Cape Wind: costs rising fast

The Cape Wind project, an offshore wind generation project proposed to be built off the coast of Nantucket Sound, has finally received federal approval to move forward after a bitter and divisive, decade-long battle. This development would be the first major offshore wind project to be constructed in the U.S. and is planned to produce energy from 130, ~400 foot tall turbines.

As a recent Wall Street Journal article noted, “The ferocious opposition from Massachusetts liberals to the Cape Wind project has provided a useful education in green energy politics.” Green opposition to the project – for a multitude of potential environmental and aesthetic ills — has been as strong, as strident, and as sustained as any opposition seen to other forms of energy production. This tendency to protest any and all development is an unfortunate reality on the more extreme ends of the green spectrum, and will be considered in the Spring 2010 edition of American Coal magazine (in final publication as this post is being written). Articles in this edition will look at the U.S. Chamber of Commerce’s Project-No-Project program, the unintended consequences and cumulative impacts of repeated rejections of development, as well as methods for communities and business to proactively address concerns over development before they become insurmountable.

But now, as the project moves closer to reality, opposition from rate-payers, citizen-groups, and their elected officials is also picking up steam. Various news sources and renewable energy boosters are reporting that the projected cost of the project, initially expected to run $650 million, has

ballooned to more than $2 billion in construction costs and a potential $6 billion hit to ratepayers when debt service, profits, maintenance and other costs are included. […] The $6 billion cost to electricity customers doesn’t include an estimated $600 million in taxpayer subsidies that Cape Wind developers could reap from federal tax credits to cover a portion of the final construction price.

Adding to the financial woes, the expected rate for the electricity produced will start out at 20.7 cents per kilowatt hour in 2013 — more than double the average national electricity price. Additionally, given the already approved 3.5% annual rate increase over the life of the project’s national grid contract, the expected price for electricity produced by Cape Wind will mount to about 34.7 cents/KWh by the end of the 15 year term. This can’t even begin to compare with the much lower rate for advanced, clean coal with CCS of 9.8 – 10.8 cents per kilowatt hour. Even staunch defenders of wind are arguing that it would serve the renewable energy cause better to target onshore developments.

“Why are you spending billions (on offshore wind) when you can pay half that with traditional wind?”

Even though it sits at half the cost of offshore wind, onshore wind developments are still far more expensive than coal as they rely on substantial subsidies to maintain their current level of ‘competitiveness’ with other energy resources. Energy Information Administration data from 2008 show that solar energy received $24.34 per megawatt hour in subsidies and wind energy received $23.37 per megawatt hour. In contrast, coal received 44 cents, natural gas and petroleum received 25 cents, hydroelectric power 67 cents, and nuclear power $1.59 per megawatt hour.

All of this is occurring amidst the reality that the wind industry has had to drastically cut its claimed CO2 reduction benefits due to the rapidly improving technologies being used to produce energy with coal, and that attempting to replace fossil fuel generation options with renewable generation options may have little to no real-world impacts on CO2 emission levels.

Since wind power has a “limited load factor even when technically available,” utilities need to maintain permanently online back up generation “with capacities equal to 90% of the installed wind power capacity … to guarantee power supply at all times.”


Natural gas used as wind back-up in place of baseload or intermediate gas (in the absence of wind) results in approximately the same gas burn and an increase in related emissions, including CO2. Extrapolating from this example to the whole, the working hypothesis is that intermittent wind (and solar) are not effective CO2 mitigation strategies because of inefficiencies introduced by fast-ramping (inefficient) operation of gas turbines for firming otherwise intermittent and thus non-usable power.

These findings are being publicly backed up by the utilities that are actively involved in building and operating renewable energy sources.

Flemming Nissen, the head of development at West Danish generating company ELSAM (one of Denmark’s largest energy utilities) tells us that “wind turbines do not reduce carbon dioxide emissions.” The German experience is no different. Der Spiegel reports that “Germany’s CO2 emissions haven’t been reduced by even a single gram,” and additional coal- and gas-fired plants have been constructed to ensure reliable delivery.

So while the Cape Wind project has finally cleared a major hurdle in obtaining federal approval to move forward, this development is still a fair way from generating power today. There are still state and

While we support a diverse portfolio of generation options, the reality is that the choices between options need to be made with full knowledge of the actual costs and benefits of each energy option being put forward. Offshore wind, as is being proposed by the Cape Wind project proponents, is certainly one option. However, it is worthwhile to recognize that this energy option will employ technology, which will have substantial environmental and aesthetic impacts of its own, will produce energy costing double to triple that of electricity produced by current clean coal options, and could potentially have little to no impact on actual CO2 emission levels (given the need for fossil-based firming and backup generation requirements.)

If the voters and ratepayers recognize this reality and continue to support offshore wind development, that is their choice. It is questionable, however, if the facts and real numbers are making it out to all those who will be impacted by the choice to use this option.

13. May 2010 by Jason Hayes
Categories: Environment, Power Generation, transmission | Tags: , , | Comments Off on Cape Wind: costs rising fast