The developer of Cape Wind has terminated contracts to buy land and facilities in Falmouth and Rhode Island, the latest sign that the $2.5 billion effort to become the nation’s first offshore wind farm may never produce a kilowatt of energy.
The developer, which for more than a decade has sought to launch a project to build more than 100 wind turbines in Nantucket Sound, was also suspended on Tuesday from participating in New England’s wholesale electricity markets by ISO New England, an independent company in Holyoke that operates the region’s power grid.
The failure to make payments to preserve those contracts and to maintain its position with ISO New England comes 2½ weeks after the disclosure that National Grid and Northeast Utilities had terminated their contracts to buy power from Cape Wind, deals deemed critical to the project’s financial viability.
In the latest ominous sign for the project, officials at Cape Wind on Thursday acknowledged they stopped making payments on an agreement last July with the Rhode Island-based Quonset Development Corporation to lease 14 acres of land in North Kingstown, R.I., which was slated to become a staging and assembly area for the project.
“I can’t say why,” said Mark Rodgers, a spokesman for Cape Wind.
He declined to comment further or answer other questions about the future of Cape Wind.
Ted Kresse, a spokesman for Quonset Development, said Cape Wind paid a $10,000 deposit for the land and a total of $19,200 in monthly payments since September to maintain the agreement, which was terminated last week. Cape Wind never took custody of the land.
“I don’t want to speculate as to why the lease was terminated,” Kresse said.
An official at East Marine in Falmouth confirmed that Cape Wind also let expire a 2012 purchase-and-sale agreement for a 3-acre marina that would have been used to shuttle staff to and from the turbines.
“It’s not clear why,” said the official, who declined to be identified because of a nondisclosure agreement.
Rodgers, the Cape Wind spokesman, declined to comment.
Officials at ISO New England said Jan. 20 they notified the Federal Energy Regulatory Commission that they had suspended Cape Wind from participating in the electricity markets.
Lacey Girard, a spokeswoman for ISO New England, said she could not comment on why Cape Wind was suspended or whether the company could be reinstated.
“In general, suspensions are a result of a participant not maintaining a minimum amount of collateral and/or not complying with other financial assurance or billing requirements,” she wrote in an e-mail.
Dennis J. Duffy, vice president of governmental and regulatory affairs of Cape Wind, called the suspension a “nonissue.”
“It will be remedied well in advance of producing power,” he said, noting that it could be years before the project would produce power. He declined to answer other questions about the project.
Critics of Cape Wind said the additional contract terminations could spell the end of the project.
“There’s clearly a pattern here of major financial problems plaguing Cape Wind,” said Audra Parker, president of the Alliance to Protect Nantucket Sound, a leading opponent of the project.
But she said Cape Wind retains a valuable long-term lease from the federal government to build on 46 square miles of Nantucket Sound. “We have pending litigation about that,” she said.
Cape Wind, which has been battling lawsuits since it first began seeking permits 14 years ago, also retains its $4.5 million agreement with the Massachusetts Clean Energy Center to lease some of its space at the newly built Marine Commerce Terminal in New Bedford.
Catherine Williams, a spokesman for the Clean Energy Center, said it remains unclear whether the agreement will take effect. To date, she said, Cape has not raised all the money it needs to start building for the project, “thus the time frame for its use of the terminal is uncertain.”
As recently as last fall, Cape Wind officials were vowing that by the end of 2014 workers would start digging the trenches and laying the cables to erect 101 turbines.
But the spate of setbacks has been a blow to the project, which proponents have long viewed as a model to promote offshore wind farms across the country.
Earlier this month, officials at Cape Wind said they intend to press on and insisted their contracts with National Grid and Northeast Utilities remain in effect. They regard the utilities’ terminating the contracts as invalid.
Cape Wind has not addressed the future of the project in light of these new setbacks.
The utility companies said they terminated their contracts, which were signed in 2012, because Cape Wind had failed to meet a Dec. 31 deadline to obtain financing, start construction, or put up financial collateral to extend the contract.
In letters dated Dec. 31 to both utilities and state regulators, Cape Wind president James Gordon asked the utility companies to put off terminating the contracts, citing “extended, unprecedented, and relentless litigation.”
Environmental advocates are holding out hope that Cape Wind will find a way forward, but many said they recognize that the project seems increasingly unlikely to get built.
“It is a very disappointing outcome for all who were excited by the vision of clean renewable energy off our shores,” said Ken Kimmell, former commissioner of the state Department of Environmental Protection who is now president of the Union of Concerned Scientists.
He and others said they hope other potential offshore wind projects will take the mantle from Cape Wind.
Next week, the federal government will auction four offshore wind leases across 742,000 acres of sea south of Martha’s Vineyard.
Those waters would be well beyond the view from shore and allow for the use of larger, more powerful turbines than Cape Wind has planned to build.
“Technological innovation is making larger and less expensive offshore wind turbines available, and we should take advantage of that,” Kimmell said.
|Wind Watch relies entirely
on User Funding