Letter

printed 11/22/2019

(The following is a letter from Delegate Christopher T. Adams (R-37B) to Maryland Public Service Commission Chairman Jason Stanek and forwarded to Ocean City Today for publication).

Dear Chairman Stanek,

Thank you for the opportunity to provide comments related to the increase in turbine sizes for Maryland’s Offshore Wind developments. As a representative from the Eastern Shore, I have unique interest in these projects and provide the following comments.

Background

On Sept. 24, 2019 and Oct. 1, 2019, respectively, Skipjack Offshore Energy, LLC (“Skipjack”) and US Wind Inc. (“US Wind”) filed non-confidential letters notifying the Maryland Public Service Commission to a change in the turbine selection size originally anticipated for use in the two commission-approved offshore wind projects in Order No. 88192.

Specifically, Skipjack notified the commission that it now plans to use General Electric’s Haliade-X 12MW wind turbines for its approved offshore wind project. In addition, US Wind notified the commission that the Siemens SWT-4.0-130, a 4.0 MW wind turbine and other turbine units that were being evaluated in 2016 by US Wind are no longer commercially available and that US Wind is now evaluating a variety of units with higher (8, 10, and 12) megawatt ratings. US Wind also stated that it would notify the commission of its final turbine selection decision as soon as it is made.

Upon these notifications, Maryland Energy Administration (“ MEA’’) filed a letter dated Oct. 21, 2019 with the commission and signed by Director Mary Beth Tung. In the letter, Director Tung notes the difference in size from what the OSW developers initially planned to use and the new planned sizes.

She writes, “MEA believes that these changes demand additional review by the commission to ensure that the facts underlying the original Order have not been materially modified.”

The commission did issue a notice for an Opportunity to Comment to parties of record and interested persons regarding the turbine size changes and potential impacts on these offshore wind projects.

These comments represent my remarks to the commission under this Opportunity to Comment.

Introduction

The increase in size of the turbines is significant for at least two reasons. The increase in size represents 1.5 to 3 times the size of the turbines originally contemplated by the developers in their applications.

Such an increase will have an impact on construction costs, operations and maintenance costs. Larger capacity turbines are taller to accommodate the larger blades and as a result will have an impact on the viewshed. This could be construed as directly violating Condition I.V. G (7) for set forth in Commission Order No. 88192.

Impacts to Project Cost

In her June 4, 2019 letter, Joy Webber, development manager for Skipjack writes, “This change will have no impact on the OREC price schedule and we remain committed to all conditions of the Order.”

This suggests that Skipjack will seek no change to the OREC price schedule to support the new technology. This implies further that the new turbine sizes will have zero net impact on the cost of the Skipjack program. This is without support.

In his Oct. 1, 2019 letter to the commission, Carville Collins, counsel to US Wind goes further and writes:

“US Wind assures the commission that although technology is rapidly changing with regard to turbines that are commercially available and ultimately to be selected by US Wind, the final turbine selection is expected to have no material impact on US Wind’s overall construction costs for its project.

Similarly, as a result of final turbine selection, US Wind expects no changes in net ratepayer impacts or the OREC price schedule, and no impact on any condition, US Wind or obligation or other requirement under Order No. 88192.

Neither developers offers a single piece of evidence supporting that their project costs will remain the same.

This increase in size will have an impact on the number of turbines needed to satisfy the order. The order governing the OREC contemplates a certain amount of generation. If indeed that generation can come from fewer turbines, costs should fall as well.

Fewer turbines means developers will spend less money on construction. Fewer towers are necessary. Fewer blades are necessary. Fewer turbines are necessary. Fewer towers means less manpower to construct them. Fewer boats and boat trips to the lease area will be necessary. Fewer turbines will require less cabling to connect them.

Beyond reduced construction costs, there are also reduced operations and maintenance costs over the 20-year life of the OREC contract. Fewer employees are necessary to operate and maintain fewer turbines. Fewer turbines require fewer replacement parts.

Every cost associated with the project goes down by some degree as the size of the turbine increases. Maryland’s OREC is worth $131.93 per megawatt-hour (MWh).

Electricity generated by offshore wind turbines is extremely expensive. However, recent procurements in both Massachusetts and New York, while expensive, will cost ratepayers of those states remarkably less, $65/MWh and $83.36/MWh respectively. That is to say that Massachusetts’ approved projects will cost less than half of what Maryland projects will cost. New York’s projects will cost about two thirds of Maryland’s cost.

It should be noted that Sunrise Wind shares one thing in common with Skipjack, they both count Ørsted, among their owners.

Skipjack and US Wind bid their OREC applications based on the best technology available at the time of their bids. Now each wants to modify their projects to reflect current technology. If current technology represents reduced costs as procurements in both New York and Massachusetts might indicate, Maryland ratepayers should enjoy a similar modification in the form of an adjusted OREC reflecting the reduced costs. If there are no material impacts to costs as asserted by both developers, then they should show why this is the case.

Viewshed Impacts

In condition I.V. G(7), the commission wrote in its 2017 order that both US Wind and Skipjack:

“... shall use best commercially-reasonable efforts to minimize the daytime and nighttime viewshed impacts of its Qualified Offshore Wind Project, including through the reliance on best commercially-available technology at the time of deployment.

The 12MW turbines now under consideration, particularly by Skipjack measure 260 meters or 853 feet tall, exceed the height of the turbines contemplated within Skipjack’s OREC application.

US Wind’s now possible 8, 10, or 12MW turbines at least double if not triple the 4MW nameplate capacity of turbines in their OREC application. These too will stand taller than those US Wind had originally planned.

These increases in height for both programs could be construed as directly violating conditions set forth in Commission Order No. 88192. Taller turbines will have an increased impact on the viewshed.

Despite perhaps a reduced number, the horizon will have a lessened mitigating impact on one’s ability to see these turbines from Maryland shores. Even if there are fewer turbines in number, those remaining will be even more noticeable.

This violates the very condition to which both developers agreed.

Conclusion

Skipjack and US Wind have each determined to use turbines larger than those contemplated in their original OREC applications. An increase in size will have immediate impacts on the cost of development for both projects and then operations and maintenance in outyears.

The cost change in this case benefits the developers and represents nothing short of a “bait and switch” for Maryland ratepayers forced to pay a now unsupported $131.93 OREC.

Maryland’s payers will indeed be paying twice as much as their counterparts in Massachusetts and over 60 percent more than payers in New York. Maryland ratepayers are entitled to know that they are getting the best deal for their electricity sourced from offshore wind.

Further, the impact on viewshed is dramatically taller than originally contemplated in the OREC applications. There have been no studies or analysis done with these sized turbines in mind.

For these reasons alone, the PSC should open a full evidentiary proceeding to determine whether the new turbine sizes justify the $131.93 OREC and whether the increase in overall turbine height will have a negative impact economic or otherwise on Maryland.

Delegate Christopher Adams

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