December 10, 2007
Running with the wind | Former Gov. Angus King on why he's betting on wind power in Maine
By Taylor Smith
In recent weeks, former Maine Gov. Angus King has spent a lot of time talking about wind. Specifically, King has been talking about wind power, and about his new company's plans to build as many as 29 massive wind turbines on a ridge in the Oxford County towns of Byron and Roxbury.
But King is quick to note he's not a figurehead of Independence Wind Inc., the company he launched earlier this year with former Maine Public Broadcasting Network President Robert Gardiner. And he insists that neither he nor Gardiner are hired guns brought on board to move somebody else's project forward. "Our intention is to remain as owners," he says. "We sort of joke that it will primarily benefit our grandchildren, but we view this as a long-term investment."
Indeed, King seems ideally suited to chase the wind. Before his two terms as governor, King spent more than a decade working in alternative energy and energy conservation, beginning with Swift River/Hafslund Co., a Massachusetts-based renewable energy company with an office in Portland. As in-house counsel with Swift River, King says he learned the ins and outs of hydro and biomass projects, from turbine pricing to environmental compliance and permitting. In 1989, King launched his own firm, Northeast Energy Management Inc. in Brunswick. The company helped commercial clients with large-scale energy conservation projects. "As the prices for energy were going down, I saw conservation as an opportunity where you could in effect save an equal amount of power as you could generate, for about half the capital cost," he says. "You could do conservation at a lower capital cost than you could do generation, and I saw this as a business opportunity."
These days, King, 63, sees similar opportunity in wind power with Record Hill Wind, the company Independence Wind formed with a landowner in Oxford County and a land management firm in New Hampshire to spearhead the project in Byron and Roxbury. While wind projects cost a bundle up-front to build, the net result is electricity generated from each turbine is reliably priced. And that pricing is likely attractive to commercial customers who could count on at least a portion of their energy prices staying relatively flat from year to year. "Predictability in electric rates is a virtue," says King. "Wind power and hydropower are really the only two energy sources that I can think of that once you build it you can predict the price because it's all in the capital costs. There are no fuel costs."
Mainebiz recently sat down with King to discuss the lure of wind power, the allure of green energy and how to respond to critics who say wind power is unreliable and inefficient. The following is an edited transcript.
Mainebiz: What was the genesis of Independence Wind?
Angus King: I have always been interested in wind power, so I went up to Sugarloaf two summers ago to testify in favor of the Redington/Black Nubble project just as a citizen ˆ no interest, no involvement, no official role. I sat in the audience for four hours, and I think I was the 28th speaker or something, and that really got me thinking about wind power.
The more I thought about it, the more I thought it could make a difference in Maine, in two ways. One is the stability of electric rates. We are now something like 55% or 59% dependent on natural gas, which strikes me as strategically and economically dangerous. Strategically, because it can be shut off, it can be slowed down, there can be shortages. And economically, because, as we've already learned, there can be tremendous price volatility.
And wind power is a way to smooth out that volatility?
Yeah. It's not correct to say that we will lower electric bills. The capital costs are so huge, you have to pay your mortgage. But once you get a bill, you do have certainty about the cost of fuel, which is zero. As I was thinking about it and preparing my testimony ˆ this was a year and a half ago ˆ it struck me that this could have some significant benefits for Maine. Historically, we have always been fossil fuel dependent, of which we have none ˆ [it's] all imported. So that was number one. Number two, all of this talk about global climate change and CO2 struck me that it was time to do something about it in a measurable way. This is a way to do it.
Finally, it looked to me like a good business, in that it's risky ˆ particularly in the early going, because you have to spend a lot of money before you get your permits, and if you get your permits, you've got your project, and if you don't get your permits you have nothing. So it's high-risk, early money from a business point of view. On the other hand, if you can put a decent project together, hopefully it will pay off in a business sense.
After you testified at the Redington hearings, did the fact that the project was denied by the Land Use Regulation Commission surprise you?
Yes, somewhat, it did, because I thought the case was pretty compelling. But I didn't hear all the hearings and I don't know what went on with the LURC commissioners ˆ I don't know what was on their minds.
Part of the result of that, when Rob and I got together ˆ it was January this year and last winter ˆ we decided that we were going to approach this business by trying to pre-identify sites we thought would be environmentally accepted. Instead of going for the best wind sites, go for sites that didn't have ideal wind conditions, but had good wind conditions and were also below 2,700 feet ˆ which in Maine is kind of a threshold for endangered habitat ˆ were adjacent to transmission lines so you don't have to do a new transmission line, and far removed from public assets like the Appalachian Trail or something like that. We tried to pre-screen and pre-select our sites.
What's your role in Independence Wind?
I'm involved in pretty much a day-to-day basis. Rob is doing this pretty much full time. I couldn't put a percentage on my time because it goes up and down. We have a conference call virtually every week with the team that's working on the project, with the engineers and the environmental people and the road building people and all that, that I'm generally involved with. I've been to five meetings up in the area where we're looking at the project, so I'm directly involved. I'm not an honorary pro counsel or something.
With your background in energy and conservation, why wind?
Well, I've been interested in wind since the 70s. The idea of being able to make electricity with no fuel costs from a natural phenomenon has always struck me as cool, as interesting and as sensible. Here's this huge slug of energy running through us every day, and here we are digging stuff out of the ground and burning it and making CO2 and everything else. Why not use this?
Someone asked me, "Why aren't you doing tidal?" and I said I'm too old for R&D. I want to do something that is going to work. I see wind as a mature technology, and therefore, it's time to do it.
Some critics say wind is nothing more than a secondary power source, something to fill in the gaps. Do you agree with that?
Sure. Wind is an intermittent resource, at least now. The problem is, you can't store it. You only get electricity when the wind blows, and when the wind blows, it goes into the grid. There are people working on technology for storage ˆ compressed air, for example. The windmill turns and compresses [the air]; you let the compressed air out and it spins a turbine to make electricity when you need electricity.
However, the people who say wind is only an intermittent resource are looking for a one-shot solution. And my experience is that there are rarely silver bullets, but there is often silver buckshot. Wind is an adjunct source of energy. Ten percent, 20% can be very significant. And we've always had energy sources that weren't utterly reliable.
It's a segment of the energy solution. It's very analogous to hydro power. Wind can and will be a significant share of Maine's energy mix, I believe.
How big is the project?
We said 23 to 29 turbines. We really don't know what we have for a wind source, so we have two towers up that are spinning away with two directionals, and we get two reports a month that tell us average speed, gust speed, direction, percentage of direction. It very quickly gets into some very complicated engineering. But that will tell us how many turbines, where they can be and what size they can be, which is a big part of this project because if there's sufficient wind, we can use larger turbines. As far as the visual is concerned, there's not much difference, but we can make a lot more power. The physical structure [of the turbine] looks roughly the same, whether it's a megawatt-and-a-half per turbine or three megawatts per turbine. We hope that there's enough wind for three megawatts per turbine because it'll make that much more electricity, but we don't know that yet.
The towers went up in August and you really want about a year's worth of data. But we'll have a pretty good idea of the site by April or May, probably.
How far along is the permitting process?
We're moving along. We've done spring bird studies, we've done fall bird studies, we're doing bat studies, we've done wetland studies, we've done preliminary road design. I'm not sure whether the archaeological studies are done, and visual studies will be done this winter and spring. Our target is a permit application to the [Department of Environmental Protection] by around the first of July. That's the target. And then anywhere from six months to a year at the DEP, and hopefully construction sometime in 2009 and online in 2010.
How much will the wind farm cost?
We used cost figures when we did the tax analysis for the town of about $100 million to $150 million. Now that's a wide range, but it depends on some extent to what size turbines we do. A rough figure for building one of these projects is about $2 million a megawatt, so if it's 70 megawatts, it's $140 million. The megawatt size will depend on the size of the turbines and how many [turbines] the site will take. But $100 million to $150 million is a reasonable figure ˆ it's not a minor investment.
Who's footing the bill for that?
Rob and I are partners with the landowners. That's another site criteria: How many landowners are there, and how many can you deal with? Typically, with a landowner, you do a lease and pay them a piece of the revenues and they're passive, like a landlord. In this case, the land manager is Wagner Woodlands, which is over in New Hampshire. They manage several million acres in Maine, New Brunswick, Quebec, New Hampshire and Vermont. The owner for which they manage this particular piece of land wants to be a partner.
But the actual financing of the project will have to wait essentially until you get your permits. Right now it's all high-risk, upfront investment by them and us.
Is wind an attractive investment?
I think it is right now, in part because there's a significant growth and demand for green power, and people are willing to pay for it. I'm on the board of Hancock Lumber, and we're seeing for the first time in five or six years an economic premium, a payoff, for green wood. People are really getting it, and they're finally getting the point where they're saying, "We want to do this and it's worth a little more." So there is a market for power that's not environmentally damaging.
You said earlier that wind power can make energy costs more reliable. That seems awfully attractive for commercial energy customers in Maine.
And we will be able to sign 10- or 15-year contracts. No fossil fuel plant could possibly do that with a fixed price or with price with a fixed escalator. We can tell you, "Okay, in 2017, your price will be this." And that's of value. That gives you predictability and you can build that into your cost structure.
Volatility in energy pricing is a big complaint among Maine businesses.
We can't single-handedly eliminate that, because, as I said, we're just a part of the mix. But it'll ameliorate that somewhat. For example, we couldn't tell Maine Medical Center that we could provide all their power and it'll be at a fixed price, because the wind doesn't blow all the time. But we could provide a component of your electricity at a fixed price, and so that will tend to dampen the volatility because you've got one piece that's flat and one piece that's volatile instead of the whole thing being volatile. It's a dampening effect.
And that's one of the things that's attractive to me, frankly, because when I was governor I saw energy prices, particularly in the industrial sector, as one of our competitive disadvantages. Again, I don't want to misrepresent, because [wind projects] are very expensive. So our initial price will be at the market ˆ we won't go online and drop everybody's electric bill. The difference is the price in 10 years will be pretty close to what it is in the beginning.
Sometimes I ask why I'm doing this at the ripe old age of 63, and it's because I'm really fascinated with the technology, and I'm also the kind of person who hates complaining and not doing. Everybody's talking about global warming and global climate change, and here's a chance to do something about it.
But King is quick to note he's not a figurehead of Independence Wind Inc., the company he launched earlier this year with former Maine Public Broadcasting Network President Robert Gardiner. And he insists that neither he nor Gardiner are hired guns brought on board to move somebody else's project forward. "Our intention is to remain as owners," he says. "We sort of joke that it will primarily benefit our grandchildren, but we view this as a long-term investment."
Indeed, King seems ideally suited to chase the wind. Before his two terms as governor, King spent more than a decade working in alternative energy and energy conservation, beginning with Swift River/Hafslund Co., a Massachusetts-based renewable energy company with an office in Portland. As in-house counsel with Swift River, King says he learned the ins and outs of hydro and biomass projects, from turbine pricing to environmental compliance and permitting. In 1989, King launched his own firm, Northeast Energy Management Inc. in Brunswick. The company helped commercial clients with large-scale energy conservation projects. "As the prices for energy were going down, I saw conservation as an opportunity where you could in effect save an equal amount of power as you could generate, for about half the capital cost," he says. "You could do conservation at a lower capital cost than you could do generation, and I saw this as a business opportunity."
These days, King, 63, sees similar opportunity in wind power with Record Hill Wind, the company Independence Wind formed with a landowner in Oxford County and a land management firm in New Hampshire to spearhead the project in Byron and Roxbury. While wind projects cost a bundle up-front to build, the net result is electricity generated from each turbine is reliably priced. And that pricing is likely attractive to commercial customers who could count on at least a portion of their energy prices staying relatively flat from year to year. "Predictability in electric rates is a virtue," says King. "Wind power and hydropower are really the only two energy sources that I can think of that once you build it you can predict the price because it's all in the capital costs. There are no fuel costs."
Mainebiz recently sat down with King to discuss the lure of wind power, the allure of green energy and how to respond to critics who say wind power is unreliable and inefficient. The following is an edited transcript.
Mainebiz: What was the genesis of Independence Wind?
Angus King: I have always been interested in wind power, so I went up to Sugarloaf two summers ago to testify in favor of the Redington/Black Nubble project just as a citizen ˆ no interest, no involvement, no official role. I sat in the audience for four hours, and I think I was the 28th speaker or something, and that really got me thinking about wind power.
The more I thought about it, the more I thought it could make a difference in Maine, in two ways. One is the stability of electric rates. We are now something like 55% or 59% dependent on natural gas, which strikes me as strategically and economically dangerous. Strategically, because it can be shut off, it can be slowed down, there can be shortages. And economically, because, as we've already learned, there can be tremendous price volatility.
And wind power is a way to smooth out that volatility?
Yeah. It's not correct to say that we will lower electric bills. The capital costs are so huge, you have to pay your mortgage. But once you get a bill, you do have certainty about the cost of fuel, which is zero. As I was thinking about it and preparing my testimony ˆ this was a year and a half ago ˆ it struck me that this could have some significant benefits for Maine. Historically, we have always been fossil fuel dependent, of which we have none ˆ [it's] all imported. So that was number one. Number two, all of this talk about global climate change and CO2 struck me that it was time to do something about it in a measurable way. This is a way to do it.
Finally, it looked to me like a good business, in that it's risky ˆ particularly in the early going, because you have to spend a lot of money before you get your permits, and if you get your permits, you've got your project, and if you don't get your permits you have nothing. So it's high-risk, early money from a business point of view. On the other hand, if you can put a decent project together, hopefully it will pay off in a business sense.
After you testified at the Redington hearings, did the fact that the project was denied by the Land Use Regulation Commission surprise you?
Yes, somewhat, it did, because I thought the case was pretty compelling. But I didn't hear all the hearings and I don't know what went on with the LURC commissioners ˆ I don't know what was on their minds.
Part of the result of that, when Rob and I got together ˆ it was January this year and last winter ˆ we decided that we were going to approach this business by trying to pre-identify sites we thought would be environmentally accepted. Instead of going for the best wind sites, go for sites that didn't have ideal wind conditions, but had good wind conditions and were also below 2,700 feet ˆ which in Maine is kind of a threshold for endangered habitat ˆ were adjacent to transmission lines so you don't have to do a new transmission line, and far removed from public assets like the Appalachian Trail or something like that. We tried to pre-screen and pre-select our sites.
What's your role in Independence Wind?
I'm involved in pretty much a day-to-day basis. Rob is doing this pretty much full time. I couldn't put a percentage on my time because it goes up and down. We have a conference call virtually every week with the team that's working on the project, with the engineers and the environmental people and the road building people and all that, that I'm generally involved with. I've been to five meetings up in the area where we're looking at the project, so I'm directly involved. I'm not an honorary pro counsel or something.
With your background in energy and conservation, why wind?
Well, I've been interested in wind since the 70s. The idea of being able to make electricity with no fuel costs from a natural phenomenon has always struck me as cool, as interesting and as sensible. Here's this huge slug of energy running through us every day, and here we are digging stuff out of the ground and burning it and making CO2 and everything else. Why not use this?
Someone asked me, "Why aren't you doing tidal?" and I said I'm too old for R&D. I want to do something that is going to work. I see wind as a mature technology, and therefore, it's time to do it.
Some critics say wind is nothing more than a secondary power source, something to fill in the gaps. Do you agree with that?
Sure. Wind is an intermittent resource, at least now. The problem is, you can't store it. You only get electricity when the wind blows, and when the wind blows, it goes into the grid. There are people working on technology for storage ˆ compressed air, for example. The windmill turns and compresses [the air]; you let the compressed air out and it spins a turbine to make electricity when you need electricity.
However, the people who say wind is only an intermittent resource are looking for a one-shot solution. And my experience is that there are rarely silver bullets, but there is often silver buckshot. Wind is an adjunct source of energy. Ten percent, 20% can be very significant. And we've always had energy sources that weren't utterly reliable.
It's a segment of the energy solution. It's very analogous to hydro power. Wind can and will be a significant share of Maine's energy mix, I believe.
How big is the project?
We said 23 to 29 turbines. We really don't know what we have for a wind source, so we have two towers up that are spinning away with two directionals, and we get two reports a month that tell us average speed, gust speed, direction, percentage of direction. It very quickly gets into some very complicated engineering. But that will tell us how many turbines, where they can be and what size they can be, which is a big part of this project because if there's sufficient wind, we can use larger turbines. As far as the visual is concerned, there's not much difference, but we can make a lot more power. The physical structure [of the turbine] looks roughly the same, whether it's a megawatt-and-a-half per turbine or three megawatts per turbine. We hope that there's enough wind for three megawatts per turbine because it'll make that much more electricity, but we don't know that yet.
The towers went up in August and you really want about a year's worth of data. But we'll have a pretty good idea of the site by April or May, probably.
How far along is the permitting process?
We're moving along. We've done spring bird studies, we've done fall bird studies, we're doing bat studies, we've done wetland studies, we've done preliminary road design. I'm not sure whether the archaeological studies are done, and visual studies will be done this winter and spring. Our target is a permit application to the [Department of Environmental Protection] by around the first of July. That's the target. And then anywhere from six months to a year at the DEP, and hopefully construction sometime in 2009 and online in 2010.
How much will the wind farm cost?
We used cost figures when we did the tax analysis for the town of about $100 million to $150 million. Now that's a wide range, but it depends on some extent to what size turbines we do. A rough figure for building one of these projects is about $2 million a megawatt, so if it's 70 megawatts, it's $140 million. The megawatt size will depend on the size of the turbines and how many [turbines] the site will take. But $100 million to $150 million is a reasonable figure ˆ it's not a minor investment.
Who's footing the bill for that?
Rob and I are partners with the landowners. That's another site criteria: How many landowners are there, and how many can you deal with? Typically, with a landowner, you do a lease and pay them a piece of the revenues and they're passive, like a landlord. In this case, the land manager is Wagner Woodlands, which is over in New Hampshire. They manage several million acres in Maine, New Brunswick, Quebec, New Hampshire and Vermont. The owner for which they manage this particular piece of land wants to be a partner.
But the actual financing of the project will have to wait essentially until you get your permits. Right now it's all high-risk, upfront investment by them and us.
Is wind an attractive investment?
I think it is right now, in part because there's a significant growth and demand for green power, and people are willing to pay for it. I'm on the board of Hancock Lumber, and we're seeing for the first time in five or six years an economic premium, a payoff, for green wood. People are really getting it, and they're finally getting the point where they're saying, "We want to do this and it's worth a little more." So there is a market for power that's not environmentally damaging.
You said earlier that wind power can make energy costs more reliable. That seems awfully attractive for commercial energy customers in Maine.
And we will be able to sign 10- or 15-year contracts. No fossil fuel plant could possibly do that with a fixed price or with price with a fixed escalator. We can tell you, "Okay, in 2017, your price will be this." And that's of value. That gives you predictability and you can build that into your cost structure.
Volatility in energy pricing is a big complaint among Maine businesses.
We can't single-handedly eliminate that, because, as I said, we're just a part of the mix. But it'll ameliorate that somewhat. For example, we couldn't tell Maine Medical Center that we could provide all their power and it'll be at a fixed price, because the wind doesn't blow all the time. But we could provide a component of your electricity at a fixed price, and so that will tend to dampen the volatility because you've got one piece that's flat and one piece that's volatile instead of the whole thing being volatile. It's a dampening effect.
And that's one of the things that's attractive to me, frankly, because when I was governor I saw energy prices, particularly in the industrial sector, as one of our competitive disadvantages. Again, I don't want to misrepresent, because [wind projects] are very expensive. So our initial price will be at the market ˆ we won't go online and drop everybody's electric bill. The difference is the price in 10 years will be pretty close to what it is in the beginning.
Sometimes I ask why I'm doing this at the ripe old age of 63, and it's because I'm really fascinated with the technology, and I'm also the kind of person who hates complaining and not doing. Everybody's talking about global warming and global climate change, and here's a chance to do something about it.
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