By now, you’ve undoubtedly heard of Cape Wind. And you may have seen that yesterday the project moved one step closer to actually getting built, with an agreement between the state and utilities NStar and Northeast Utilities, that would allow the two to merge in exchange for purchasing 27.5% of Cape Wind’s electricity.
But if you’re fuzzy on the details about Cape Wind, you’re not alone. Here’s everything you need to know to speak intelligently about it:
What is Cape Wind?
Cape Wind is a proposed offshore wind farm to be built on Horseshoe Shoal in Nantucket Sound by Energy Management Inc. (EMI), a private developer. It is expected to be the first of its kind in the U.S.
Cape Wind would include 130 wind turbines about five miles offshore, and would generate up 420 megawatts of power, and 174 megawatts on average, according to EMI. At average output, that equates to 75% of the electricity demand of Cape Cod, Martha’s Vineyard, and Nantucket. A report by Charles River Associates, commissioned by Cape Wind, states that the project could provide 1% of New England’s electricity.
Why Hasn’t it Been Built Yet?
Regulatory Approval: The project was first proposed in 2001, but has been delayed by the glacial pace of state and federal approval, which is due in large part to the fact that it is the first such project in the U.S. In 2010, Secretary of the Interior Ken Salazar approved the project, clearing the main federal roadblock. Opposition to the project (more on that below) has led to appeals at various points in the process, and aspects of the project’s approval have appeared before the Massachusetts Supreme Judicial Court (SJC) multiple times. Most recently, the SJC upheld a deal between National Grid and Cape Wind for the former to purchase half of the project’s electricity. Cape Wind is expected to receive the green light from the Federal Aviation Commission shortly, which should put it in the clear in terms of regulatory approval.
Finding Buyers and Financiers: In order to attract the project finance required to begin construction, Cape Wind needed to find buyers for the power it would produce. Specifically, it needed long-term contracts – Power Purchase Agreements (PPAs) – with utilities. In 2010, National Grid, one of the state’s largest utilities, agreed to buy half of Cape Wind’s power. With that agreement recently upheld by the state’s Supreme Judicial Court, the project still needed to find buyers for the other half. The announcement yesterday that the soon-to-be-merged NStar and Northeast Utilities would buy another 27.5% makes it substantially easier for the project to attract financing and thereby begin construction. Construction is expected to take about two years.
Why is it Controversial?
Local Opposition: Much of the opposition to Cape Wind has been from local residents, organized by The Alliance to Protect Nantucket Sound, a nonprofit created specifically to oppose the wind farm. The Alliance points out that views from parts of the shoreline would be changed, which is true (rendering to the right), although whether for the better or the worse is subjective. It also cites a variety of environmental concerns, including the disruption of marine life, as well as public safety and costs (more on that below).
A report by the National Renewable Energy Laboratory (NREL) considers some of the concerns around offshore wind projects (page eight) and suggests that many of these concerns can be effectively managed and are relatively minor compared to other energy sources.
Cost: Electricity generated by offshore wind is indisputably more expensive at present than traditional energy sources, and roughly double that of onshore wind (more on that below). But the question of how Cape Wind will impact Massachusetts residents’ electricity bills is more complicated.
The deal with Northeast Utilities and NStar includes a four year rate cap, meaning the newly merged utility couldn’t raise rates until after 2015. So in the short term, those customers wouldn’t see any increase (though theoretically they could see a decrease if the utility didn’t buy from Cape Wind, as explained here). Other customers could see increases in the range of 1-2%. The project’s economics look better over time, since offshore wind has high upfront costs (for construction), and because fossil fuel prices are likely to rise over time.
What are the Benefits?
Climate Change: Because wind energy, unlike fossil fuels, does not produce greenhouse gas emissions that contribute to climate change, the Cape Wind project would lower emissions for the state. Just as importantly, as the first U.S. offshore wind project it could spur innovations in the technology, siting, and economics of offshore wind, which could lead to more offshore wind projects and potentially significant emissions reductions over time.
Economic Benefits: The construction of Cape Wind would put Massachusetts at the forefront of a new technology industry, which could mean jobs in sectors like manufacturing. It would also increase the share of energy produced within the state, rather than imported from outside.
Offshore Wind: A Short Overview
The first offshore wind project was built by Denmark in 1991, and nine European countries had completed 830 turbines as of 2010. However, the U.S. has not built a single offshore wind project. Cape Wind would likely be the first, although it’s possible that a Rhode Island project could take that honor if Cape Wind continues to face delays.
The U.S. has massive offshore wind potential – enough to produce four times our current electricity needs – but the technology is quite expensive. Offshore wind is about twice as expensive as onshore wind, typically the cheapest form of renewable energy. But costs are expected to drop as the construction of more projects sparks innovation. The technology is still evolving; current projects are predominantly sited within a few miles of shore, but deepwater technologies are under development.
To learn more about offshore wind, this 2010 study by the National Renewable Energy Laboratory (NREL) is the place to start. Its conclusion: “In the context of the greater energy, environmental, and economic concerns the nation faces, accelerating the deployment of offshore wind could have tremendous benefits to the United States.”