Interview: Paolo Sammartino on how US Wind got into US wind
Our associate editor, Ilaria Valtimora, speaks to Paolo Sammartino of US wind about the challenges to the North American wind industry.
Who wouldn’t want free electricity?
In June 2018 we found out the answer: people in Maryland coastal resort Ocean City. Developer US Wind is looking to build a 268MW wind farm off the shoreline, but has faced opposition since early 2018 from local people that say the project would harm property values and tourism. US Wind recently offered free electricity to Ocean City residents in exchange for relaxing their opposition to the scheme, but they refused.
We spoke to Paolo Sammartino, executive vice president at US Wind, who said that he couldn’t say much about the dispute as he is still in talks with locals – “We are still working on it” – but that he’s still positive about the project, and offshore wind in the US. The scheme is part of a 2.2GW project portfolio off Maryland and New Jersey.
So how did US Wind get into US wind?
The question might look odd, but it isn’t as stupid as it sounds. US Wind isn’t actually as American as its name might suggest.
Rather, the developer is the US arm of Italian renewable energy company Renexia, which is part of Italian construction group Toto Holding. Renexia owns an onshore wind portfolio of 200MW in Italy and North Africa; and is working on Italy’s 30MW first offshore wind project in partnership with Belgian developer Belenergia.
Three years ago Renexia decided to diversify its portfolio, and Sammartino said that investing in offshore wind looked like the smartest choice to take advantage of Toto’s experience in building large infrastructure projects.
“Around three years ago, we looked at investing in offshore wind in the UK and in the German North Sea,” he explained. “However, in Germany we were discouraged by grid connection delays. In the UK, we thought that the country’s ROC (Renewable Obligation Certificate) system was too volatile”.
The result was that Renexia started looking at the emerging offshore wind market in the US – and early successes for its subsidiary gave it a foothold.
US Wind was successful in two offshore tenders. In Maryland, it secured the right to build an offshore project of up to 722MW, of which the current 268MW Ocean City scheme is the first stage; and, in New Jersey, it won rights to build an up-to-1.5GW project, which is still at an early stage of development.
The 268MW first phase of the Maryland project is set to consist of up to 32 turbines, and due to complete in 2021: “We have so far invested $25m of our own resources to develop the project and we are now looking at its financial close,” he said.
Sammartino added that this inward investment should help the offshore wind sector to appeal to the famously anti-wind President Trump: “Offshore wind projects in the US require an element of local content. For example, in Maryland, we are obliged to build steel manufacturing facilities in order to build our scheme. This generates investments that benefit the local economy and add economic value. We believe this is of interest to the current federal government”, Sammartino has argued.
Challenges in the US sector
But he added that the US offshore sector still has some challenges to overcome.
The most important one – no surprises here – is the development of an adequate supply chain, that would give developers and investors the access to the products and services they need to take projects to financial close, and then complete them.
He also said it was key to put in place a system of a power purchase agreements: “The US is a very competitive market. You have to compete for site control and then you have to compete for a revenue contract. It is important that the states put in place a PPA system to support the projects”.
This is especially relevant given the high initial cost that developers would have to sustain to build the schemes. For example, the New York is currently deciding how the state will be buying its first 800MW offshore wind, and PPAs and offshore wind renewable energy credits are both on the table.
And finally, there are objections from local residents – as the firm’s Maryland project shows. Negotiating that is the first hurdle to delivering its planned 2.2GW.