The perception of the inevitable failure of the Cape Wind project seemed more likely early this year when the two largest electric utilities in Massachusetts announced they would not be purchasing electricity generated by the proposed project, the Wall Street Journal reported. The project, to be located off the coast of Nantucket island, would include 130 turbines standing 426 feet tall that would generate 468 MW of electricity, has been in the works since 2001. At the end of the day, the project seemed assured of generating electricity at a rate that no electric utility, facing competition in the marketplace, would pay when it could be nearly triple the cost per kilowatt-hour of currently generated electricity.
The two Massachusetts-based electric utilities, National Grid and Northeast Utilities subsidiary Nstar, were going to be purchasing, between them, 77.5 percent of the 468 MW of electricity the Cape Wind project was expected to generate. The agreement was canceled because of failure of the Cape Wind project to meet financing and construction commitments under the agreement.
“Unfortunately, Cape Wind has missed these critical milestones,” NStar spokeswoman Caroline Pretyman said via email to CBSBoston. “Additionally, Cape Wind has chosen not to exercise their right to post financial security in order to extend the contract deadlines. Therefore the contract is now terminated.”
The agreement terminated could have cost residents of the areas to pay three times their current rates for electricity, National Review reports in an article about the Cape Wind project, citing a claim by the Alliance to Protect Nantucket Sound, a local group that opposes the Cape Wind project. The alliance claims the project will cause a $4 billion increase in electric rates in Massachusetts.
The rate the two Massachusetts utilities were going to pay for the electricity generated by Cape Wind would have started at 18.7 cents per kilowatt-hour, and would have increased 3.5 cents each year for 15 years, the Institute for Energy Research reported early this year in its analysis of the electricity purchase agreement between Cape Wind and National Grid and Nstar. The report stated the average cost of electricity in the U.S. is about 10.08 cents per kilowatt hour in 2013. At the end of those 15 years under the agreement, Cape Wind would be selling that electricity to the two Massachusetts utilities for 31.19 cents per kilowatt-hour after 15 straight annual increase of 3.5 percent. This was clearly electricity that was well above the market rate.
Theodore Roosevelt IV, an investment banker at Barclays Capital and great-grandson of President Theodore Roosevelt, was the partner/managing director of Lehman Brothers in 2005 when Cape Wind engaged the firm as financial adviser for the project. Jim Gordon of Cape Wind chose Lehman Brothers in part because Roosevelt worked for them.
“There was another benefit: Mr. Roosevelt’s conservationist credentials and his advice on how to approach the privileged community on the Cape were a big boon to the struggling project,” the New York Times reported. “Ted’s reputation as an environmentalist precedes him,” Mr. Gordon said. “For him to embrace the Cape Wind project added to its stature.”
Mr. Roosevelt is listed, as of July 24, 2015, as the Honorary LCV Chair, and is affiliated with Barclays Capital. His affiliation is listed on the web site for the League of Conservation Voters, an organization that supports public policy benefiting projects like Cape Wind.
A 2013 report about Cape Wind by American Commitment concludes the project is “an Offshore Solyndra.” The report highlights the enormous degree to which federal loan guarantees, tax breaks, and regulations of energy from coal and natural gas were still not enough to insure the success of the Cape Wind project. The report also calls the project a “comprehensive dead end” for American taxpayers.
“Such favoritism is questionable on its face,” the report concludes about the government assistance and tax breaks for the project. “Worse, however, is the fact that venture capitalism, when performed by the government, is ripe for waste, fraud, and abuse.”
Supporters of the project have mounted an effort to save the project at the web site “Cape Wind Now” that lists as major supporters the Conservation Law Foundation, Greenpeace, and the Sierra Club. These are the same groups, including the Sierra Club, that are supported with huge financial donations from a club of billionaires who advocate such “green” energy projects like Cape Wind and who also stand to profit from them financially. Billionaires like Michael Bloomberg and Nathaniel Simons are prominent backers of these groups and their support for such projects like Cape Wind.
Citizens Against Government Waste opposes federal subsidies and benefits for Cape Wind, and say energy from the project might be clean but “far from cheap.” Other critics of the project are calling the Cape Wind project “crony capitalism” and a massive waste of taxpayer money.
The failure of Cape Wind, Eileen McNamara wrote for the Boston Globe earlier this year, is the “hubris of Cape Wind’s developers themselves.”
“Almost 14 years after Cape Wind Associates unveiled plans to erect 130 wind turbines across 24 square miles of pristine Horseshoe Shoal, Jim Gordon and his investors seem to have run out of time, money, and political capital,” McNamara wrote, “The decision by NStar and National Grid to walk away after Cape Wind missed a December 31 contract deadline appears to leave Cape Wind ‘dead in the water,’ as Gordon’s nemesis, Audra Parker of the Alliance to Protect Nantucket Sound, so poetically put it.”
To imagine that building a huge area between Cape Cod and Nantucket with 130 wind turbines more than 400 feet tall that would look like an airport off shore at night time, with all the lights on them, to generate electricity that would cost three times market rate, and that such a project would be supported, does indeed take a lot of hubris. Other than the few who would financially benefit from this offshore Solyndra, its failure is great news for the rest of us, say critics of the Cape Wind project.
[Photo of wind turbines from www.wgbh.org.]