2012-03-22 / Front Page

Town to draft RFPs for turbine

Consultant will draw up requests for contractors and third-party developers
BY PHIL ZAHODIAKIN

In an effort to gather “solid” numbers for its pending decision on a Taylor Point windmill, the Town Council this week directed turbine consultant Harley Lee to draft a pair of requests for proposals (RFP) to solicit the additional data.

The council, which met on March 19, also directed Town Administrator Bruce Keiser to submit the turbine proposal to the Planning Commission, which has to issue a recommendation (as a “development plan review”), and also to the Zoning Board of Review, which has to issue a special-use permit before a turbine could be built.

Lee is performing a wide range of tasks in support of the council’s proposal to build a 1.5- to 2-megawatt turbine at Taylor Point. One of the tasks is financial forecasting, and the numbers indicate that “the project is economically attractive,” Lee told the council.

But there are unknowns in the breakouts Lee provided in his update, and the responses to the RFPs will enable the council to pin down the potential net income from various turbines if they were to spin in two different scenarios: municipal ownership versus a third-party arrangement in which a company funds a negotiated portion of the cost to build the turbine in exchange for some percentage of the income.

Another key unknown that has to be addressed in the RFP responses is the financial viability of the turbine manufacturers – an issue that arose in Portsmouth when the company that built its municipally owned turbine went bankrupt and left the town without a warranty for the windmill.

So, one of the RFPs will request manufacturers and contractors to submit quotes for all the costs that the town would incur to buy and install a turbine. The other RFP will seek quotes only from thirdparty developers.

The vote to endorse the RFPs was 4-1. Councilor Ellen Winsor voted “no” because she wanted the council to wait for guidelines being developed by the state’s Wind Energy Siting Guidelines Advisory Group and the Renewable Energy Siting Partnership at the University of Rhode Island. Three of the other councilors said the RFPs were a logical step towards a final decision, although Councilor Bill Murphy said he was somewhat hesitant to vote “yes.”

“We’ve been at this for five years,” Murphy said, “and my gut tells me that we’re trying to develop an energy company, and I’m not confident with our adequacy to do that. But we’re stuck because I don’t see solid numbers.”

According to Lee’s latest numbers, the net income produced by a turbine would range from $70,000 to $140,000 during year one of a 15-year contract with National Grid (with the range reflecting “worst-case” and “best-case” scenarios). To put that income in perspective, the annual electricity bill for schools and other municipally owned buildings and facilities is about $300,000.

It’s impossible to predict a turbine’s income after year 15 because the town might negotiate a higher price for its electricity or, alternatively, decide to dismantle the turbine. Lee told the council that the decommissioning costs would be offset by the sale of turbine components and scrap metal.

Assuming that Jamestown signs a power-purchase agreement before the state assembly revises the terms for renewable energy purchases by National Grid in Rhode Island, the Grid would pay Jamestown 13.3 cents per kilowatt hour for the turbine’s power – or nearly twice the rate that the town is paying for electricity under its latest power-purchase agreement.

Suffice it to say that the legal and regulatory terms establishing wind-power prices for turbines with various power outputs defy an easy explanation, but they appear to guarantee that Jamestown would qualify for the 13.3 cent rate through 2013 – as long as the turbine doesn’t exceed 1.5 megawatts.

If the council decided to build a 2-megawatt turbine, then the town would have to submit its desired rate to National Grid as a bid – and hope its bid is selected for a longterm power-purchase agreement.

For now, the council wants to know the exact prices manufacturers would charge for their turbines; the costs to bring them to Jamestown; and the costs that contractors would charge to build them. Lee sourced a sample of those numbers for his update, but it’s fair to assume that the quotes could change once they’re submitted in response to a formal RFP.

One of turbines in Lee’s update is a $3 million, 2-megawatt turbine from Gamesa; the other is a $2.1 million, 1.5-megawatt turbine from Goldwind. Adding in costs for engineering, site preparation, foundations, construction and insurance raises total costs for those particular turbines to $5.83 million and $4.8 million, respectively. Lee told the Press that he selected those turbines for his update because they fit the height and power specifi cations for a Taylor Point windmill.

An additional – and major – expense will be the cost to connect the windmill to the high-voltage power lines on North Road. Whether the “extension cord” runs through a buried trench in the golf course (which has reportedly raised some concerns at the facility) or across the utility poles on Weeden Lane, the cost would be about the same: $1.5 million.

Asked for comment on the possibility that Jamestowners might decide against replacing a Taylor Point turbine once it wears out, thereby leaving a costly extension cord connected to nothing, Lee said that, like the components of the turbine, the copper in the interconnection cables could be sold off.

Under the terms of the turbine question passed by Jamestown voters in the 2010 election, the town has the authority to issue up to $6.5 million worth of bonds. Given the town’s healthy credit rating (Aa3), Jamestown wouldn’t have to pay an excessive interest rate to raise money for a turbine: about 3.5 percent, Keiser told the Press.

Responses to the RFPs will enable the town to compare the actual costs of debt service to the quotes submitted by manufacturers and construction contractors. Under the current timeline, and assuming that the RFPs are drafted and advertised by the middle of next month, the responses should be in hand by late May, or just a couple of weeks before the Financial Town Meeting. That means the council could hold a workshop on the RFP responses around the middle of June and put to a vote a motion to construct a turbine before the end of that month.

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