Feds OK Cape Wind project

Interior Secretary Kenneth Salazar on Wednesday approved the controversial Cape Wind project, paving the way for the first offshore wind farm in the U.S.

Salazar announced the federal go-ahead in Boston at the Massachusetts State House as he stood next to Massachusetts Gov. Deval Patrick. Patrick is a supporter of the project, which has been in development for nine years.

The decision means that Cape Wind can move ahead with its plan to erect 130 wind turbines, which would stand 400 feet above the seabed in Nantucket Sound, an area south of Cape Cod and north of Martha's Vineyard and the Nantucket islands. Cape Wind hopes to begin construction in about a year and have the turbines operating by 2013. The turbines, which will be five miles from shore at the closest point, would supply about 75 percent of the electricity needs of Cape Cod.

At the press conference, Salazar announced modifications designed to minimize the visual impact and address concerns over preservation of the historic region in Nantucket Sound. The size of the project will be scaled down to 130 turbines from 170 and the developers will need to do additional marine archaeological surveys on the Horseshoe Shoal. These and other "common sense" measures will strike a balance between the country's push for clean energy and the need for historic preservation, he said.

"This will be the first of many projects up and down the Atlantic coast that I expect will come online as we build a new energy future in this country," Salazar said. "I am convinced there is a path we can take forward that both honors our responsibility to protect historical and cultural resources and at the same time meets the need to repower our economy with clean energy produced from wind power."

For the offshore wind industry in the U.S. as a whole, the federal approval carries significant symbolic value. President Obama has made renewable energy a high priority and governors from six northeast states last week sent a letter to Salazar urging him to approve Cape Wind.

Investors, too, are likely to be cheered by the approval, as it gives them more confidence that projects can meet regulatory reviews and get financing. Cape Wind, which spent $40 million to date, is considered a pioneer in U.S. offshore wind. But in the last few years, a number of projects have been proposed by northeast states, including Delaware and New Jersey.

"There has never been a major project that has secured state or federal approval for offshore wind development in the U.S.," said Matthew Kaplan, a senior wind analyst at Emerging Energy Research. "At this point, the (Cape Wind) project is in a very firm position to become the first offshore wind farm in North America."

Since Cape Wind was first proposed in 2001, federal agencies have created guidelines to streamline the regulatory process, such as leasing federal waters for offshore wind farms. The technology and project management has matured in that time as well, Kaplan noted.

Challenges expected
The project's owners still need to contend with local groups who have opposed the project on the grounds that it would mar the local environment and disrupt a place considered sacred by local Native Americans. Cape Wind also has to secure a contract for a utility to purchase the power from the turbines, which is expected to be about twice the cost of onshore wind power.

Opposition groups, such as the Alliance to Save Nantucket Sound, have said that having visible turbines offshore would cause environmental damage and hurt the local economy. Members of the Kennedy family, including the late Sen. Edward Kennedy, have opposed the project from the beginning. The turbines, which are projected to take up 24 square miles, would be visible from a Kennedy family compound on Cape Cod.

On Wednesday, the Alliance to Save Nantucket Sound said it has formed a coalition with conservation groups and a fisherman's association to file suit to block the project.

Two Native American tribes said earlier this week they were prepared to sue on the basis of "legal shortcomings" by the Minerals Management Service under the National Historic Preservation Act. "The tribe's decision to pursue legal recourse is not only to protect their own sacred sites and rights under federal laws, but would directly help avoid future devastation to tribal historic sites throughout Indian Country," according to a statement from the Wampanoag Tribe on Martha's Vineyard island.

The case for blocking the project on grounds of historical significance was boosted earlier this month by the Advisory Council on Historic Preservation. The agency, in a recommendation to Salazar, said that the effects of constructing the wind farm are "significant, adverse, and cannot be adequately mitigated." (click for PDF of report.)

Salazar said that, after nine years of reviews, the U.S. is confident it can win any legal challenges. Cape Wind Communications Director Mark Rodgers, too, said Cape Wind has already won suits in the run-up to the decision on Wednesday.

Opposition groups have proposed a different location for the wind farm, which would be south of Nantucket Island, but because of technical challenges and cost of working in deeper waters, it was never considered an adequate compromise.

During the press conference, Massachusetts officials indicated that one of the modifications to the project is that Cape Wind and the state set aside "cultural mitigation" financing for the tribes.

Breaking clean-energy logjam?
Cape Wind has already signed a contract to purchase Siemens turbines for the project. But it still has to find a buyer for the electricity generated by the wind farm, which has proven to be a barrier in other offshore projects. The project is expected to cost near $2 billion to build.

In Rhode Island, public utility commissioners rejected a proposed test offshore wind farm, which would have been off the coast of Block Island, because of the anticipated costs. Despite pressure from Rhode Island's governor, the commission said that the power purchase price, at almost the double the retail electricity rate, was too high, effectively derailing the plan. Another project in Long Island was also scrapped because of costs.

Cape Wind has already had negotiations with utility National Grid, but it has not yet come to terms on a power purchase agreement, Rodgers said. Utilities in Massachusetts need to generate a percentage of their power generation from renewable sources. These renewable portfolio standards have driven demand for renewable in other states, such as Texas and California.

In a statement, the president of National Grid Tom King said Wednesday's decision is a "bold step by the Obama Administration" to develop renewable energy sources. He said that National Grid is optimistic about signing a power purchase agreement and is expected to make an announcement on the progress of negotiations soon.

With Cape Wind getting final approval, clean-energy advocates hope that it will clear the way for more renewable energy in the U.S.

A number of environmental advocacy groups have endorsed the plan. The National Resources Defense Council, Union of Concerned Scientists, Conservation Law Foundation, and Massachusetts Audubon Society earlier this week sent Obama a letter urging approval, saying that the plan would reduce greenhouse gas emissions and be consistent with protection oceans.

Those groups also argued that there will be economic benefit to the U.S., which is lagging Europe and China in offshore wind. Approval shows "that we are ready at last to tap into the nation's immense offshore renewable energy potential, a key element of moving forward with building a green economy and creating green jobs," they said.

Last week, the Obama administration asked for "formal expressions of interests" from companies seeking to build offshore wind farms in Delaware.

The ongoing opposition to Cape Wind, though, signals the conflicts that can be expected as the U.S. pursues renewable energy. As large-scale solar or wind projects seek to move ahead, projects like Cape Wind have faced financing challenges, lengthy regulatory reviews, and competing interests over how to use land and other natural resources.

Even in Massachusetts, the state's two senators have opposing views on Cape Wind, with Sen. John Kerry backing Salazar's decision and Sen. Scott Brown opposing the choice of location. (For a collection of reactions from politicians and advocacy groups, see here.)

"This is not an easy decision. This is a difficult decision. It's one I'm very confident in. I'm very confident it will withstand the scrutiny of time," Salazar said.