'One Yard Line' For Cape Wind?

by |April 28, 2011

On Friday, March 25th, Jim Gordon, the developer of Cape Wind, spoke at Columbia University about his experience working to get the first offshore wind farm in the US built. The project, consisting of 130 3.6-Megawatt wind turbines, would be installed off the coast of Cape Cod on the Horseshoe Shoal in Nantucket Sound. In average winds, these turbines would generate enough power to meet three quarters of the energy needs of the Cape and the surrounding islands. On April 19th, the federal government approved the development’s construction and operations plans, paving the way for construction to begin as early as this fall, more than 10 years after Cape Wind was first proposed.

A key theme of Mr. Gordon’s talk, and one that will be familiar to anyone following the Cape Wind saga, was what he called the “exhaustive regulatory gauntlet” through which the project has had to pass.  With windmills in federal waters and related infrastructure in Massachusetts, the project required approvals from no fewer than 17 federal and state agencies.

Even intra-jurisdiction processes were complicated. At the federal level, for example, with the passage of the Energy Policy Act of 2005 authority to grant federal approval for offshore wind projects was moved from the U.S Army Corps of Engineers to the agency formerly known as the Minerals Management Service (MMS). MMS found that the initial environmental impact statement (EIS) prepared by the U.S. Army Corps of Engineers was insufficient in the resource areas and issues covered, leading to 2.5 years of further hearings and drafts of the EIS. In the end, all of the studies concluded that the project would create many public benefits with limited negative impacts.

Ultimately, it took an 800-page final EIS and almost a decade (2001-2010) for the project to attain all the necessary major local, state, and federal approvals. In contrast, Gordon described witnessing a 30-day approval process for a deep-sea oil platform, including an EIS of a mere 17 pages.

The protracted nature of the process is partly attributable to the fact that Cape Wind is the first development of its kind in the U.S. Indeed, Mr. Gordon noted proudly that his and his partners’ efforts have contributed to the development of a regulatory framework for offshore wind in the US, so that subsequent projects might navigate the process with greater speed.

But at each of the many steps of the approval process, Cape Wind has also faced a well-organized and well-articulated opposition, led by the Alliance to Protect Nantucket Sound. The Alliance was formed in 2001 in response to the Cape Wind proposal, and describes itself as a nonprofit environmental organization aiming “to protect Nantucket Sound in perpetuity through conservation, environmental action, and opposition to inappropriate industrial or commercial development.”

The Alliance and other opposition groups continue to fight the wind farm via lawsuits and appeals of legal rulings and agency decisions favorable to Cape Wind. Mr. Gordon noted that these groups have filed at least 15 lawsuits. While all the rulings have supported the continuation of the project, construction cannot begin while legal action continues.

Opposition arguments have generally emphasized possible environmental impacts and the disturbance of coastal views (see this Daily Show clip). Potential negative economic impacts have become more of a focus of these arguments as the project has progressed. For example, a recent skirmish erupted over the difference in energy prices in long term wind energy contracts signed by Massachusetts’ two largest electric utilities. One of the utilities, NStar, agreed to buy 109 MW of power from three onshore wind farms at a rate of approximately 10 cents/kwh while the other, National Grid, signed a 15 year power purchase agreement for 50% of the power (upwards of 200 MW/year) generated by Cape Wind, at a price of 18.7 cents/kwh. This has led some to argue that the project is not cost effective. In its memo approving the National Grid contract, the MA Department of Public Utilities (DPU) explicitly acknowledged the price premium commanded by Cape Wind energy, but concluded that the other benefits of the project make it worthwhile for ratepayers. The Alliance is appealing DPU’s decision.

Having gained both regulatory approval and partial financing, Gordon said the development of Cape Wind stands “on the one yard line.” The game isn’t over, but with almost 10 years of struggles behind him, it appears the developer regards the 11 unresolved legal challenges and the unsold 50% of planned energy production as final hurdles that the project can and will surmount.

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