First US Offshore Wind Farm Wins Federal Funds, Courtroom Fights
For over a decade, Cape Wind’s proposal to build a turbine farm off Cape Cod has generated excitement and opposition in large measures—but no power. New federal funding and recent courtroom victories may soon change all that, and launch America’s offshore wind industry in earnest.
The Department of Energy’s (DOE) Loan Programs Office has announced a conditional commitment to Cape Wind, a 130-turbine project slated for the shallow waters of Nantucket Sound. The $150 million loan guarantee would support construction of the 360 megawatt (MW) wind farm and might finally help the bid to spin turbines above the waters of Nantucket Sound.
“I think a big significance of the DOE’s conditional guarantee is that it makes the U.S. government a participant in the financing of America’s first offshore wind farm,” said Cape Wind spokesman Mark Rodgers. “That’s something that you see quite often in Europe, and I think it sends a message to other financial stakeholders about the confidence the government has in us. After all, although it was different agencies the government also approved the project and issued us our lease. We believe this commitment will help us to continue to attract additional commercial sector financial players.”
With commitments already in place for approximately 60 percent of Cape Wind’s $2.5 billion cost, Rodgers said Cape Wind expects financing to wrap up by year’s end. Initial construction of the onshore cable route could also begin before the end of 2014, he added, if final project financing is completed this fall. “With that schedule, as it stands now, ocean construction would begin in 2015 and we’d expect to commission at least a portion of the project and start producing electricity by the end of 2016, with the full project commissioned in 2017.”
Cape Wind has been fully permitted for several years. Now the long lineup of legal challenges it has weathered, dozens of suits dating back to 2003, may finally be drawing towards a close as well. In March four National Environmental Policy Act lawsuits brought by the Alliance to Protect Nantucket Sound, Public Employees for Environmental Responsibility, the town of Barnstable, and the Wampanoag Tribe of Gay Head (Aquinnah) were decided resoundingly in favor of Cape Wind by United States District Judge Reggie Walton. An appeal seems likely, but opponents of the project may finally be running low on further legal options.
“We’ve had a slew of major decisions, all of which have gone in our favor,” Rodgers said. “To date we’ve won 26 legal challenges against this project. Our opponents have been very litigious, but they have an overwhelmingly losing track record.” Rodgers added that while further legal appeals are probably inevitable, he believes that the recent legal decisions have moved Cape Wind past the point where further courtroom wrangling could affect the schedule.
A Shift in the Wind?
Offshore wind advocates see Cape Wind as the vanguard of a critical, and huge, source of green energy—much of which happens to be located in areas like the Northeast coast, which lies close to millions of energy consumers. (See related: Banking on Connections to Spur Offshore Wind.”)
“Today’s announcement of a conditional commitment to the Cape Wind project demonstrates our intent to help build a strong U.S. offshore wind industry,” said Secretary of Energy Ernest Moniz in a July 1 statement.
DOE estimates that offshore winds near the nation’s coasts could provide a potential 4,000 GW of electricity—a staggering amount that’s four times today’s total nationwide generation capacity. To date, all that power remains untapped. If it comes online, Cape Wind would be a small operation in terms of the national grid but a large local player, able to provide some 75 percent of the electricity consumed on Cape Cod, Nantucket and Martha’s Vineyard.
“If built, the Cape Wind Project could transform the fishing ports and manufacturing towns in Eastern Massachusetts into a hub for a vibrant U.S. offshore wind industry. The lessons that could be learned from this project can help catalyze similar projects in other areas of the U.S. with excellent offshore wind resources,” said Peter Davidson, executive director of the DOE Loan Programs Office.
“As we’ve seen with onshore wind and utility-scale solar, as more projects are built, prices come down.” Davidson added. His department’s Wind Program has also elected to fund three projects, for deployment by 2017, that can help drive offshore wind development from small scale demonstrations to commercial scale operations. (Those projects are Dominion Virginia Power, Fishermen’s Energy Atlantic City (NJ) Windfarm, and Principle Power (OR) Windfloat.)
In Europe, commercial offshore wind is more than two decades old and the booming industry is the fastest growing power sector. According to the European Wind Energy Association (EWEA), 73 offshore farms in 11 nations currently produce more than 7,300 MW and have capacity for some 27 terawatt hours. That’s enough power to supply 7 million homes, or the population of the Netherlands. Sixteen additional farms that are under construction will provide an additional 4.9 gigawatts of power capacity.
Construction of the first commercial offshore wind operation in America involves endemic challenges, but Cape Wind also has faced a very determined human opposition. Detractors have included a who’s who of those living or summering along these scenic shores. (Related: Cape Wind Deadline: Headwinds for Offshore Turbines.)
Notables leading the fight against Cape Wind included the late Massachusetts Senator Edward M. Kennedy and his nephew, environmental lawyer Robert F. Kennedy Jr. The bipartisan opposition has also included billionaire businessman and Cape Cod denizen William Koch. Koch told CommonWealth magazine last year that he had put “well over” $1 million into fighting Cape Wind as one of the backers of the Alliance to Protect Nantucket Sound. His aim, he said, has been to “delay, delay, delay.”
Much of this opposition was focused on preserving the classic coastal views and aesthetics that some fear will be marred by the offshore installation of the 440-foot (135-meter) turbines.
But the project’s potential environmental impacts also drew detractors and spawned years of analysis and study. Most environmental groups have come to support Cape Wind’s ability to produce clean energy, and been satisfied that environmental impacts can be mitigated.
For example, a decade of study convinced the once-skeptical Massachusetts Audubon that the project would pose no undue threat to birds and other wildlife. And in 2012 Cape Wind and other wind developers signed an agreement with environmentalists to mitigate underwater sound and the impact of ship traffic on migrating, feeding, and breeding right whales in the North Atlantic. (Related: As U.S. Eyes Offshore Wind Development, Whales Get New Protections.)
In recent years much Cape Wind opposition has centered on the higher costs consumers will be asked to pay for electricity generated offshore. Utilities NSTAR and National Grid have contracted to buy Cape Wind power at 19 cents per kilowatt hour, with a 3.5 percent increase each year. Those contracts cost considerably more than land-based power, but are in line with the U.S. Energy Information Administration estimates that on a per-megawatt-hour basis, new offshore wind energy will cost 2.6 times more than onshore wind power and 3.3 times more than advanced natural gas plants.
The high costs don’t sit well with those opposing Cape Wind.
“In 2010, Cape Wind signed exorbitant price contracts with the Massachusetts utilities and it became very clear that this power wasn’t cheap at all,” Alliance President and chief executive Audra Parker told National Geographic last year. “At that point, opposition started to increase across Massachusetts among people and business concerned with the possibility of rising electric bills.”
“We believe that there are many obstacles that will prevent [Cape Wind] from ever being built; financial obstacles, legal challenges, and growing objections to that specific project in that specific location at that specific cost,” she added. (See related stories about wind energy concerns, “Federal Study Highlights Spike in Eagle Deaths at Wind Farms,” “Wind Farm Faces Fine Over Golden Eagle’s Death,” and “Hope for Stemming Wind Energy’s Toll on Bats.”)
But a legal challenge to that power purchase, brought by the Alliance, the Town of Barnstable, and other local groups, was recently quashed, another in the growing string of Cape Wind courtroom victories. In May a U.S. District Court judge ruled against the suit which sought to cancel the power purchase agreement with the state of Massachusetts, leaving the 15-year agreements in place. An appeal of the federal court decision is pending.
Cape Wind’s Rodgers acknowledged that current costs are higher than other forms of energy, but he stressed that Cape Wind is worth it as an investment in a future of clean, unlimited energy.
“Offshore wind is uniquely scalable to deliver large blocks of carbon free clean energy to urban populations on the U.S. East Coast,” he said. “It can do that more effectively than other sources of renewable energy and as we develop it the price will come down just as we’ve seen with other technologies.”