFP this fall seeking proposals to supply LIPA with up to 600 megawatts of power via the Neptune cable. Power imported over the Neptune cable will be needed by the Summer of 2007. Seeking energy purchase contracts with suppliers in the Pennsylvania, New Jersey and Maryland will provide LIPA with the opportunity to gain access to a more diverse, cost-effective supply source, which will help contain future electricity costs on Long Island. All of the proposals will go before LIPA’s Board of Trustees for approval. The first project that will be considered by the Board will be the combined cycle projects that need to be ready for Summer 2005. The LIPA Board will consider this recommendation at its May 26, meeting which will be held at the Sagtikos Arts & Sciences Building on the Brentwood campus of Suffolk Community College starting at 8:00 pm. The remaining elements of the energy supply plan for Long Island will go before the Board of Trustees at a future meeting. LIPA, a non-profit municipal electric utility, owns the retail electric system on Long Island and provides electric service to nearly 1.1 million customers in Nassau and Suffolk counties, and the Rockaway Peninsula in Queens. LIPA does not own any electric generation assets on Long Island, and it does not provide natural gas service.
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