Maine’s handling of Statoil called a ‘cautionary tale’ for states interested in offshore wind development

Maine continues to make headlines for how the Legislature handled its relationship with Statoil, the Norwegian company that had plans to deploy a $120 million pilot offshore wind project in the Gulf of Maine.

The headlines do not cast Maine or the Legislature’s actions in the most favorable light.

In a column published on The Huffington Post, Lewis Milford, president of the Clean Energy Group, a Vermont-based nonprofit that focuses of clean energy technology and financing, calls Maine a “cautionary tale” that other states should heed.

At issue is LD 1472, a bill the Legislature passed in late June at the behest of Gov. Paul LePage. The law forces the Maine Public Utilities Commission to reopen the process it had used to select an offshore wind development project to receive state support in the form of a favorable power purchase agreement. The PUC had closed the process in January, having finalized a term sheet with Statoil.

The University of Maine is also developing offshore wind technology and currently has a pilot project in Castine Harbor, which recently became the first grid-connected offshore wind turbine in the Americas to provide electricity to the power grid. However, UMaine was not prepared to submit a proposal for ratepayer support when the PUC originally opened up the bidding process in 2010.

Despite the fact the PUC had already finalized a deal with Statoil (though no contract had been signed), LePage wanted UMaine to be able to compete for that ratepayer support.

“The hard-working citizens who fund the University every year would be pleased to see that their ratepayer dollars are going to a project that will benefit Mainers, rather than subsidizing a foreign oil company,” LePage said in a statement regarding the bill, LD 1472. “Our own university has made significant progress in offshore wind technology recently and we have already invested millions into this research. I am pleased to sign this bill, which allows the University to compete on a level-playing field and permits the PUC to determine which one makes the most sense for Maine’s economy.”

Milford believes LePage’s use of the term “level-playing field” is ironic considering his actions, and those of the Legislature, are sending the exact opposite message to the international business community, that Maine supports a level-playing field only when it suits the politicians.

Following the passage of LD 1472, Statoil announced it was putting its Maine project on hold because of “the risk and uncertainty” created by the new law.

Milford writes: “Ignoring the fact that allowing a state-funded institution to compete with private industry is a strange position for a … pro-business administration to take, the real problem is the state’s changing the rules after the fact.”

He continues: “You can spin this any way you like, but to the worldwide business community watching all this, Maine has reneged on a deal with a private company that committed to invest hundreds of millions of dollars in our state.”

As I’ve previously reported, it’s estimated that at least a billion dollars will be invested in offshore wind projects around the world in the next two or three years. Maine has a shot of getting a piece of that pie.

Other states, such as Maryland and New Jersey, also are fighting to attract that investment. It’s to those states that Milford directed his column.

“Hopefully, Statoil’s offshore wind ambitions will be realized, in Maine or otherwise. But this should be a cautionary tale to other states. The economic benefits associated with the offshore wind supply chain will be a huge boon to whichever states are first movers in the U.S. offshore wind industry,” he writes. “Muddling the forecast for project developers will squash those opportunities.”

Whit Richardson

About Whit Richardson

Whit Richardson is Business Editor at the Bangor Daily News. He blogs about Maine business, entrepreneurs and the economy.