PORTLAND, Maine — Statoil North America on Wednesday said it was putting its offshore wind energy project on hold because of “the risk and uncertainty” created last week when the Legislature, at Gov. Paul LePage’s behest, made changes that will delay and potentially threaten state approval for the project.
The Norwegian company informed the Maine Public Utilities Commission of its decision on Wednesday in a letter.
Statoil’s departure would be a big loss for the state from an economic development point of view, according to Annette Bossler, an international business consultant based in Bremen.
Bossler, who consults for a German company that is developing a pilot offshore wind energy project in the Baltic Sea, said that in the next two or three years there will be at least a billion dollars invested around the world by offshore wind technology developers. Maine has threatened its ability to receive any part of that investment, Bossler said.
“We have a huge opportunity to be part of a global industry, but there needs to be commitment, and I think now that commitment, you can argue, is questionable,” Bossler told the Bangor Daily News.
Last week, the Maine Legislature approved LD 1472, which reopens a process by which the Maine Public Utilities Commission approved a plan in late January to subsidize Statoil’s project with ratepayer support. The support allowed the Norwegian company to move ahead with its plan to erect four floating turbines in federal waters off the Maine coast by 2016.
The University of Maine, which also is developing offshore wind energy technology, was not prepared to submit a proposal when the PUC first issued a request in 2010. LD 1472 would delay Statoil’s project to allow UMaine to submit its own proposal, and therefore compete with Statoil for that ratepayer support.
The Legislature’s actions sent a message, Bossler said: “If you want to build your full-scale pilot to develop this technology further, Maine is not really a reliable location,” she said.
And the world is watching. The Legislature’s last-minute legislative changes last week was reported throughout the wind energy industry media, including in Europe, Bossler said.
“That is not something only Statoil will notice. Other big players in the industry will notice as well,” she said.
Paul Williamson, executive director of the Maine Ocean & Wind Industry Initiative, confirms that Maine is on the world stage, but not in the best light.
“I’ve had conversations directly with both small and large players in the international offshore wind industry, and I’ve received reaction from those various parties that if the state of Maine doesn’t follow through with Statoil, they would not think of the state of Maine as a good place to invest in offshore wind energy,” Williamson said Wednesday.
Ola Aanestad, Statoil North America’s vice president of communications, wrote in an email to the Bangor Daily News on Wednesday that the company will continue “a robust dialogue with stakeholders related to the Hywind Maine Project.”
“However, given the uncertainty created by the recent law change (LD 1472), Statoil is now preparing to put the Hywind Maine Project on hold, while we assess the changes made to the law, the total risk picture and our progress plan going forward,” he wrote. “We will keep the option open to re-initiate project activity if we should find the total risk picture related to the Maine project acceptable.”
Maine is not the only place the company is looking to launch its pilot project.
“Statoil is considering several locations for building a pilot park based on the Hywind floating concept, in addition to Maine,” he wrote.
Bossler, who in May released a report on the global offshore wind energy industry, said Statoil is looking at a pilot project in Scotland and in November signed an agreement with Hitachi in Japan.
“So Statoil has options. Maine, on the one hand, is a very good market because of the wind resources we have, but you need to have the reliable commitment to have a big company say, ‘this is where we’re going to spend the money.’ Because there are other places in the world you could do this.”
UMaine’s project involves placing 170 6-megawatt floating wind turbines in the Gulf of Maine in an effort to generate up to 20 gigawatts of electricity by 2030, which is some 15 years later than Statoil proposes being online. The UMaine project involves the university’s Advanced Structures and Composites Center and Pittsfield-based building contractor Cianbro, among other entiti es.
Williamson said the state’s desire to support UMaine’s project “is fantastic,” but it should have gone about it another way.
“They have some really brilliant ideas under development at the University of Maine that deserve state support,” he said last week after the Legislature passed LD 1472. “However, it would have been better for the Maine renewable energy climate had the Legislature identified creative ways to support the university without disrupting the state’s agreement with Statoil.”
Tom Welch, chairman of the PUC, wasn’t surprised by Statoil’s decision.
He acknowledged that LD 1472, which will force the PUC to reopen its review process and consider UMaine’s project for ratepayer support, delays the PUC’s approval of Statoil’s contract and therefore creates uncertainty for the company.
“This doesn’t particularly surprise me,” he said. “It may be a rational reaction to a level of uncertainty in terms of timing at the very least of when the contract would be executed. Corporations have to make their own decision.”
There has been some deliberation over whether the PUC could provide ratepayer support to both the Statoil and UMaine projects, but Welch said that isn’t likely, at least if both were the size of Statoil’s project.
“You could certainly not support both of them at the level Statoil is now. The ability just isn’t there,” he said.
Welch wouldn’t comment on what message the Legislature sent when it passed LD 1472, except to say, “Obviously people in the private sector always prefer that things stay exactly the way they are. But that just isn’t the case in the real world.”