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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Cape Wind, scheduled to be the first U.S. offshore windfarm, is wrapping up pre-construction activities in the waters off the coast of Massachusetts, and is setting its sights on securing financing and beginning construction activities in early 2013, Mark Rodgers, communications director for the project, told Industrial Info. "We're going to be the first of many offshore wind projects in the U.S.," he said. "The U.S. has the best offshore wind resource in the world. We're behind Europe in terms of capitalizing on that, but as a nation, we're on our way."
Cape Wind, which has been under development for more than 10 years by Energy Management Incorporated (EMI) (Boston, Massachusetts), is the controversial 420-megawatt (MW) windfarm that keeps on winning legal and regulatory challenges. This summer, it appeared that the project cleared its last hurdle when it received a "no hazard" ruling from the Federal Aviation Administration (FAA) (Washington, D.C.). But the project's opponents are trying to overturn that ruling in a federal court in the District of Columbia. In a separate federal lawsuit, opponents are challenging the project's permit from the U.S. Department of the Interior (DoI) (Washington, D.C.).
Located in Nantucket Sound, about five miles south of Hyannis, Massachusetts, Cape Wind has been opposed by powerful financial and political interests, including billionaire William Koch, a former leader at Koch Industries (Wichita, Kansas), and the Kennedy family, which owns a sprawling family compound on Hyannis. Koch, also a local property owner, reportedly is helping bankroll a $50 million fund to block Cape Wind.
Opposition to the windfarm is so strong that the legal challenges may ultimately involve the U.S. Supreme Court. They already involve the U.S. Congress. This summer, the House of Representatives passed the "No More Solyndras" Act (H.R. 6213), which is designed to terminate the federal construction loan guarantee program for renewable energy projects. But that measure is unlikely to move farther in this Congress: Although it passed the House last month, a companion bill never made it out of the Senate Energy and Natural Resources Committee. Congress is in recess until after the election next month. Cape Wind is seeking about $2 billion in federal construction loan guarantees.
But Cape Wind's developers are not intimidated: "Our opponents have an almost unbroken string of failure in legal and regulatory challenges," Rodgers said. "Over the last 10 years, we have won 15 out of 16 legal and regulatory challenges, and we are very confident we will win the two pending federal suits. This has been a very litigious project, but these two pending suits are nothing but nuisance litigation." He said he has no timetable for rulings from the federal courts.
Rodgers thinks the DoI approval with withstand court challenge because it followed: "The most comprehensive review of any energy project in the northeastern U.S." Absent glaring procedural flaws or some type of malfeasance, federal courts generally are reluctant to substitute their judgment for the judgment of regulatory agencies.
Cape Wind has a formidable set of allies in the environmental community, including the Conservation Law Foundation (Boston, Massachusetts), the Natural Resources Defense Council (NRDC) (New York, New York), the National Wildlife Federation (Merrifield, Virginia) and Greenpeace (Washington, D.C.).
As Cape Wind wraps up its pre-construction activities in Nantucket Sound, Rodgers said the project could see construction of its network of cables begin in early 2013, about the same time it seeks to close financing for the project. Rodgers declined to confirm or deny the project's reported $2.6 billion cost. But he did say, "We are encountering a very high level of interest" among potential investors and lenders. "We are optimistic we can secure the necessary capital." Cape Wind is seeking a mixture of equity and debt capital, though he declined to be more specific. Rodgers would not say if venture-capital or private-equity firms have been approached. Cape Wind has retained Barclays Capital to raise capital for the project.
Rodgers said ocean construction is scheduled to begin in 2014, and the project is expected to begin generating electricity by 2015. By the following year, Cape Wind is expected to be complete.
The project has signed long-term purchase-power agreements for about 77.5% of Cape Wind's electric output. The electricity will be sold to local utilities NSTAR Electric and Gas (Boston, Massachusetts), a unit of Northeast Utilities (NYSE:NU) (Hartford, Connecticut), and National Grid Plc (NYSE:NGG) (Waltham, Massachusetts), a unit of National Grid (London, England).
The power purchase agreements (PPAs) with NSTAR and National Grid will be fulfilled by 101 wind turbines with aggregate generating capacity of about 325 MW. That portion of the project, which Rodgers called "season one," will be followed by "season two," which comprises about 29 wind turbines totaling 95 MW--the remaining 22.5% of the project's generating capacity at full built out. None of season two's generation is under contract as yet.
One factor that makes Cape Wind particularly compelling, Rodgers said, is that the offshore wind resource correlates very well to New England's peak electric demand period. Unlike Texas, where there is scant wind during hot August afternoons, the sea breezes off the coast of Massachusetts constitute a "strong and reliable resource," Rodgers said. "I just hope that future offshore wind projects get approved faster than us."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
Cape Wind, which has been under development for more than 10 years by Energy Management Incorporated (EMI) (Boston, Massachusetts), is the controversial 420-megawatt (MW) windfarm that keeps on winning legal and regulatory challenges. This summer, it appeared that the project cleared its last hurdle when it received a "no hazard" ruling from the Federal Aviation Administration (FAA) (Washington, D.C.). But the project's opponents are trying to overturn that ruling in a federal court in the District of Columbia. In a separate federal lawsuit, opponents are challenging the project's permit from the U.S. Department of the Interior (DoI) (Washington, D.C.).
Located in Nantucket Sound, about five miles south of Hyannis, Massachusetts, Cape Wind has been opposed by powerful financial and political interests, including billionaire William Koch, a former leader at Koch Industries (Wichita, Kansas), and the Kennedy family, which owns a sprawling family compound on Hyannis. Koch, also a local property owner, reportedly is helping bankroll a $50 million fund to block Cape Wind.
Opposition to the windfarm is so strong that the legal challenges may ultimately involve the U.S. Supreme Court. They already involve the U.S. Congress. This summer, the House of Representatives passed the "No More Solyndras" Act (H.R. 6213), which is designed to terminate the federal construction loan guarantee program for renewable energy projects. But that measure is unlikely to move farther in this Congress: Although it passed the House last month, a companion bill never made it out of the Senate Energy and Natural Resources Committee. Congress is in recess until after the election next month. Cape Wind is seeking about $2 billion in federal construction loan guarantees.
But Cape Wind's developers are not intimidated: "Our opponents have an almost unbroken string of failure in legal and regulatory challenges," Rodgers said. "Over the last 10 years, we have won 15 out of 16 legal and regulatory challenges, and we are very confident we will win the two pending federal suits. This has been a very litigious project, but these two pending suits are nothing but nuisance litigation." He said he has no timetable for rulings from the federal courts.
Rodgers thinks the DoI approval with withstand court challenge because it followed: "The most comprehensive review of any energy project in the northeastern U.S." Absent glaring procedural flaws or some type of malfeasance, federal courts generally are reluctant to substitute their judgment for the judgment of regulatory agencies.
Cape Wind has a formidable set of allies in the environmental community, including the Conservation Law Foundation (Boston, Massachusetts), the Natural Resources Defense Council (NRDC) (New York, New York), the National Wildlife Federation (Merrifield, Virginia) and Greenpeace (Washington, D.C.).
As Cape Wind wraps up its pre-construction activities in Nantucket Sound, Rodgers said the project could see construction of its network of cables begin in early 2013, about the same time it seeks to close financing for the project. Rodgers declined to confirm or deny the project's reported $2.6 billion cost. But he did say, "We are encountering a very high level of interest" among potential investors and lenders. "We are optimistic we can secure the necessary capital." Cape Wind is seeking a mixture of equity and debt capital, though he declined to be more specific. Rodgers would not say if venture-capital or private-equity firms have been approached. Cape Wind has retained Barclays Capital to raise capital for the project.
Rodgers said ocean construction is scheduled to begin in 2014, and the project is expected to begin generating electricity by 2015. By the following year, Cape Wind is expected to be complete.
The project has signed long-term purchase-power agreements for about 77.5% of Cape Wind's electric output. The electricity will be sold to local utilities NSTAR Electric and Gas (Boston, Massachusetts), a unit of Northeast Utilities (NYSE:NU) (Hartford, Connecticut), and National Grid Plc (NYSE:NGG) (Waltham, Massachusetts), a unit of National Grid (London, England).
The power purchase agreements (PPAs) with NSTAR and National Grid will be fulfilled by 101 wind turbines with aggregate generating capacity of about 325 MW. That portion of the project, which Rodgers called "season one," will be followed by "season two," which comprises about 29 wind turbines totaling 95 MW--the remaining 22.5% of the project's generating capacity at full built out. None of season two's generation is under contract as yet.
One factor that makes Cape Wind particularly compelling, Rodgers said, is that the offshore wind resource correlates very well to New England's peak electric demand period. Unlike Texas, where there is scant wind during hot August afternoons, the sea breezes off the coast of Massachusetts constitute a "strong and reliable resource," Rodgers said. "I just hope that future offshore wind projects get approved faster than us."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
