Saturday, November 2, 2013

Renewable energy at a fair price

The Cape Wind project, started by Jim Gordon's company, Energy Management, in 2001, [1] has largely turned into a distraction for renewable energy in New England. It aims to build and operate an offshore wind farm between Cape Cod and Nantucket. [2] The site has very good wind potential, [3] relatively shallow waters and adequate access to power transmission. However, the projected construction cost rose steeply, from $0.5 billion in 2001, [4] for 168 MW annual average (not peak) generating capacity, to $2.6 billion in 2013 for 183 MW. [5] Some owners of oceanfront property have sponsored preservationist campaigns and lawsuits, [6] while the nearest residents are about five miles away from the site boundaries.

Comparable conventional electricity is readily found in Massachusetts. In Cambridge, for example, the Kendall Square station--opened by Cambridge Light and Power in 1949 burning coal--was converted to combined-cycle natural gas by Mirant in 2000 and is now run by NRG Energy. Kendall Square has a current year-round (not peak) generating capacity of 218 MW. [7] For calendar years 2010, 2011 and 2012, it ran at an average 68 percent of that capacity. [7] Its output was somewhat above the average 61 percent of capacity for all large gas-fired plants in New England. It was selling into a New England bulk electricity market with average wholesale prices per kilowatt-hour of $0.051 in 2010, $0.048 in 2011 and $0.037 in 2012--according to ISO New England. [8] [9]

By the end of 2012, Cape Wind had two major contracts to sell bulk electricity for $0.187 per kWh that it has not been able to fulfill, because its offshore wind farm remains unbuilt. [10] [11] That would be about five times the actual, average wholesale price of bulk electricity in New England for 2012. In September, 2013, Massachusetts and Connecticut state agencies approved long-term agreements by Northeast Utilities, National Grid and other utilities to buy bulk electricity from land-based wind farms run by First Wind, Iberdrola Renewables and Exergy Development, at an average wholesale price of less than $0.080 per kWh. [12] [13]

The total capacity of New England's land-based wind power coming under contract in 2013 was nearly twice what was promised by Cape Wind. The price per kWh is less than half the price from Cape Wind. If Cape Wind had built its offshore wind farm at the cost projected in 2001, it too could sell renewable energy at a fair price. [14]

[1] Background, Energy Management, Inc., 2012, available at

[2] Cape Wind Project History, U.S. Bureau of Ocean Energy Management, 2013, at

[3] New England wind resources, U.S. Department of Energy, 2011, at

[4] Jeffrey Krasner, Offshore wind farm blows into Cape view, Boston Globe, July 28, 2001, p. A1

[5] Ehren Goossens and Christopher Martin, Cape Wind offshore farm lawsuits, Bloomberg News, October 22, 2013, at

[6] Katharine Q. Seelye, Koch brother wages 12-year fight over wind farm, New York Times, October 23, 2013, at

[7] Power plant operating data, Form EIA-923 and related forms, U.S. Energy Information Admimistration, 1970-2012, at

[8] Annual Markets Report, ISO New England, 2011, at

[9] Annual Markets Report, ISO New England, 2012, at

[10] Michael C. Bailey, DPU approves Cape Wind contract with National Grid, The Enterprise (Falmouth, MA), November 26, 2010, at

[11] Erin Ailworth, NStar deal with Cape Wind gets OK, Boston Globe, November 26, 2012, at

[12] Rick Saia, State announces record wind-energy deal, Worcester (MA) Business Journal, September 23, 2013, at

[13] Renewables progress in Northeast, American Wind Energy Association, September 27, 2013, at

[14] Expanded from a version appearing in the Brookline (MA) Tab, October 31, 2013, p. B2

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