Cape Wind in ‘Cardiac Arrest’ as Utilities Seek to End ContractsEhren Goossens
Cape Wind, the $2.6 billion offshore wind farm that’s been under development in Massachusetts for 13 years, is facing a significant threat as two utilities seek to terminate contracts to buy electricity.
“The project is in cardiac arrest,” Amy Grace, a wind industry analyst with Bloomberg New Energy Finance, said today.
National Grid Plc and Northeast Utilities’ NSTAR unit yesterday filed to cancel power-purchase agreements after the 468-megawatt project failed to complete financing by Dec. 31.
Cape Wind Associates LLC is asserting it missed contractual milestones due to “unusual circumstances” that were beyond its control, citing “extended, unprecedented and relentless litigation” in letters submitted to the utilities Dec. 31.
The project planned for Nantucket Sound may become the first offshore wind farm in the U.S. It has faced stiff opposition from local fishermen, American Indians, the Kennedy family and billionaire Bill Koch. The groups have said it threatens commercial fishing and the local environment, and may desecrate sacred tribal lands.
“It would be a travesty if delays caused by an interest group funded by one of the Koch brothers could stop” the project, Cape Wind spokesman Mark Rodgers said in an e-mailed statement today. Koch is on the board of The Alliance to Protect Nantucket Sound, one of the project’s main foes.
The utilities’ efforts to cancel the contracts may not mean the project is dead. “It’s possible it could be resuscitated,” Grace said.
Still, it’s a setback for the developers. “I think they’re trying to buy more time, but I’m not sure that more time would even help them,” she said.
National Grid is “disappointed that Cape Wind has been unable to meet its commitments under the contract, resulting in yesterday’s termination,” it said in an e-mailed statement.
The project has received commitments for about half the financing it needs. Bank of Tokyo-Mitsubishi UFJ, Rabobank Group and Natixis SA agreed to provide a combined $400 million in debt, and to to soliciting other banks for support.
Pension Danmark has pledged $200 million and Siemens AG has considered a $100 million equity investment. EKF, Denmark’s export credit agency, pledged a $600 million loan guarantee in February and in July the project received a conditional $150 million loan guarantee from the U.S. Department of Energy.
The U.S. awarded a lease to Cape Wind for an area 5 miles (8 kilometers) off mainland Cape Cod in 2010. Spread over 25 square miles known as Horseshoe Shoal, it would generate on average enough electricity to power 200,000 homes, according to the Energy Department.
The project ultimately may include 130 3.6-megawatt Siemens turbines, according to its website.