By Ted Nesi

PROVIDENCE, R.I. (WPRI) - Executives at the renewable-energy firm Deepwater Wind don’t see any logic in critics’ efforts to link it with 38 Studios because the wind company is relying on private investors to finance its project and is being closely scrutinized by regulators.

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• Related: Q&A: How the Deepwater Wind-National Grid deal works (Aug. 11, 2010)

(rendering: Deepwater Wind)

Attorney General Patrick Lynch finishes his second term this week with an uncertain future but one of the biggest political war chests in the state. (He had $417,056 on hand as of Sept. 30.) Lynch’s gubernatorial bid fizzled out last year and although most people assume he will make another run for office eventually, there’s no clear target for him on the current landscape. Still, those things can change quickly.

Meanwhile, it seems that one way Lynch plans to keep his name in the headlines is by positioning himself as the most high-profile opponent of the Deepwater Wind deal with National Grid, as he emphasized in his exit interview with the Projo’s Tracy Breton:

[Lynch successor Peter] Kilmartin has said he will end the state’s current Supreme Court appeal of Deepwater’s offshore-turbine project. But Lynch says he will press it as a private citizen, adopting the brief already filed by his office, and hopes to get former attorneys general Arlene Violet and James E. O’Neil to join with him.

In an e-mail, Violet told me that while she hasn’t spoken to Lynch yet about joining the brief, she shares his concerns. “If he asks me to join him re the brief, I will read it, and, if it expresses the analysis I have seen him verbalize, I would join him as amicus curiae at that point,” she said. (Violet is also a panelist on WPRI 12′s “Newsmakers” program.)

Lynch’s original brief against the Deepwater agreement called it one of the worst decisions in 224 years, and on New Year’s Eve his office issued a press release calling on seven other organizations – TEC-RI, Common Cause, AARP, RISC, Operation Clean Government, Save the Bay, and the League of Women Voters – to join him in challenging the constitutionality of the law that pushed it forward. Lynch described the project as “this $400 million boondoggle.”

Lynch has the field pretty much to himself in opposing the Deepwater agreement. Gov.-elect Lincoln Chafee supports it, as do Kilmartin, Gov. Don Carcieri, House Speaker Gordon Fox and Senate President M. Teresa Paiva Weed. And unlike the unpopular 38 Studios deal, 56% of Rhode Islanders approved of the Deepwater project in our September WPRI 12 poll.

Still, if opinion turns against the Deepwater project it looks like Lynch could be well-positioned to benefit. With Democrats already scratching their heads about how to run against Chafee in 2014, could Lynch be an anti-establishment candidate for the party in 2014?

Deepwater Wind announced today that it is doubling the proposed size of its larger offshore wind farm to 200 turbines. The expanded project – which is different from Deepwater’s small pilot wind farm planned off Block Island – could generate up to 1,000 megawatts of electricity about 18 miles off Rhode Island’s coast. The Providence Journal’s Alex Kuffner offered a thorough rundown of the latest iteration in today’s paper, and I recommend his article.

This morning I called Matt Kaplan, an associate director at the Cambridge consultancy IHS Emerging Energy Research who covers the North American wind energy industry. I asked him for his take on Deepwater’s announcement, what challenges the company faces in moving forward, and how this fits into the broader offshore wind picture here in New England (think Cape Wind). Here’s a transcript of our conversation, lightly edited for clarity.

What’s your take on Deepwater Wind’s big announcement today?

The project itself is of a very large scale – 1,000 megawatts would put it up there as one of the largest proposed offshore wind projects in the U.S. So it’s a very ambitious and aggressive announcement, especially in light of some of the challenges that offshore wind has faced in the past couple of years, and that includes the permitting process, which has traditionally been a challenge, as well as making project economics work.

(more…)

Deepwater Wind’s proposal to build a small demonstration wind farm off Block Island is currently tied up the Rhode Island Supreme Court. But CEO Bill Moore, speaking at a Reuters conference in Boston yesterday, remains optimistic that the price of offshore wind will come down in the coming years:

“Prices are coming down,” said Bill Moore, the chief executive officer of Deepwater Wind, which plans to build a small installation of five to eight turbines off Block Island, as well as larger projects further off Rhode Island and off New Jersey.

“If you look back over the 20 years that commercial wind has been built onshore, over that time we saw declines in pricing that were on the order of 60 to 80 percent and I think over a similar period we’ll probably see declines in our pricing of a similar amount,” Moore said. “It just has to do with scaling up the industry.” …

Deepwater, which is backed by hedge fund D.E. Shaw, plans to sell electricity to utility National Grid at a rate of up to 24.4 cents per kilowatt hour. That is higher than the 18.7 cents per kilowatt hour rate the larger Cape Wind project has agreed, also with National Grid.

“Block Island is an expensive project. It has some obvious dis-economies of scale,” Deepwater’s Moore said. “We knew that going in, but it still serves a useful purpose.”

The upside to starting with a small-scale wind farm is that it will be cheaper to build, Moore said. The developers expect the installation to cost $205 million and plan to seek $150 million in construction loans to fund it.

That’s far lower than the tab of more than $1 billion it will likely take for Deepwater’s other proposed projects, installing about 100 turbines off the coasts of Rhode Island and New Jersey.

Legal troubles aside, the Deepwater project is supported by more than half of Rhode Island voters, according to our WPRI/Fleming poll last month.

D.E. Shaw, the huge New York hedge fund paying for Deepwater Wind’s efforts to build two wind farms off Rhode Island, has run into financial problems and is now reviewing its investments. My story is up on WPRI.com:

The New York hedge fund backing Deepwater Wind, the company picked to build two wind farms off Rhode Island, has run into financial problems just as the project faces a court challenge.

D.E. Shaw & Co. fired 10 percent of its work force, or 150 people, to deal with a 46 percent plunge in the value of its assets, Bloomberg News and other outlets reported Tuesday. The fund’s holdings fell to $21 billion as of Sept. 1, Bloomberg said.

D.E. Shaw is also conducting a strategic review of its investments and operations, according to the Financial Times. The fund had sunk “tens of millions of dollars” into Deepwater Wind as of June, a company executive told The Block Island Times .

An exclusive WPRI 12 poll set for release tonight shows the Deepwater project is popular with Rhode Islanders, with 56 percent of likely voters saying they would be willing to pay an additional $1.35 to $3 per month for electricity to support it. Only 32 percent opposed doing so, and 12 percent were not sure.

No word on what impact – if any – this could have on the company’s projects here, which are already facing a court challenge expected to stretch into next year.

Jeff Grybowski

Jeff Grybowski, who served in the Carcieri administration from 2003 to 2007 including 10 months as the governor’s chief of staff, has joined Deepwater Wind as its chief administrative officer and senior vice president for strategy and external affairs, the company said today.

Deepwater, of course, is the hedge fund-backed wind power company picked by Carcieri in September 2008 to develop two offshore wind farms with the state’s enthusiastic (but non-financial) support. Bill Lynch, now a candidate for Congress, criticized Grybowski’s involvement with Deepwater back in 2008 when he was head of the R.I. Democratic Party. It will be interesting to see if he or his brother, Attorney General Patrick Lynch – another Deepwater critic – will sound off on Grybowski’s hiring.

Deepwater also announced that it is now officially a Rhode Island company, with its Providence office serving as its corporate headquarters; before, the HQ had been in Hoboken, N.J., near the New York City base of the company’s chief financial backer, D. E. Shaw. The Hoboken office remains open. No sign of the press release on Deepwater’s website yet.

On a related note, all this news comes the same day Carcieri co-wrote an op-ed in Politico calling on Congress to approve a federal Renewable Electricity Standard.

Update: No mention of Grybowski’s hiring in a Carcieri press release issued moments ago praising Deepwater’s decision to make Providence its corporate home. “This decision by Deepwater Wind to relocate its corporate headquarters to Rhode Island is further proof of the company’s commitment to help us develop the nation’s first offshore wind farm and create good paying jobs for Rhode Islanders,” the governor said. (Carcieri also put Grybowski on the Judicial Nominating Commission last year.)

Update #2: Checked in with a Deepwater spokeswoman to double-check on what the corporate headquarters relocation really means. The company’s senior management team will indeed by based here in Providence, while the Hoboken office will be “a development office only,” she said.

(image credit: Hinckley Allen Snyder LLP)

Attorney General Patrick Lynch joined an environmental organization and two businesses on Monday in asking the Rhode Island Supreme Court to throw out the R.I. Public Utilities Commission’s Aug. 11 decision to sign off on a deal between National Grid and Deepwater Wind.

And in his statement asking the court to take up the case, Lynch draws an eye-popping historical parallel:

Not since the events surrounding the case of Trevett v. Weedon [sic] (1786) – in which the Justices of this Court’s predecessor were summoned to the floor of the General Assembly to face firing for non-implementation of an enactment that abridged specific trials and stripped the court of jurisdiction – has the judicial function been so threatened in this state. …

So too, the current affair – featuring an attempt at retroactive legislative dictation of the result of a case-specific fact question that had been adjudicated – will have an impact far beyond the parties. This case provides an opportunity for the Court to illuminate Rhode Island’s ongoing exploration of the separation-of-powers.

Now that’s what I call a rip-roaring writ of certiorari.

Update: So, what happens next? First, the Supreme Court has to decide whether to take the case. If it does, the two sides will have to file their opposing briefs and then argue the case before the justices. Considering that Deepwater wants to get going on building the wind farm, they may ask for an expedited review, which would likely see the case decided before the end of the year. But that’s just an informed guess.

Updated #2: Turns out the AG’s office was writing a little too hastily – the correct name of that post-Revolutionary War case they referred to was Trevett v. Weeden, not Weedon. But Wikipedia reports (and other sources confirm) that Weeden was one of the cases that set the stage for Marbury v. Madison, the famous 1803 U.S. Supreme Court case that established the principle of judicial review.

I just posted a lengthy explainer article on the main site with answers to questions about the deal approved today between Deepwater Wind and National Grid for the first of the two wind farms Deepwater has proposed off Rhode Island. Find out when the wind farm is supposed to be built, how much its energy will cost, what the price will be for consumers, and more.

Check it out!