The Cape Wind energy project could be “dead” because it now stands to lose a critical $150 million federal loan guarantee needed to install 130 wind turbines in Nantucket Sound after two utilities nixed their contracts with the company, said an energy policy expert.
The controversial offshore wind farm project is in jeopardy of losing a $150 million loan guarantee from the U.S. Department of Energy because federal law requires companies receiving those loans to provide “a reasonable prospect of repayment” – something Cape Wind no longer has without a reliable revenue stream, according to Nick Loris, a senior energy policy analyst at the Heritage Foundation.
“The fact that National Grid and Nstar are backing away from this project is a clear indication to me that this is not economically viable and the DOE shouldn’t be gambling with taxpayer money,” Loris said. “It’s looking more and more likely that this project is dead. It makes it difficult for me to see this come back and start producing power the way it was supposed to do.”
The Herald reported yesterday that Nstar – a subsidiary of Northeast Utilities – and National Grid terminated contracts to buy power from Cape Wind, saying the company had missed a Dec. 31 deadline in the contracts for the necessary financing to begin construction and had not put up collateral to extend the deadline.
U.S. Energy officials declined to comment on Cape Wind yesterday but, in a statement, said the agency “works with project developers to ensure any outstanding legal, financial, commercial and technological conditions are met before moving forward with any project.”
Cape Wind spokesman Mark Rodgers deemed the contract terminations as invalid, saying a clause in the contract allows the developer to put that deadline on hold for unavoidable circumstances, such as the barrage of court challenges from project opponents.
Rodgers labeled the issue as a contract dispute and said there is a provision in the contract to resolve disputes, but he did not say what that process involves.
Gov. Deval Patrick, a Cape Wind supporter, said, “We’ve done everything as a state government to get them over the regulatory lines and I’ve said before, and I say again, after that it’s up to the market and up to the leadership of the project and their partners to get it done.”
The Associated Press contributed to this report.
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