Cape Wind Associates LLC enjoyed two key victories this month. But the wind farm developer only trumpeted one of them.
Cape Wind, a Boston-based affiliate of Energy Management Inc., announced today that it cleared yet another hurdle for the 130-turbine wind farm its principals want to build in Nantucket Sound. Sure, the state Department of Public Utilities’ approval of Cape Wind’s deal to 27.5-percent of its power to NStar is another important milestone. But it certainly wasn’t surprising. After all, Gov. Deval Patrick remains an important champion for Cape Wind, so it’s hard to imagine the DPU going in the other direction. And a similar arrangement with National Grid was upheld by the state’s highest court a year ago.
Earlier this month, however, Cape Wind scored another victory that wasn’t as easily foreseen: Mitt Romney’s loss in the presidential race. Romney, as you may remember, was a powerful political foe to Cape Wind when he was governor before Patrick took his place in the corner office. Although Cape Wind has essentially received all its major federal approvals by now, a Romney White House could have made things quite difficult for Cape Wind’s Jim Gordon and his crew. Gordon has to be relieved that Romney lost to Barack Obama, one of the renewable energy industry’s strongest supporters.
It used to be that Gordon had political foes on a number of fronts: Romney in the governor’s office, Tom Reilly in the AG’s office, Ted Kennedy and Bill Delahunt in Congress. But Kennedy, whose family’s compound overlooks Nantucket Sound, died three years ago. Reilly and Delahunt are in the private sector. And now Romney’s political career is over.
But that doesn’t mean it’s necessarily smooth sailing for Cape Wind from here.
Opponents have mired the project with several lawsuits in Washington, D.C. Cape Wind has generally emerged successfully from previous court challenges, and Cape Wind spokesman Mark Rodgers maintains that the ones that remain won’t get in the project’s way. But it’s not a sure thing until those appeals are resolved.
The biggest hurdle is the quest for financing. Cape Wind has been working with Barclays (and previously with Lehman Bros.) for several years but still has no big investors or lenders to announce for the roughly $2.5 billion project. That’s why it makes sense that the press release today from Cape Wind portrayed the DPU approval of the NStar deal as a major step forward in encouraging financial backers to step up to the plate.
There’s also the uncertainty surrounding the federal tax credits for the wind industry. Rodgers says a provision in the NStar and National Grid agreements (Grid wants to buy 50 percent of Cape Wind’s power) should help Cape Wind secure financing if the tax credits aren’t renewed for the new year in the form of what he calls a “small increase in the power price” that would be passed along to the utilities’ ratepayers.
Rodgers says Cape Wind is still on track for a construction start next year, and a partial commissioning in 2015, with the likelihood of a full commissioning the following year. Rodgers says Cape Wind is trying to find financing for 101 turbines right now – the portions of the project backed by the National Grid and NStar agreements. He says Cape Wind will try to secure additional financing once it sells more power.
These two victories that Cape Wind won this month are important ones. But Gordon can’t help but hope that they’ll help pave the way for an even bigger victory: lining up the money he needs to make this project a reality.
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