The Maine Public Utilities Commission (PUC) on Wednesday approved primary contract terms of power purchase agreements (PPAs) for Ocean Renewable Power Co.’s (ORPC’s) 4-MW Maine Tidal Energy Project in Washington County and directed three investor-owned utilities to negotiate 20-year PPAs with ORPC. Those deals could be the first long-term PPAs for tidal energy in the U.S.

The PUC’s order directs Maine utilities Bangor Hydro, CMP, and Maine Public Service to negotiate 20-year PPAs with ORPC. Many terms of the resulting contracts will need to be worked out, but the price is firm, noted law firm Preti Flaherty.

Utilities will pay 21.5 cents per kilowatt-hour for the tide-generated electricity in the first year; this base price of 21.5 cents will escalate at 2% per year, reaching a price of about 39 cents per kWh in the final contract year. “By way of comparison, the Cape Wind offshore wind PPA approved in Massachusetts starts at 18.7 cents per kWh, with a 3.5% annual escalator over its 15 year term,” the firm said. “The ORPC initial rate is over twice the average rate currently paid by Maine utility customers on ‘standard offer’ default service, or about 5 times higher than the current wholesale price in the New England market.”

Yet, for ORPC, the contract is a “significant boon,” the firm said. “Securing a 20-year power purchase agreement should greatly assist the developer in securing financing for the project. This project is designed as a demonstration or pilot project, but may be able to serve as a proof that ORPC’s technology and installation systems will work on a larger scale.”

In a statement on Wednesday, ORPC agreed: "This historic PUC decision is vital to the commercialization of tidal energy in Maine, and underscores Maine’s industry leadership in the U.S. and abroad. It also formally recognizes the substantial benefits of tidal energy. The PPAs will greatly enhance ORPC’s ability to attract the additional investment needed to complete the project’s build-out over the next four years.”

The PUC’s decision follows the unanimous passage of the "Recommendations of the Governor’s Ocean Energy Task Force" in April 2010, an action that made tidal energy a state priority.

Installation of the first phase of the Maine Tidal Energy Project began in March 2012 with the installation of the bottom support frame for the first grid-connected, commercial TidGen Power System at ORPC’s Cobscook Bay site near Seward Neck, Lubec. ORPC expects to have the TidGen Power System installed by late summer, and to begin delivering electricity under the PPAs by Oct. 1, 2012.

ORPC said it would install four additional TidGen devices at the same site in fall 2013, creating a five-device TidGen Power System with a design capacity of 900 kW. In addition to Cobscook Bay, ORPC’s Maine Tidal Energy Project includes expansion into nearby Eastport- and Lubec-area tidal energy sites in Western Passage and Kendall Head, Maine. When completed, the project will have a capacity of 4 MW.

Sources: POWERnews, Maine PUC, Preti Flaherty, ORPC