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Islanders Seek Energy Relief Two Island Groups Pursuing Wind Power to Combat Escalating Costs

August 19, 2008

By BILL TROTTER; OF THE NEWS STAFF

Editor’s Note: This is the first in a three-part Bangor Daily News series covering plans for alternative energy projects on Maine’s offshore islands.

Since their earliest days, residents of Maine’s offshore islands have been known for being self-reliant, using what is immediately available to them in order to help sustain themselves.

The natural resources of these islands made them attractive to early colonists from Europe who were looking to establish permanent settlements in the Western Hemisphere. The islands had wind to move sailing vessels, trees to provide lumber for housing, and surrounding waters filled with fish to feed the islanders.

But myriad economic changes over the past century have had significant effects on these aspects of island living, prompting many island residents to look to the mainland for food, jobs or other resources. Now that some of these changes are becoming even more pronounced – affecting mainlanders as well as island residents – some Maine island communities are reconsidering natural resources that helped lead to their permanent settlement centuries ago.

Rapidly escalating energy costs is one of the biggest issues facing many of the island communities, island officials have said, and have led two groups of offshore Maine islands to tackle the issue head-on by pursuing wind power projects. The Fox Islands Electric Cooperative, which serves Vinalhaven and North Haven, and the Swan’s Island Electric Cooperative, which serves Swan’s Island and neighboring Frenchboro, each are looking into the possibility of erecting a few large wind turbines in order to help satisfy their electricity needs and perhaps even reduce electric bills for their members.

According to island officials, members of the two co-ops and residents of other islands that have their own electric power distribution entities pay rates that are roughly twice those paid by a typical residential customer on the mainland, and three times the national average. The average monthly electric bill on many of the islands, they say, is about $150.

“Electricity prices are killing us out here,” said George Baker, a Harvard Business School professor and seasonal Frenchboro resident who has been working on the projects with the co-ops and the Rockland-based Island Institute. Baker, who is on sabbatical this year from Harvard so he can research the economic feasibility of the projects, also sits on the board of the Swan’s Island Electric Cooperative.

According to Baker, the possibility of generating electricity from wind power, which would shield island residents from the volatility of world energy markets and enable them to mitigate costs by seasonally selling excess power back into the regional power grid, has proved to be a strong motivator in pursuing the projects.

“Wind blows [on the islands] all the time,” he said recently. “It doesn’t take a rocket scientist to say, ‘Gosh! Maybe we should consider wind power here.’ It truly is a no-brainer.”

Community ownership

Unlike other wind power projects in Maine, these projects would supply electricity directly to nearby residents instead of feeding all their power into the New England regional power grid. Rather than being owned by developers looking to tap into growing markets, the island wind turbine facilities essentially would be owned and operated by the communities in which they are located.

According to Philip Conkling, president of the Island Institute, community ownership is a key aspect of these projects. Owning the power that is generated and being able to sell excess power in the winter when demand on the islands is relatively low and the wind supply is high will help island residents in their efforts to keep island life affordable, he said recently.

Electric power is not the only increasing cost on the islands. The limited and usually scenic real estate on the islands is expensive, which results in elevated property taxes, and the high cost of boat fuel and maintenance affects prices of even the most basic supplies on the islands, groceries included.

By using natural resources such as wind wisely, Conkling said, the island communities can help make sure they remain attractive and affordable places to live, much as they were in the 18th and 19th centuries. It was wind, which early colonists depended upon for transportation, that brought permanent settlers to the islands in the first place, he said.

“Fundamentally, it’s a sustainability issue,” Conkling said. “Here’s a resource that’s been very valuable to the islands in the past – a resource that hasn’t been used for 100 years. [Reconnecting to that resource] is a very appealing idea.”

Ed Schwabe, a retired U.S. Army colonel and board member for the Swan’s Island Electric Cooperative, said recently that reducing power costs on Swan’s Island could lead to economic benefits just as important as stable or even lower electric bills. He said small, ocean-oriented business such as sea-salt harvesting companies might decide to locate to the island if power were cheaper, which would help create local jobs.

“If we’re going to have a sustainable, year-round population on the island, we’ve got to have affordable power,” Schwabe said.

Economics

The main reason many of the island electric bills are so expensive is that the co-ops that serve residents on each island own and maintain the island’s electrical distribution system. For island co-ops that buy power from mainland suppliers, this includes the expensive undersea power cable systems that connect the islands to mainland port communities miles away.

When residents on such an island pay electric bills, they also are paying maintenance costs on the island system and the debt service on loans the local co-op has incurred to purchase the necessary distribution equipment. This can add up to millions of dollars in debt that, in many cases, has to be paid down by only a few hundred co-op customers.

The high infrastructure costs and the limited number of people served by each system are reasons many islands established their own co-ops decades ago. Power companies didn’t want to spend so much money to serve so few customers, leaving the islands with little choice but to acquire diesel generators and set up their own electrical distribution systems.

The Fox Islands and Swan’s Island-Frenchboro, the two most populous Maine island groups with their own electric co-ops, first installed three-phase undersea cable systems to the mainland in the 1970s, eliminating their dependence on diesel fuel. Cables, whether bundled together or laid individually across the ocean floor, generally have to be replaced every 15 to 20 years, which can mean that as soon as one is paid off a new one is needed, resulting in more or less continual debt-service payments for co-op members. Swan’s Island most recently spent $218,000 on a single new underwater strand for its power cable system in 2000, while in 2006 the Fox Islands installed a new high-quality cable system, which includes both three-phase electric and fiber-optic cable, for $6 million.

It is because of their power cable connections to the mainland that these islands have the chance to generate their own power and sell what they don’t use on the regional power grid.

Another key factor in the islands’ move toward wind power occurred more recently, when the co-ops asked for help from Hannah Pingree, who represents their towns in the Legislature.

Deregulation of Maine’s power industry in the late 1990s barred retail companies such as Bangor Hydro-Electric Co., Central Maine Power and others from generating the power they sell, Pingree said recently. In an effort to increase competition among power generators, the state decided to require retail companies to buy the power they sell to consumers from third parties.

The law similarly barred the co-ops from generating their own power and then selling it directly to their members. So in 2005, after being approached by the co-ops, Pingree solicited help from the Island Institute and together they convinced the Legislature that the co-ops were facing a unique scenario and should be exempt from the power generation ban. The Legislature approved such an exemption for the Fox Islands in 2006 and then for Swan’s Island in 2007, she said.

According to Pingree, the issue of price stability is as important as affordability. Because island co-op members already face high prices in paying for their distribution infrastructure, she said, it makes it that much more difficult for them to absorb price spikes that might be brought on by hurricane threats or other oil industry scares.

Wind turbines would enable the co-ops to buy electricity for part of the year and sell it for part of the year, better insulating communities from price swings than other consumers, Pingree said. If energy prices rose, the co-ops would get the benefit when they sell excess power in the winter, and if prices fell they would get the benefit when they bought extra power in the summer.

“People like the idea of generating their own power,” Pingree said. “People see the price of everything going up. To have some things you can control is exciting.”

Addison Ames, a Vinalhaven resident and board member with the Fox Islands co-op, said recently that there are three reasons prices spiked in early 2006 for Fox Islands residents, which for some families resulted in electric bills as high as $500 a month: Normal market pressures already were pushing them upward; hurricane damage to energy industry infrastructure along the Gulf of Mexico severely limited the supply of fuel used by power plants; and the island’s three-year power contract with Central Maine Power expired, enabling the distribution company to raise its prices to meet its costs.

Island residents hope that, with local wind power at their disposal, electricity prices at least will be shielded from such volatile market pressures and remain stable during the projected 20- year life span of the turbines, he said.

“Could you imagine having a stable gasoline price for the next 20 years?” Ames said. “[Wind power] certainly can help, that’s for sure.”

Swan’s Island

According to Schwabe, the Swan’s Island Electric Cooperative began collecting data on the island’s wind resources about a year ago, when it mounted research equipment at two heights on a local cell phone tower on Stockbridge Hill.

The study will last until next spring, Schwabe said recently, but initial results show that with one or two turbines, each of which could be more than 300 feet tall, the island could generate up to 3 megawatts of electricity during peak wind conditions. This should be more than enough power for the island’s 350 year-round residents, he said, and is expected to provide more than half the power needed to serve all the island’s residents when the population rises to about 1,000 in the summer.

Frenchboro is much smaller, with only about 40 residents in the winter and 100 in the summer.

Schwabe said a big question is whether it would be financially feasible to erect any turbines on the island. One commercial-scale turbine can cost $2.5 million, he said, and with the growing popularity of wind power the devices are getting more expensive all the time. Swan’s Island has only about 550 customer meters, he said, and many co-op customers are responsible for paying the bills for more than one account. The co-op’s relatively few customers would have to bear the cost of acquiring and erecting the turbines, he said.

“The capital costs are huge and they are all upfront,” Schwabe said.

According to Katie Chapman, an Island Institute fellow who is helping the Swan’s Island co-op research the issue, the co-op would need some help from the federal government if it is going to acquire even just one turbine. The co-op simply doesn’t have the money for the initial capital costs, she said.

“It would be a big project,” Chapman said. “Hopefully, we can get low-interest or no-interest loans from the [federal] Rural Utility Service, or it will get pretty expensive pretty quick.”

According to Schwabe, the earliest that construction of a wind turbine facility is likely to begin on Swan’s Island is spring of 2010.

Fox Islands

Officials and residents on Vinalhaven and North Haven, however, are closer to realizing their goal of having wind turbines operating on Vinalhaven within the next two years. Late last month, members of the Fox Islands Electric Cooperative voted overwhelmingly, 382-5, to move ahead with the effort.

According to Chip Farrington, interim general manager for the Fox Islands co-op, they hope to erect two or three turbines on a 74- acre parcel off North Haven Road on Vinalhaven. The turbines would have a total peak-wind generation capacity of about 4 or 5 megawatts and likely would be large, perhaps 250 feet tall where the blades meet the hub, he said recently.

How tall the turbines will be, and whether the co-op buys two or three, likely will depend on what’s available when the co-op is ready to buy, Farrington said. Because of the high demand, the availability of turbines is scarce, he said, and the exact specifications of the turbines that go up on Vinalhaven likely won’t be decided until the co-op is ready to make its purchase.

The Fox Islands co-op is further ahead in the process because it began testing the islands’ wind resources in 2002, five years before Swan’s Island started its study, and because its larger membership makes it easier for the co-op to pursue the project. The islands, which make up the largest offshore community in eastern Maine, have a combined year-round population of about 1,500 people, with about 80 percent of them living on Vinalhaven. In the summer, the islands’ combined population balloons to about 4,500 residents.

According to Farrington, 1,900 of those residents are paying members of the local co-op. The projected cost for those members of acquiring two or three turbines and erecting them on Vinalhaven, he said, is $10 million to $13 million.

Even at that cost, the turbine project makes sense because the co- op already is spending millions of dollars on its infrastructure and is not getting any income in return, he said. When the co-op installed a new 11-mile, $6 million cable between North Haven and Rockport in 2006, the price included the expense of burying the cable 6 feet under the ocean floor so it would be better protected from weather and fishing vessels.

“Hopefully, that [cable] will last much longer then the older one,” Farrington said.

Financing

According to Baker, the Harvard professor, planning how to fund the projects has required some creative thinking. He said he has had to travel to Washington, D.C., to talk with officials from the U.S. Department of Agriculture about what kind of federal loans the Fox Islands co-op might receive. USDA oversees the Rural Utility Service, he said, which has a mandate of helping provide utility infrastructure to rural areas.

“All we had to do was tell them this was a project that would benefit the Fox Island Electric Cooperative and was consistent with [the RUS] mission,” Baker said.

With Baker’s encouragement, the federal service agreed to a nonstandard loan structure that will help direct $4 million to $8 million in federal funds toward the Vinalhaven project, he said.

According to Conkling, USDA officials will allow private investors to help put up some of the money for acquiring and installing the turbines. The investors will not share in any of the revenue from the excess power the co-ops would sell in the winter, he said, but they will benefit from some fairly substantial tax incentives that are expected make investment worthwhile.

All the revenues the co-ops would get from selling their excess power in the winter will go either toward paying down the debt service for the infrastructure or toward purchase of additional power that the co-ops will need during the summer months, Conkling said.

Permitting

Getting the projects approved by all the appropriate regulatory agencies could be a complex task, according to officials. Federal Energy Regulatory Commission, Federal Aviation Administration, Maine Department of Environmental Protection, local planning boards and possibly other agencies will have to issue permits for each project, officials said, and they could come up with conflicting suggestions for how to deal with issues such as turbine height and visibility.

According to Schwabe, six possible sites on Swan’s Island are being considered for turbines, but so far, no one has brought any possible concerns about the visual or environmental impact of the turbines to the co-op’s attention.

“Not to everybody is a turbine a thing of beauty,” Schwabe said. “They are quite large. The erection of these turbines is a big, big deal.”

According to Conkling, one likely issue with the Vinalhaven project is whether the turbines will have to be lighted at night. The FAA likes to have structures near airports and landing strips illuminated at night, he said, but lights also have been known to attract birds, especially when they are disoriented in foggy weather. There is a dirt landing strip on Vinalhaven that is used at night only for emergencies, he said.

“It’s a well-known fact that island lighthouses kill a lot of birds,” Conkling said.

Because of the turbine proposal, study is being done of bird migration patterns on Vinalhaven, according to officials. Early results indicate the turbines will not pose a great threat to birds, but data about fall migration patterns still have to be collected before the study will be complete.

According to Rich Knox, spokesman for Maine Coast Heritage Trust, the trust is familiar with the Vinalhaven proposal and will be interested in finding out the final results of the study, but unless it shows that birds are likely to be significantly affected, the trust is not likely to oppose it.

The trust’s mission is to conserve land and to preserve the scenic beauty of the coast, Knox said recently, but its positions on development proposals are largely shaped by the extent of local opposition in the communities where the projects would be located. He said the trust expects that if other coastal communities held referendums on similar projects, the results would be similar to the recent vote of 382-5 in the Fox Islands.

“We believe our mission can co-exist with broader community goals of alternative energy and lower energy costs if [energy projects] are done right,” Knox said.

According to Conkling, how long the permitting process might take is unknown because the types of wind projects being considered on Swan’s Island and Vinalhaven have never been proposed on the Maine coast before. The recent vote on the Vinalhaven project, he said, suggests that one thing unlikely to come up during the permitting process is staunch opposition from people who live on the islands.

“We certainly have more work to do,” Conkling said. “But in 25 years, I have never seen a 99 percent in-favor vote on any island issue.”

All offshore Maine islands are faced with economic and energy issues that are making them increasingly expensive places to live. Part 2 of this series tomorrow will take a look at other, smaller energy initiatives on the islands and challenges they face in keeping energy costs affordable.

btrotter@bangordailynews.net

460-6318

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