January 2, 2013

Cape Wind scores another approval to sell electric power

GateHouse News Service | Jan 02, 2013 | www.wickedlocal.com

Cape Wind has successfully sold more of its potential electric power. The Massachusetts Department of Public Utilities has approved the sale of 27.5 percent of the electricity generated by the 130 turbines in Nantucket Sound to NStar for between $353 and $448 million.

The power purchase agreement is for 15 years and combined with Cape Wind’s previous sale of half its power to National Grid means they’ve done enough to attract financing.

“Taken together, these two PPAs provide Cape Wind with the critical mass to continue securing project financing,” said Theodore Roosevelt IV, Managing Director of Barclays and Cape Wind’s Financial Advisor.

“We expect to finish that by the end of the second quarter of 2013 and everything else will follow from that,” Cape Wind spokesman Mark Rodgers said of the financing. “We expect construction to begin next year and major ocean construction in 2014 with partial commissioning in 2015 and full commissioning in 2016. We can commission the project row by row.”

Rodgers wouldn’t disclose the full capital cost of the project.

The deal works out to between 18.7 and 23 cents for each kilowatt-hour of electricity and will amount to about 1.9 percent of NStar’s electrical load. Pricing is similar to the National Grid deal (18.7 cents initially) that was challenged by Cape Wind foes and upheld by the Massachusetts Supreme Judicial Court in Dec. of 2011. NStar currently provides residential electricity for fixed rate of 6.7 cents per kwhr.

“With this decision, Massachusetts electric consumers have secured an abundant, inexhaustible, and clean energy resource that provides price stability and avoids all of the external costs of fossil fuels,” Cape Wind President Jim Gordon said in a statement. “Finally, our region will no longer be at the end of the energy pipeline, by harnessing an endless supply of offshore wind power, we will be producing homegrown and clean energy right here.”

Not everyone was happy.

“It’s no surprise,” noted Audra Parker, President of the Alliance to Protect Nantucket Sound, a longstanding opponent of the project. “It’s disappointing that the state is willing to burden Massachusetts households and businesses with billions in extra costs. Fortunately for ratepayers with five lawsuits facing Cape Wind it will never be built.”

NStar supplies power to all of Cape Cod’s towns so consumers could light their homes in part with homegrown electricity. The Green Communities Act requires utilities to seek out renewable energy contracts. NStar will buy 129 megawatts of power from Cape Wind (Cape Wind’s capacity is 468 megawatts).

The first phase of the project (101 turbines) is expected to be operating by December of 2015. Under the agreement Cape Wind must commence construction by Dec. 31, 2013 and should be operating two years after that – but that can be extended although at a cost of $645,000 to Cape Wind or more if it drifts into 2017.

“There will be several hundred [workers] involved in the construction of the project,” Rodgers said. “And once the project is built and in operation at out base in Falmouth Harbor we’ll have 50 full-time Cape-based employees.”

NStar will be buying electricity, capacity and renewable energy certificates from Cape Wind and they’ll pay a bundled price; a base price between $187 and $193 per megawatt hour with numerous adjustments baked in that could push the cost over $230 a megawatt hour. The price is expected to escalate at 3.5 percent a year. NStar can opt to extend the contract for an additional 10 years – until the end of Cape Wind’s expected lifetime.

The Alliance to Protect Nantucket Sound argued against approving the power sale alleging that NStar had no choice but to buy Cape Wind power if it wanted its merger with Northeast Utilities approved. However the DPU found that NStar’s solicitation and execution of the PPA was “reasonable and consistent” with the law.

Cape Wind is seeking buyers for the remaining 22 percent of its power but Rodgers said financing will be built around the power that is already sold.

“In New England there are an additional number of potential buyers out there and a number of parties for us to talk to,” Rodgers said.

URL to article:  https://www.wind-watch.org/news/2013/01/02/cape-wind-scores-another-approval-to-sell-electric-power/