LONG ISLAND OFFSHORE WIND – BETTER THE 2ND TIME?

The Long Island Power Authority (LIPA) has a $6.6 billion debtload, the financial burden of renovating out-of-date fossil fuel power plants and needs funds for a planned solar power plant. Yet it is making plans, in partnership with New England megautility Con Edison (Con Ed) to build an offshore wind installation in the medium-range future.

Implications: (1) The potential of Atlantic coast offshore wind power is irresistible and (2) offshore wind is a good financial bet.

LIPA CEO Kevin Law’s interest in wind came from a New Energy development task force organized by New York’s Governor at which the utilities serving the New York metropolitan region were urged to develop wind capacity. On investigation, Law discovered downstate onshore assets are not powerful enough for large-scale development but offshore assets are considerable.

Though Europe has some 20+ producing offshore installations, the U.S. has yet to build one. A proposed Delaware project could get into the water in 2009.

A proposed project off Long Island’s very popular Jones Beach was abandoned last year when original $150-to-$200 million cost estimates ballooned to $800 million for 40 turbines and associated transmission interconnects.

Many costs will only be greater now but the demand for energy, especially New Energy, has risen since last year.

And there are 2 additional new considerations: (1) Planners have begun to realize that the cost of building new coal plants is even greater than building new wind (and solar) installations and will go up even more when a price is imposed on greenhouse gas emissions, and (2) the cost of new nuclear plants is so high, the risks so great, and the time required for construction so lengthy that the return on investment is simply too little, too doubtful and too delayed to warrant the investment.

Oracular NYC Mayor Bloomberg has urged that New Energy be developed for NYC and has endorsed the offshore concept.

Examples of offshore wind installations. (click to enlarge)

LIPA, Con Edison plan wind farm off the Rockaways
Mark Harrington, September 23, 2008 (Newsday)

WHO
Long Island Power Authority (LIPA) (Kevin Law, CEO); Con Edison (Con Ed) (Joe Petta, spokesman); FPL Energy; David Paterson, Governor, NY; Michael Bloomberg, Mayor, NYC

WHAT
A new offshore installation is proposed by LIPA and Con Ed to provide wind energy-generated electricity for the greater New York City metropolitan area.

The New York and Mid-Atlantic bights could supply much of the East Coast's power. (click to enlarge)

WHEN
The formal proposal is expected in early 2009.

WHERE
- 5-to-10 miles off the Rockaways coast of Queens
- The Jones Beach installation was planned to be only 3.5 miles off the coast, imposing on beachgoers’ vistas.

WHY
- The size of the installation is characterized as “significant” and estimated at 100 turbines with a 300-megawatt capacity.
- Estimated cost: $1.5 billion, to be shared by LIPA and Con Ed.
- This is Con Ed’s 1st investigation of wind energy.
- Demand for energy in the NYC area is growing faster than supply.
- The Jones Beach installation was an FPL Energy proposal and was rejected due to ballooning costs.
- Factors as such as aesthetics, wind velocity, water depth and shipping lanes will be studied before a specific location is selected for the LIPA/Con Ed project.

Europe is serious about developing its offshore assets. (click to enlarge)

QUOTES
Governor Paterson: "[The offshore wind project]has the ability to bring investments in clean and renewable energy technologies and create clean-tech 'green collar' jobs…The partnership between LIPA and Con Ed could provide New Yorkers with a cleaner, brighter future, and I look forward to the conclusion of this project…"