Massachusetts OKs Long Term Power Contract for First U.S. Offshore Wind Farm with Major Power Co.
Posted November 22, 2010
Today, the Commonwealth of Massachusetts approved an agreement for National Grid, the large Northeastern electric utility company, to purchase half of the clean power produced by the country’s first utility-scale offshore wind farm, Cape Wind, to supply to its Massachusetts customers after the project is completed and the turbines start spinning.
The Cape Wind project has been a long time in the making. NRDC has actively participated in the twists and turns of the long environmental review and regulatory approval processes for this project. After careful review of the two lengthy environmental review documents prepared by the federal government, and after an enlightening tour of offshore wind projects with NRDC President Frances Beinecke, NRDC announced its support for the project in 2008. And NRDC will continue to see this project through until those windmills start turning.
Today’s decision brings us closer to that day. The 15-year agreement (called a power purchase agreement) between National Grid and Cape Wind will be important in allowing Cape Wind to secure financing to build the project. That’s because the capital markets will now see that Cape Wind has an important long-term customer for half of the emissions-free renewable power it produces. The news also shows us that Massachusetts found the project cost-effective, which is the key criteria the Commonwealth had to evaluate in order to approve the agreement.
NRDC, working closely with our allies the Conservation Law Foundation, Union of Concerned Scientists and Clean Power Now slogged through many months of arcane administrative legal proceedings before a board of Massachusetts agency officers to show that the economic benefits of the power purchase agreement far outweighed its costs. As with all Cape Wind related matters, the approval process for these long-term contracts became a contentious legal battleground, with project opponents and supporters going at it at the courtroom and filing motions and briefs by the boatload.
Some argued against that the Cape Wind project by saying it would be too expensive – but this agreement showed Massachusetts can trade out its dirty energy for clean, renewable wind power with only an additional $1.25 per month on the electric bill for the average National Grid customer. And this small charge will reap large cost-savings benefits for all customers on the electric grid – ranging from reductions in wholesale electricity and natural gas prices for other utilities, to hedging against volatile natural gas prices because unlike fossil fuels, wind energy prices stay stable and are not prone to dreaded spikes in your bill.
To prove this in the legal review process for this agreement, NRDC and our environmental partners took the debate beyond “he said/she said” by bringing in two renowned experts – the Nobel Prize winning economics professor Gary Yohe and veteran electric utility expert Paul Chernick – to testify on the diverse and immense benefits of the contracts to Massachusetts customers. And Massachusetts agreed, finding that the power purchase agreement is “both cost-effective and in the public interest.”
For my NRDC colleague Brandi Colander and me, and for our courageous environmental allies, the Massachusetts contract hearings meant many nights up well past midnight hunched over the computer writing technical briefs, days in a Boston courtroom debating economic terms, and intense sessions with our expert economists. Sounds pretty dry, right? Who’d want to do that for a living?
But today’s decision makes it all worth doing. The path toward America’s clean energy future hasn’t been an easy one, but that future is looking brighter—and closer. Clear skies, free of power plant smog and acid rain, and spinning turbines high above the water. With this next step forward on Cape Wind, we’re already on the road to tapping into the clean renewable power from offshore wind.
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