The Associated Press May 7, 2012, 1:53PM ET

Wind giant Gamesa passes on Va. wind project

Global wind giant Gamesa said Monday it will build a wind turbine prototype in the Spanish Canary Islands instead of Virginia, citing the sluggish pace of U.S. development of offshore winds.

The Spanish company won Virginia regulatory approval in March to construct the 479-foot, 5-megawatt wind turbine prototype off the Eastern Shore. It was viewed as a significant step by the wind technology company to help develop the nascent U.S. wind industry, especially in waters off Virginia.

In a statement posted on the company's website, however, Gamesa said it has chosen the Canary Islands south of Spain and off northwest Africa for the prototype.

While still committed to developing a U.S. market, a Gamesa spokeswoman said the slow pace of regulatory actions, uncertainty over the future of tax credits for offshore development and the lack of a federal energy policy all conspired against investment in the prototype.

"Without a mature offshore wind market in the United States, it is extremely difficult to justify the enormous expenditure of capital and utilization of engineering and technical resources that would be needed to build and install a prototype in the U.S.," Gamesa spokesman Susana Sanjuan wrote in an email to The Associated Press.

The prototype was to rise in the lower Chesapeake Bay, about three miles off the town of Cape Charles, Va. It had a late 2013 completion date, which would have made it the first wind turbine in offshore U.S. waters.

The prototype was the first publicly announced product to emerge from a partnership between Gamesa and Huntington Ingalls Newport News Shipbuilding. Gamesa also announced that partnership will "wind down" by year's end with the design of a new offshore platform completed.

Proponents of developing offshore winds have said Virginia's deep water port and shipbuilding facilities are big assets for a slowly emerging industry that could create up to 10,000 jobs.

Dominion Virginia Power told the federal government this year that it is interested in leasing areas off the coast of Virginia to develop wind energy. The state's largest electric provider has designs on the entire 113,000 acres that the government is making available about 24 miles off the Virginia coast.

The company said the leases have the potential of generating 1,500 to 2,000 megawatts of electricity, enough energy to power 500,000 households.

The Gamesa prototype was to put to the test new offshore technology for global commercial markets scheduled for use in 2015.

The prototype is larger than most offshore turbines and the Virginia test unit was intended to ensure it can withstand extreme open Atlantic weather conditions.

In a statement, Gamesa's chairman and CEO described the U.S. wind market as "developing at a firm pace."

"However," said Jorge Calvert, "demand is being tempered by economic and financial factors and the difficulties being encountered by developers in accessing credit. Based on the current situation, the U.S. market appears to be set to develop later than others."

Virginia Gov. Bob McDonnell, who has made energy development a cornerstone of his Republican administration, said federal regulatory reforms have not kept pace with the state's quicker permitting for energy projects.

"The fact is, Virginia and Gamesa did their parts," McDonnell said in a statement. "But this project will not move forward due to the ongoing lack of a true national energy policy and a global market that has become more difficult for offshore wind the past few years. That is disappointing."

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Steve Szkotak can be reached on Twitter at http://twitter.com/sszkotakap


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