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Failed wind projects make builders skittish

From now on, it may cost towns more to build industrial-sized wind turbines.

The Cape and Vineyard Electric Cooperative, which lost hundreds of thousands of dollars last year when Harwich voters killed a proposal to build two wind turbines, now is evaluating projects based on financial risk. The co-op’s board of directors will ask towns and other public entities to assume some of that risk by paying for preliminary costs such as engineering and environmental studies.

“The lesson of the last couple of years is that you need to be concerned about the viability of some of these projects and spend your money wisely,” said Charles McLaughlin, the co-op’s Barnstable representative and its president.

The cooperative was formed in 2007 as an offshoot of the Cape Light Compact, the countywide consumer-driven energy agency funded by a surcharge on electric utility bills. The co-op’s purpose was to overcome the significant financial hurdles towns face in dealing with renewable energy projects. Members include 16 Cape and Martha’s Vineyard towns, two counties and one county agency.

Co-op officials hoped to use low-cost loans to create a network of renewable energy projects among members. The cooperative has offered towns a soup-to-nuts deal, paying all costs for planning, installing, purchasing and managing municipal wind turbines. The only cost for towns was to make land available for the projects. The co-op would then pay towns tens of thousands of dollars a year in fees for using that land and supply up to 90 percent of municipal needs with, hopefully, low-cost “green” power.

But times have changed.

Co-op officials told the Dennis Water Department last month that they would not pay for environmental and health studies, or for engineering costs or any of the other costs needed for permitting. That could cost towns hundreds of thousands of dollars and might dim the enthusiasm for municipal wind projects.

“From a business standpoint, we have to sit back and say ‘is it worth it?'” Dennis Water District Superintendent David Larkowski said. “They changed the game on us.”

But co-op officials say they also must consider risk.

“We spent a significant amount of funds in Harwich and then it didn’t go through,” said Maggie Downey, the assistant administrator for Barnstable County and a member of the co-op board. “We have a budget allocated to planning projects. We don’t have millions of dollars to continue to fight like Cape Wind.”

Mark Zielinski, administrator of Barnstable County and co-op treasurer, estimated the group spent around $700,000 on preliminary work for projects in Brewster and Harwich. That money came from a mixture of grants and money that the co-op would recoup with financing for turbine construction.

In the case of Harwich, that financing did not happen because the town voted against the project last spring. Zielinski estimated that preliminary costs in Harwich may have run around $400,000. A Brewster proposal, for two 400-foot turbines off Freemans Way, may incur $400,000 in upfront costs. That project is currently seeking a special permit from the planning board.

Towns need to demonstrate commitment to wind turbine projects, Downey said.

“There’s a level of risk and commitment. When you have a financial stake in a project at the permitting phase, there is more commitment to seeing it pass,” Downey said.

The co-op could still use bonding through the U.S. Department of Agriculture to finance projects, including the $4 million to buy a turbine. And towns could potentially recover their upfront costs as part of that loan package. But they could also lose hundreds of thousands of dollars in engineering and study costs if the project is rejected by voters.

After the Old King’s Highway Regional Historic District ruled against proposed turbines at Cape Cod Community College in West Barnstable and Aquaculture Research Corporation in Dennis, the co-op board decided that projects in the historic district, which covers the area north of Route 6 from Sandwich to Orleans, were too risky for investment prior to turbine approval.

“We could spend a half-million (dollars) for the initial engineering … and maybe get nowhere if the Old King’s Highway (historic district) knocks it down,” Larkowski said.