The race to get America’s first offshore wind farm up and running continues, with Massachusetts beginning to cement its leading position.
The state’s Cape Wind project received a partial green light yesterday for its 15-year power purchase agreement with National Grid, although one of the two proposed contracts was rejected by the Department of Public Utilities for not clearly identifying a utility to buy the power.
With 50% of the power output sold, however, the developers are confident of moving forward with a project that unlike other US offshore proposals is not waiting for a demonstration stage.
Using experience from Europe, where more than 800 offshore turbines are already in the water, Cape Wind Associates and Siemens intend to move straight on with installation of 130 turbines in Nantucket Sound.
The National Grid contract that did get the nod from Massachusetts officials was based on a starting price of 18.7 cents per kWh, a price 20% lower than the Cape Wind’s nearest rival, Rhode Island’s Block Island project. Another deal at the same price for the rest of Cape Wind’s output would get fast-tracked through the approvals process according to the DPU.
Opponents have naturally pointed out the unfavorable comparison with price contracts for onshore wind projects – for example Maine’s Kibby Mountain project with a 132MW deal at less than 11 cents per kWh. Of course, a group set up with $20 million to oppose a particular renewable energy project will never be satisfied with its terms.
However, an interesting point in the Cape Wind contract approval is that the review process has taken into account a number of factors regarding the overall benefit of the offshore wind farm to the state of Massachusetts.
It has taken into account the chances of another renewable energy project of comparable size to Cape Wind being developed early enough to meet state emissions targets. It has taken into account the prospects for employment that comes with the development of large offshore wind farms.
This attraction of ancillary industries in offshore wind can already been seen in full effect in the UK, where turbine manufacturers and developers are flocking to the East and North East regions of England.
Skipping over the demonstration phase to be used in Rhode Island and the Great Lakes, Massachusetts does gain a good chance of becoming first to attract major manufacturers, installation companies and operations specialists.
Most likely, we will see an offshore wind cluster that also takes in nearby Rhode Island, the two states sharing out the economic benefits of the next major wave of renewable energy development in the US.
The cluster can then provide services to those other East Coast states that are later to market – New York, New Jersey, Maryland, Delaware and at some point Maine, Virginia and North Carolina.
As the offshore wind industry ramps up over the next decade, the benefits of offshore wind will become clearer in the US market, making it easier to win support for new projects.
Cape Wind now requires support from the federal government in the form of stimulus funding and a loan guarantee, but judging by the noises coming out of Washington regarding offshore wind, these commitments cannot be far away.