CAPE WIND PRICE CONTROVERSY

Wanted: Buyer for controversial Cape Wind energy
Jay Lindsay, December 19, 2010 (AP via Washington Post)

"Cape Wind has outlasted a decade of government review, a slew of court brawls and fierce opposition from mariners, fishermen, Indian tribes and Kennedys just to win the right to sell its wind-fueled electricity…Now, all it needs are customers.

"Last month, the nation's first offshore wind farm nailed down its first buyer when the Massachusetts Department of Public Utilities approved a deal that sees Cape Wind selling half its power to National Grid, the state's largest electric utility…[T]he other half of the Cape Wind project's electricity remains available with no obvious takers, raising the possibility of a smaller project with pricier power."

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"The top prospect for Cape Wind is the state's second-largest electric utility, NStar. But Nstar…says it can find cheaper renewable power [for its customers] elsewhere…Price is always an issue with offshore wind, which costs more partly because it's expensive to build and maintain massive turbines at sea. The 468-megawatt Cape Wind, which is expected to produce enough power for 200,000 homes in average winds, is estimated to cost at least $2 billion to construct…In its 15-year deal, National Grid agreed to pay 18.7 cents per kilowatt hour for Cape Wind power beginning in 2013, with a 3.5 percent annual increase. The starting price is twice what National Grid pays today for power from fossil fuels, and regulators say the contract will add about 1.7 percent to its residential customers' bills.

"Though its price is higher, Cape Wind has big selling points, including a large generating capacity…[and] the green electricity needed to fill state renewable power mandates [in 2012] years before any other U.S. offshore project…Without other takers, Cape Wind would almost certainly have to build fewer than its proposed 130 turbines…[and then] the price goes up per lost turbine, to a maximum 19.3 cents per kilowatt hour."

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"…[T]his month, developer Deepwater Wind announced plans for a 200-turbine, 1,000 megawatt project (1 gigawatt) off Rhode Island…Deepwater has said the project's large size will help lower the price of its power…[estimated at] the "mid teens" in cents per kilowatt hour…Sue Reid of the Conservation Law Foundation, a Cape Wind advocate, estimates Cape Wind has six months to a year to find new buyers or face the disappointing prospect of building a smaller project. But she's certain that buyers, including perhaps NStar, will want to be part of a new and badly needed clean energy industry [and not be on the wrong side of history]…

"Cape Wind has been assailed since it was proposed in 2001…[O]pponents promptly sued the Obama administration after it approved the project…[S]tate utility regulators wrote that Cape Wind's power price is ‘expensive’ but cited numerous benefits that make Cape Wind ‘cost effective,’ including about 160 permanent jobs and a stable price that acts as a hedge against volatile fossil fuel prices…[and] said regional utilities simply won't be able to meet requirements to increase renewable energy sources without Cape Wind and the offshore industry it will kick off…Without NStar, Cape Wind could conceivably cobble together buyers from around the Northeast, including utilities, power suppliers, even the government. But NStar is the best prospective customer…"