Deepwater to start building R.I. wind farm in 2010

NEW YORK (Reuters) - Deepwater Wind expects to start construction in 2010 of a wind farm off the shore of Rhode Island that could cost more than $1.5 billion, state Gov. Donald Carcieri said in a release on Thursday.

The project would generate about 1.3 million megawatt-hours a year or about 15 percent of the state's electricity use.

Deepwater would build the wind farm in two phases.

First, it would install turbines capable of generating about 20 megawatts in state waters beginning in late 2010 with operation expected in late June 2012.

In phase two, Deepwater would install turbines in federal waters capable of producing 1.3 million megawatt-hours a year within three years of approval of the U.S. Department of the Interior's Minerals Management Service.

The exact location of the wind project will be determined by the state's Special Area Management Plan permitting process led by the Rhode Island Coastal Resources Management Council in partnership with the University of Rhode Island's Graduate School of Oceanography. That process will take about two years, according to the governor's release.

In 2006, Gov. Carcieri said he wanted to boost the use of renewable sources of energy to 20 percent with wind energy making up about 15 percent.

Rhode Island selected Deepwater in 2008 after reviewing seven bids on its request for proposals to build an offshore wind farm.

To help seal the deal, Deepwater pledged to establish a regional development office in Rhode Island and build a manufacturing facility in Quonset that would create up to 800 jobs with annual wages of $60 million. The Quonset facility will manufacture the support structures upon which the turbine and its tower are based.

Rhode Island hopes Deepwater's presence will be a catalyst to attract additional jobs in the renewable energy sector.

Deepwater was established to develop utility-scale offshore wind projects in the northeast United States. It is developing projects in other states including a 350 MW offshore wind farm in New Jersey.

The major investors in Deepwater are Newton, Massachusetts-based First Wind, a developer of onshore wind projects in the United States, and New York-based capital investment firm D.E. Shaw & Co.

(Reporting by Scott DiSavino; Editing by David Gregorio)