Company that dropped Maine project invests $2.5 billion in wind farm off Scotland
A Norwegian company that planned to build a major wind farm off Maine’s coast, then pulled the plug last fall after political maneuvering by Gov. Paul LePage, has invested $2.5 billion in a wind project off the shores of Scotland.
The announcement this month by Statoil, one of the world’s biggest oil and power companies, to invest heavily in the Dudgeon Offshore Wind Farm is a glimpse into what could have been a major project for Maine, wind industry officials said.
“One major thing you can take away from (the announcement) is that offshore wind is a significant resource with practicality. Having a huge oil and gas company make that investment proves that,” said Paul Williamson, executive director of the Maine Wind Industry Initiative. “The takeaway locally is, we still have an abundant resource (of offshore wind). There have been errors in politics and finding the right way to attract that kind of investment, so I think we’re having to revisit our strategy.
“But if we don’t, we probably won’t be able to capture the next moment.”
Patrick Woodcock, LePage’s energy director, said he didn’t see a connection between Statoil’s investment in Scotland and what the company might have invested in Maine.
“They are two different things,” he said. “The investment they are making there is in a commercial farm using technology that already exists and technology that could not be used here. And (Statoil) makes billion-dollar investments all the time.”
Jeremy Payne, director of the Maine Renewable Energy Association, said Maine had an opportunity to do business with a major player in the offshore wind industry – as evidenced by the $2.5 billion investment – and that opportunity is now lost, perhaps for good.
“I’m not sure we would have seen that level of investment right off,” Payne said, referring to the $2.5 billion. “But clearly this is a reminder of an opportunity lost. The broader issue, too, is the reputation that we’ve left behind in the industry.”
In early 2013, the Maine Public Utilities Commission approved a project by Statoil to build an offshore-wind pilot project off Boothbay Harbor that it hoped would lead to a major operation.
LePage, a Republican, criticized the deal, saying he felt the negotiated price for the electricity generated by the project was too high.
A few months later, the governor threatened to veto an omnibus energy bill championed by his own party unless it included a provision to reopen bids to the PUC for offshore wind contracts. The Legislature agreed to add the provision.
That maneuver by the LePage administration opened the door for Maine Aqua Ventus, a business partnership led by the University of Maine, which originally had the idea of partnering with Statoil.
At the same time, the reopening of bids prompted Statoil to withdraw its proposal for Maine.
The company first put its Maine project on hold, then in October 2013 pulled out of Maine completely, citing LePage’s decision to reopen bids as a key factor. Company spokesman Ola Morten Aanestad told the Press Herald at the time that it would focus its research and development efforts in Scotland, which had a clearer policy on offshore wind energy.
“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?”
Statoil officials could not be reached for comment Monday.
Without Statoil in the picture, Maine Aqua Ventus is now the only current player for offshore wind in the state. However, that firm was dealt a financial blow two months ago when it learned that it was passed over for a $47 million federal grant. The partnership did receive $3 million for additional research and development and could potentially receive more money if another federally funded project falters, but the Department of Energy’s decision was damning, Payne said.
The UMaine project was rejected, according to the DOE, because other projects had cheaper technology, but Payne said there was likely another reason.
“If I’m the DOE, I would look at what happened with Statoil and be cautious,” he said.
Woodcock said the fact that UMaine received $3 million, and was the only public university selected by the DOE to receive funding, is good news.
“I don’t think the opportunity (for offshore wind power development) is lost,” he said.
Nevertheless, wind power has never been LePage’s top priority when it comes to energy.
When he cut a deal to reopen bids in 2013, critics said he was motivated more by his opposition to wind power in general than his desire to help UMaine. Only one year earlier, LePage rejected a $20 million bond for offshore wind research and development that would have benefited the university.
Earlier this year, the governor also sought to strip wind energy goals from a 2008 law signed by his predecessor, Democratic Gov. John Baldacci. Under that law, Maine aimed to produce at least 2,000 megawatts of electricity through wind projects by 2015 and 3,000 megawatts by 2020, or enough to power about 900,000 homes.
The goals have long been viewed as lofty, but proponents say they’re essential in attracting investment.
Asked to characterize the state of offshore wind in Maine in light of the Statoil failure and the stalled UMaine project, Woodcock remained hopeful.
“We’ll have a better picture next year when the deadline arrives for new projects,” he said.
Payne, however, is not sure the interest will still be there.
“Companies are looking for a stable investment climate,” he said. “For a time we had two projects in competition, which means we really had a sizable chunk of the market share. Now, we have nothing.”
Williamson said the loss of Statoil is significant because there are so few companies willing to make such a substantial investment. The UMaine project may have the technology, but it doesn’t have the financial resources of Statoil.
“The market is still good and strong, but we’re regrouping. It’s as simple as that,” he said.
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