Hopes of creating a deep-water wind power industry in Maine suffered a serious setback Wednesday when the state’s pilot project for a floating wind farm failed to win a highly competitive $47 million federal grant.

The U.S. Department of Energy announced that the Maine Aqua Ventus project was passed over for the full grant. Instead, it will receive $3 million for continued engineering and become an alternate for a second round of full demonstration funding.

Maine Aqua Ventus is proposed by Maine Prime Technologies, a for-profit spinoff that represents the University of Maine, and two general partners, Maine-based Cianbro Corp. and Emera Inc. of Nova Scotia.

The grant funding decision raises questions about whether and how the project, projected to cost $120 million, can secure enough money to refine the technology and move to commercial scale.

“I don’t think we’re in a position to answer that yet,” said Jake Ward, UMaine’s vice president for innovation and economic development.

Ward said the Aqua Ventus team had identified a combination of private borrowing and equity funding, along with the $47 million federal grant, to raise the money needed. Unless one of the three winning projects stumbles over the next year or so, Maine will have to go forward without that big slug of federal funding. That could mean building a smaller project, perhaps with one turbine, and maybe moving the test site to a different location, Ward said.

Over the next year, the Aqua Ventus team will use the $3 million to refine the project design and scale it up to full size. The goal is to get it to a point where a developer would be interested in building a full-scale wind farm with the technology, Ward said.

Maine Aqua Ventus faced off against projects in New Jersey, Virginia, Texas, Ohio and Oregon for the federal money.

The winning projects are in New Jersey, Virginia and Oregon. Each will receive as much as $47 million over a four-year period. The project in Oregon, proposed by Principle Power of Seattle, was the prime competitor for Aqua Ventus.

FUNDING WINNERS A BIT SURPRISING

The grants were to be announced at the American Wind Energy Association’s annual conference and exhibition in Las Vegas by David Danielson, the Department of Energy’s assistant secretary for energy efficiency and renewable energy, but the news came out before his speech.

Key members of Maine’s wind power industry are at the conference, including Habib Dagher, the UMaine professor and leader of the Aqua Ventus team, and Paul Williamson, director of the Maine Ocean & Wind Industry Initiative.

“There’s a fair amount of surprise from the industry’s point of view,” Williamson told the Portland Press Herald from Las Vegas, referring to the fact that the New Jersey project, Fishermen’s Energy, has yet to secure a power-purchase contract.

But Williamson said the rejection of Maine for full funding wasn’t a complete surprise. “Everyone recognizes that all six projects were very high-quality projects,” he said.

Reacting to the news, members of Maine’s congressional delegation expressed disappointment but pledged continued support for Maine Aqua Ventus.

U.S. Reps. Mike Michaud and Chellie Pingree said that if the project receives second-round funding, Aqua Ventus could compete for additional money.

“While I am disappointed UMaine was not selected for the full grant, the R&D partnership will continue to move this project and Maine’s ongoing efforts to become a leader in renewable energy forward,” Michaud said.

Pingree said it’s just a matter of time before offshore wind power is a reality in Maine, and she is hopeful that the federal government will continue to fund research and development in the state.

“Maine has a significant offshore wind resource and the supply chain for wind power is already well established in the state,” she said.

U.S. Sens. Susan Collins and Angus King released a statement and pledged their continued support, saying, “While we are disappointed that the university’s application was not selected for a full award at this point, we are very encouraged that, with this $3 million investment, the Department of Energy clearly recognizes the project’s enormous potential. DOE is pledging to engage in an R&D partnership and continue its investment in the university’s innovative deep-water, offshore wind technology.”

OFFSHORE WIND INDUSTRY EVOLVING

Behind the competition is the quest for a better, made-in-America way to generate wind power at sea.

Europe has hundreds of offshore wind turbines, mostly in shallow water on steel towers buried in the sea bed. The Department of Energy is looking for new designs to radically cut the cost of wind energy. One answer may be turbines that float far offshore, where the wind is stronger and steadier.

In narrowing the field, the agency initially picked six finalists covering the coasts and the Great Lakes. They won preliminary $4 million grants in late 2012.

The finalists included four projects calling for steel towers set in foundations off the coast of New Jersey, Virginia and Texas, and in Lake Erie. Two of the six finalists – from Maine and Oregon – were floating designs.

A year ago, the Aqua Ventus partners launched a one-eighth-scale model of a floating turbine off Castine. The unit is made of advanced composite materials that fight corrosion and reduce weight. Its hull is made of concrete, which can be produced in Maine and has a longer life span in the ocean than steel.

The prototype, which generates a small amount of power, endured extreme sea and wind conditions last winter and has been performing as expected, the developers say. Ward, the UMaine vice president, said it’s not immediately clear what will become of the model, but it doesn’t have permits to remain off Castine for another year.

The partnership’s goal was to use the knowledge it gained off Castine to develop a full-scale pilot wind farm off Monhegan Island by 2016. Called VolturnUS, it would consist of two turbines, each with a capacity of six megawatts. Based on the availability of wind, the project would be expected to generate 43,000 megawatt-hours a year, enough to power 6,000 average homes.

MAINE PROJECT HAS PROMISE, CRITICS

Putting wind farms at sea, in locations approved by the state, is designed to take better advantage of strong, consistent breezes and appease coastal residents who don’t want to see large wind turbines. But the Maine Aqua Ventus project drew some opposition, from birders, residents of Monhegan, and critics of using ratepayers’ money to subsidize the project’s above-market power contract.

Supporters, however, said the project would have created 340 jobs and at least $120 million in investment to start, according to estimates from the developers, and would set the stage for thousands of jobs and billions of dollars in spending over time. Advocates said the expertise developed by the venture could form a research-and-development cluster that would help to build and supply a global emerging energy sector.

The project won a crucial power-purchase agreement late last year from the Maine Public Utilities Commission. The investment from ratepayers would add a small charge for 20 years to Central Maine Power Co. bills. An average home customer would pay an additional 73 cents a month at the start, $8.70 in the first year.

AN INDUSTRY WITH SHIFTING WINDS

Wednesday’s developments are the latest twist in a six-year effort to start an offshore power industry in Maine.

In 2008, Seattle-based Principle Power came to Maine with hopes of testing a demonstration floating turbine off the coast, with partners that included UMaine. The company abandoned its plans in 2010, citing the state’s parochial politics and unreasonable conditions set by the university, something the university has denied.

Principle Power went on to launch the world’s second commercial-scale wind farm, in 2011 off the coast of Portugal. Its next-generation design, called WindFloat, emerged as Maine’s top rival in the federal grant competition. It’s to be located 15 miles off Coos Bay, Oregon.

Principle Power announced Wednesday that it’s teaming up with Deepwater Wind, which is set to build the nation’s first offshore wind farm, off Rhode Island, to develop its Oregon project.

Until last year, Maine’s best hope for an offshore wind industry appeared to rest with the Norwegian energy conglomerate Statoil. The company had already put a steel floating turbine in the North Sea. In 2011, it proposed a next-stage, 12-megawatt wind farm off Boothbay Harbor, called Hywind Maine.

The proposal won approval and a power purchase contract from the PUC. It also was the seventh finalist in the Department of Energy’s grant competition, one of three floating designs.

But the impact on ratepayers drew opposition from Gov. Paul LePage, who pressured the Legislature into passing a law that had the effect of reopening the PUC process. That provided a window for Maine Aqua Ventus, which submitted its proposal to the PUC last summer.

Statoil responded to LePage’s political maneuver by putting its $120 million project on hold. Last fall, the company announced that it was pulling out of Maine. It blamed shifting state policies and said it would redirect investment to a site off Scotland.

Tux Turkel can be contacted at 791-6462 or at:

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