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Cape Wind steel deal dead in the water 

Credit:  By Patrick Cassidy | Cape Cod Times | March 12, 2013 | www.capecodonline.com ~~

A deal has tanked between Cape Wind and a Middleboro company tapped two years ago to build steel towers for the proposed Nantucket Sound wind farm.

“Obviously it was a complex deal from the start,” Stephen Lynch, executive vice president of Mass Tank Sales Corp., said Monday about the tentative agreement between the two companies going down the tubes.

Gov. Deval Patrick announced in 2010 that Mass Tank would build the foundations and other steel components of the 130-turbine project.

Since that time, Cape Wind has moved forward on a number of fronts but remains the target of legal challenges and is under the gun to begin construction by the end of the year so it can take advantage of federal tax credits.

Cape Wind had serious doubts about Mass Tank’s ability to fulfill the requirements of the deal as early as the spring of 2011, company spokesman Mark Rodgers said.

Cape Wind made it clear when the potential deal was first announced that Mass Tank would need to come up with a financial model that did not burden the energy developer with the cost of a manufacturing facility, Rodgers said.

Mass Tank officials believe they met a number of the required milestones in the past two years, including a partnership with the German company EEW Group to supply foundations for the project and the establishment of Quincy as the port where the work would be staged, Lynch said.

“We had done a lot of homework,” Lynch said.

The proposed pact between the two companies appears to have been shaky from the start.

In a letter sent to Mass Tank President Carl Horstmann in May 2012, Cape Wind President Jim Gordon wrote that it was unclear what role Mass Tank might play in the project given that the company hadn’t secured a facility or partner to perform the work.

In a Jan. 28 letter commenting on a roughly $350 million loan application Cape Wind had submitted to the U.S. Department of Energy, Horstmann wrote that Mass Tank did not believe the developer was committed to creating local jobs in a new industry for the state.

“It’s our understanding that Cape Wind apparently intends to deal directly with a foreign business, bypassing Mass Tank completely and outsourcing the work to a foreign, rather than a local, business,” Horstmann wrote. “As a result of decisions made by Jim Gordon, the original vision of the nation’s first offshore wind project bringing a new manufacturing industry to Massachusetts apparently will not come to pass.”

Mass Tank reached agreements with EEW and Gulf Island Fabricators, the largest steel fabricator on the Gulf Coast in Louisiana, was ready to meet a schedule with its partners, was “100 percent buy American” compliant, and had reached a memorandum of understanding to lease the Fore River Shipyard in Quincy, Horstmann wrote.

Cape Wind has said it hopes to use New Bedford as its primary port for construction operations, but it is unclear when a state-funded $100 million marine facility planned in that city will be ready, making it likely that Cape Wind would have to look elsewhere if it plans to begin work before a deadline at the end of 2013 for tax credits that factor into the price of the project’s power.

The partnership with Mass Tank had received a tremendous amount of support from Patrick and his administration because of the transfer of an existing skill set to the development of a new technology in the United States, Lynch said.

“We came up with what we thought was a competitive market price,” Lynch said about negotiations between the two companies. “We couldn’t even get a potential draft contract out of Cape Wind.”

Instead, Cape Wind told Mass Tank officials that the offshore wind energy developer had decided to go with another company, Lynch said, adding that he has heard Cape Wind plans to work directly with EEW.

Mass Tank would have filled up to 300 jobs if a deal was reached when the potential agreement was first announced, Lynch said.

Lynch said he does not think Cape Wind will be able to use New Bedford as a port for the initial work on the project if the company wants to begin before the end of the year.

“Cape Wind project is a trail of broken promises,” said Audra Parker, CEO and president of the anti-Cape Wind group, the Alliance to Protect Nantucket Sound. “When will state officials hold Cape Wind accountable and put a stop to this expensive project?”

The company promised lower electric rates but will now cost ratepayers billions of dollars over other sources of power during the life of contracts to sell the project’s power to National Grid and NStar, Parker said.

The Mass Tank jobs are not the first ones that are being shipped overseas, she said about the use of Siemens in Germany to build Cape Wind’s turbines.

“DOE is considering a loan for a project where the turbines and now the foundations will be constructed overseas,” Parker said. “It’s Cape Wind operating in bad faith.”

Massachusetts Energy and Environmental Affairs spokeswoman Krista Selmi declined to comment on Cape Wind’s decision to drop Mass Tank and referred the Times to the Massachusetts Clean Energy Center, a quasi-governmental organization that is leading the effort on the New Bedford port facility.

“We will continue to do everything we can to ensure local jobs as a result of this first-in-the-nation project,” the center’s spokeswoman, Catherine Williams, wrote in a statement sent to the Times. “However, MassCEC doesn’t manage contracts or business negotiations with Cape Wind and its potential contractors.”

When Cape Wind announces major contractors in the coming months, the center will work to make sure Massachusetts companies have the opportunity to bid as subcontractors and suppliers for the project, Williams wrote, adding that Cape Wind may be the country’s first offshore wind farm, but it won’t be the last. Cape Wind still wants to do as much work out of New Bedford as possible, but the details of what that includes will be tied to when that facility is completed, Rodgers said.

The company has not announced a contract for the construction of the foundations and towers for the project but is “mindful that there are no domestic providers of these structures,” Rodgers said.

There are 55 offshore wind farms in Europe, Rodgers said.

“That’s where the market has been so that’s where the manufacturers of these products are,” Rodgers said.

Source:  By Patrick Cassidy | Cape Cod Times | March 12, 2013 | www.capecodonline.com

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

The copyright of this article resides with the author or publisher indicated. As part of its noncommercial educational effort to present the environmental, social, scientific, and economic issues of large-scale wind power development to a global audience seeking such information, National Wind Watch endeavors to observe “fair use” as provided for in section 107 of U.S. Copyright Law and similar “fair dealing” provisions of the copyright laws of other nations. Send requests to excerpt, general inquiries, and comments via e-mail.

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