Firsts for Deepwater Wind

Three miles offshore of Rhode Island is the first commercial wind farm in the U.S.  The five turbines standing in the Atlantic Ocean near Block Island, powered up to a collective capacity of 30 megawatts in December 2016.  The wind farm built by Deepwater Wind has connected Block Island to the New England power grid for the first time. 

Block Island is one of many outer islands of the Rhode Island coast.  It is a popular destination for summer tourists who come to enjoy the ocean front and water sports.  As much as 40% of its 9.7 square miles is dedicated to conservation, giving the island a particularly natural atmosphere.  Indeed the northern most tip of the island, which is entirely undeveloped, is a resting stop for birds along the Atlantic migration route.

The birds of Block Island figure into another first for the Block Island Wind Farm.  Working with a mix of wildlife experts and environmentalists, Deepwater Wind has installed a wildlife tracking station on the platform of the easternmost wind turbine.  The station will collect data on tagged birds and bats that fly within a twenty mile radius.  Researchers affiliated with the U.S. Fish and Wildlife Service, the University of Rhode Island and the University of Massachusetts Amherst have outfitted birds and bats with tiny, high-frequency transmitters.  Data captured by Deepwater’s tracking station as well as two stations located on Block Island itself will be used to better understand migration patterns of bird and bats.

Investors may not be so concerned about birds and bats than they are about power generation and earnings.  However, the cooperative agreement with wildlife constituents may be of significance for Deepwater’s position in the wind market.   The agreement could put the privately-held Deepwater Wind in a better competitive position by giving the company more immediate access to information on environmental impact.  It could also help burnish the company’s reputation.  Wind farms have come under strong opposition from some communities where there is public objection to turbine noise and blade hazards for wildlife. 

Deepwater Wind is a privately held company with majority owned by D.E. Shaw, an investment firm with over $40 billion under management. The company also got financial support from General Electric Energy Financial Services and CitiGroup.

The company has other projects in the development stage.  The South Fork Wind Farm off the northeastern shore of Long Island in New York will be an even larger off-shore wind farm with 90 megawatt capacity.  Deepwater also plans to begin construction of a wind farm off the Maryland shore that will have fifteen turbines with combined capacity of 120 megawatts.  Called Skipjack, this wind farm will be located far enough off-shore to have minimal visual impact from the Ocean City Pier. 

The Block Island Wind Farm has given Deepwater new visibility in the energy markets.  These other projects will take the company to a new financial level.  Deepwater Wind is a privately held company with majority owned by D.E. Shaw, an investment firm with over $40 billion under management. The company also got financial support from General Electric Energy Financial Services and CitiGroup for the Block Island Wind Farm.  With D.E. Shaw sponsorship, it is not likely to have too much trouble getting the needed capital for future projects. 

What is noteworthy for individual investors is the prospect that D.E. Shaw will begin looking for an exit through a public offering of Deepwater stock.  It is worthwhile checking in on Deepwater to track its progress. 

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.