Cape Wind Needs Buyers (USA)

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.

But the 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.

The top prospect for Cape Wind is the state’s second-largest electric utility, NStar. But NStar is uninterested and says it can find cheaper renewable power elsewhere.

“It’s not that we’re for or against Cape Wind at all,” said NStar spokeswoman Caroline Allen. “We just want to make sure that we are promoting renewables in the region … but also being mindful of costs for our customers.”

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 that’s far greater, for instance, than Maine’s 132-megawatt Kibby Mountain wind farm, the largest wind farm in New England. Also, Cape Wind’s projected start date in late 2012 has it producing the green electricity needed to fill state renewable-power mandates 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, said wind-energy analyst Mark Kaplan, an associate director at IHS Emerging Energy Research.

Mr. Kaplan also questioned whether Cape Wind’s search for a second customer has broad implications for offshore wind expansion. Just this month, developer Deepwater Wind announced plans for a 200-turbine, 1,000 megawatt (1 gigawatt) project off Rhode Island.

“If Cape Wind is having difficulties identifying a second buyer, who’s going to buy a gigawatt of offshore wind?” Mr. Kaplan asked.

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.

“Really, are they going to choose to be on the wrong side of history here?” she said.



Source: washingtontimes, December 20, 2010