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Cape Wind has final permits  

Credit:  By Mike Seccombe, Vineyard Gazette Online, www.mvgazette.com 14 January 2011 ~~

More than nine years after plans for a huge wind farm in Nantucket Sound were first revealed, the final regulatory approvals for Cape Wind have been granted.

The exhaustive review process began in 2001. It ended last Friday, with granting by the Environmental Protection Agency of a permit relating to potential effects on air quality of emissions from vessels engaged in operations to do with construction and operation of the 130-turbine development on Horseshoe Shoal.

The previous day, the U.S. Army Corps of Engineers made a determination in favor of the project.

Both approvals were widely seen as foregone conclusions, for several reasons. First, the Army Corps had previously in 2004 released a draft environmental impact finding favorable to the development. Second, the negative impact on air quality of the construction process was small. Third, the Interior Secretary Ken Salazar had already approved the project and signed the nation’s first offshore wind power lease with Cape Wind.

But while all the bureaucratic hurdles have been cleared, significant obstacles remain.

The least of them is the selection of a general contractor to oversee the construction. Cape Wind spokesman Mark Rodgers said this week the company hoped to have that sorted out before the middle of the year.

Then Cape Wind must find buyers for the electricity it generates. So far, it has a deal with National Grid for half its output. Under an agreement concluded in May, and subsequently ticked off by the state, National Grid committed to buying 50 per cent of the wind farm’s output, including electricity and renewable energy certificates for 20.7 cents per kilowatt hour, beginning in 2013.

The price is significantly above the current average cost for power from traditional fossil fuel generators, although National Grid estimates it will increase costs by roughly $1.59 per month for a typical residential consumer. The developers and supporters argue that it will become more cost-competitive as the price of fossil fuels increases in coming years.

So far, though, there is no buyer for the other half of Cape Wind’s output.

Mr. Rodgers said talks were continuing with other potential buyers.

The next hurdle for the project is finding the money for its construction.

And it has grown vastly more expensive due to long delays and costly added conditions for development.

A decade ago, when it was first mooted, it was expected the cost of the project – then comprising 270 turbines – would be about $700 million.

Now, even the scaled-back 130-turbine array will cost far more; estimates range from $1.5 billion to well over $2 billion.

Mr. Rodgers would not reveal numbers this week.

“We consider that proprietary information,” he said. “But obviously costs have changed over a decade,” he said.

He did say the developers have yet to secure financing for the project.

“We’re really just beginning that effort, so we don’t have any money lined up yet. We’ve only just gotten started,” he said.

In addition to escalating construction costs, money has become harder to get over recent years, in a recessionary economy.

The recession has hit Cape Wind in more direct ways too. In May 2005, the company announced it had engaged the giant investment bank Lehman Brothers to structure its financing.

In a statement released at the time, Cape Wind chief executive officer Jim Gordon said: “We chose Lehman Brothers because they are one of the world’s premier energy project financiers and because Lehman’s managing director on this assignment, Theordore Roosevelt 4th, is a committed environmentalist and longtime Martha’s Vineyard resident.”

But in September 2008, Lehman went bankrupt, and in the ensuing breakup of the firm, Mr. Roosevelt and the division working on the Cape Wind project passed to the London-based Barclays Capital.

Barclays remains Cape Wind’s financial advisor.

The task of finding the money is complicated by the other remaining impediment to the project: a series of well-funded legal actions against the project.

The major opposition group, the Alliance to Protect Nantucket Sound, claims a war chest of more than $20 million and is open about its intent to encourage as many lawsuits from as many organizations and groups as possible.

The array of litigants includes the Alliance itself, local fishermen, towns, the Barnstable Airport, vested corporate interests and community groups. As of Thursday, the Alliance enumerated 11 separate actions.

They go to three areas. Five challenge the state’s approval of the power supply contract between Cape Wind and National Grid; four challenge the Department of the Interior’s approval, and two challenge the approval of the Federal Aviation Administration.

Mr. Rodgers thinks it will in the end boil down to three cases.

“I believe that all the litigation on the federal contracts, although they may start out as separate lawsuits, will be consolidated into one. That’s usually what happens,” he said.

As to how long it might take for all the legal actions to be resolved, Mr. Rodgers said: “I have no idea. I don’t think anybody can know for sure.”

But he admitted it does complicate financing.

“We’re working to see if we can finance the project in such a way that we can move forward, with outstanding litigation,” he said. “That would require that other parties involved would have to be comfortable with the issues involved.

“The relevant statistic is that from the very beginning until today, there have been 15 times when a judge has ruled on Cape Wind related litigation, and Cape Wind opponents are zero for 15.

“Given that track record and the fact that this was the most comprehensively reviewed project in the history of New England – these permits are very robust and extremely difficult to challenge in court – the hope is that we’ll find financial partners that recognize that,” he said.

Only time will tell how robust the decision-making process has been, but few would argue the process has been protracted.

The outstanding example is the federal approvals process. The Army Corps of Engineers environmental impact statement produced a 2,000-page draft in late 2004. The Environmental Protection Agency promptly pronounced it inadequate and sought more information.

Then, before the final EIS could be produced, the Army Corps was supplanted as the lead agency by the Minerals Management Service, which then began its own environmental review.

Three and a half years later, MMS came out with its own 2,000-page draft, which concluded the development would have no lasting major adverse impacts on wildlife, navigation, fishing, tourism or recreation.

After more community consultation and comment, the final EIS reached the same conclusion.

But that, too, was found to be inadequate in some respects, specifically in relation to consulting with Native Americans.

In January last year the Massachusetts Historic Preservation officer Brona Simon determined the wind farm site was eligible for listing on the National Register of Historic Places. The development, she said, would interfere with Wampanoag rituals welcoming the rising sun, and potentially desecrate archaeological and historic sites dating back 5,000 years to a time when Horseshoe Shoal was dry land. The National Park Service concurred.

Interior Secretary Salazar then commissioned yet another study of the project, before ultimately approving it.

Over 10 years, contention over the Cape Wind project has served to delineate the limits of the powers of the Cape Cod and Martha’s Vineyard Commissions, local governments and the state Energy Facilities Siting Board. It has embroiled the administrations of two Massachusetts governors and two presidents. It has divided conservationists and the citizenry of the Cape and Islands. It has engaged wealthy land owners and poor fishermen, birders, boaters, airline pilots, energy company executives. It has sparked allegations of political dirty tricks and featured prominently in election campaigns.

And while the permitting process is complete, there is still no timeline for when Cape Wind will begin to harness the wind over Horseshoe Shoal to generate electricity.

Source:  By Mike Seccombe, Vineyard Gazette Online, www.mvgazette.com 14 January 2011

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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