Cape Wind: Will it be first?

Developer Jim Gordon says market timing is good but condemns frivolous lawsuits

Cape Wind appears to be moving closer to construction, but it’s no longer clear whether the Nantucket Sound wind farm will be America’s first.

At a conference in Boston of offshore wind industry officials from across the world, Cape Wind’s developer, Jim Gordon, said he expected financing for the 130-turbine project to be completed by the end of October. He said construction will begin in 2015 and finish sometime in 2016.

Jeff Grybowski, the chief executive of Deepwater Wind, said his much smaller, five-turbine demonstration project off of Block Island is on a similar timetable. He said he expects to begin installing foundations next year and turbines in 2016.

Gordon said he didn’t know whether Cape Wind or Deepwater Wind would be America’s first operating wind farm, but added that it didn’t matter. “The important thing is that this industry puts some steel in the water,” he said.

Gordon is fond of using the annual conference, called Offshore Wind Power USA, to release news about his long-delayed project. Last year, he predicted a groundbreaking on the project by the end of 2013. At this year’s conference, he announced that a Danish export credit agency called EKF has pledged a loan of $600 million to go along with $200 million from another Danish institution and a $100 million investment from Siemens, the project’s German wind turbine manufacturer. Cape Wind is also counting on an investment by the Bank of Tokyo and a federal tax credit worth 30 percent of the project’s cost. (That federal tax credit expired at the end of last year.)

In his speech this year to the group, Gordon spoke passionately about how his wind farm is needed now by a region desperate for low-carbon energy. He also urged environmentalists, legislators, and others to discuss ways to curtail the type of lawsuits that have stalled his project over the years.

The cost of Cape Wind power would be high, but Gordon and other speakers at the conference made the case that the price is competitive in a region becoming over-dependent on natural gas and losing or about to lose many of its coal-fired power plants. Gordon noted that Cape Wind’s price of approximately 19 cents a kilowatt hour compares favorably with the 23.7-cent market price of electricity on Wednesday.

Ann Berwick, chairwoman of the Massachusetts Department of Public Utilities, acknowledged in a speech on Tuesday that the cost of Cape Wind electricity on most days will be high relative to the market. But she said the wind farm is needed because it represents one of the few major sources of low-carbon electricity available. “You can’t decarbonize the New England grid without offshore wind,” she said.

Gordon said New England is facing an historic choice. With coal and other electricity plants shutting down or nearing retirement, he said the region needs new power sources with low carbon footprints. He said New England will have to choose between expanding pipelines so more natural gas can be brought into the region, importing hydroelectricity from Canada, or developing a wind industry off the state’s coast.

“Cape Wind can solve a problem that exists today, not tomorrow,” he said.

Gordon also ranted about “vexatious litigation” that has delayed his project and contributed to the “exploitation of people in this room.” He said he knows many environmentalists use litigation to slow down or block projects they oppose, but he urged environmentalists to join with him in calling for reforms that would limit the number of court challenges a project can face.

“I’m out here slinging a new product called green energy,” Gordon said. “Other parties don’t want this to happen because it’s a disruptive technology.”

Gordon’s project won an important ruling from the Federal Aviation Administration in January and is awaiting action on another key case pending in Washington. Most of the litigation has been brought or funded by the Alliance to Protect Nantucket Sound, a group heavily supported by billionaire and summer Cape Cod resident Bill Koch. Indeed, the Alliance in January filed another suit against Cape Wind, taking issue with the way the administration of Gov. Deval Patrick allegedly used a merger request from NStar to coerce the utility into signing a power purchase contract with Cape Wind.

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Bruce Mohl

Editor, CommonWealth

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

“This is a frivolous and meritless suit,” Gordon said on Wednesday, predicting that the lawsuit would be dismissed on summary judgment. He said there is no parallel with other cases where power supply contracts overturned because they were orchestrated by state agencies. “We negotiated on an arms-length basis with National Grid and NStar,” Gordon said, although some would say the negotiations with NStar were pro forma and done only to gain Patrick administration approval for NStar’s merger with Northeast Utilities.

Audra Parker, president of the Alliance to Protect Nantucket Sound, issued a statement yesterday criticizing Cape Wind for relying on foreign investors and failing to deliver on past promises to begin construction. “Cape Wind is an outdated project that would cost ratepayers three times the cost of other readily available renewable energy – adding billions of dollars in unnecessary electricity costs for Massachusetts ratepayers to create jobs overseas,” she said.