By William Opalka
National Grid and NSTAR, a unit of Northeast Utilities, said the 468-MW project off the coast of Cape Cod failed to meet deadlines to secure financing and begin construction by Dec. 31. The developer of the $2.6 billion project could have extended the deadline if it had put up financial collateral, the utilities said. Both utilities terminated their PPAs with the developer on Jan. 6.
National Grid had a 2010 agreement for 50% of the project’s output, while NSTAR was contracted for 27.5% as part of its merger settlement in 2012 with Northeast Utilities. Both PPAs were for 15 years.
“We do not regard these PPA terminations as valid due to the force majeure provision of the contracts that extends the milestone dates,” Cape Wind said in a statement. The developer cites delays caused by “relentless litigation” by project opponents as the primary reason it has been unable to meet the deadline, a contingency it says is included in the utility contracts.
National Grid said that it “is disappointed that Cape Wind has been unable to meet its commitments under the contract, resulting in yesterday’s termination of the power purchase agreement.”
The Alliance to Protect Nantucket Sound, which has been fighting the project for 14 years, hailed the contracts’ termination.
“The decision by NSTAR and National Grid to end their contracts with Cape Wind is a fatal or near-fatal blow to this expensive and outdated project. It’s very bad news for Cape Wind, but very good news for Massachusetts ratepayers, who will save billions of dollars in electric bills,” it said.
The Interior Department’s Bureau of Ocean Energy Management issued a commercial lease in 2010 for the project, which the alliance now says should be revoked.
Opponents’ efforts to block the project based on its above-market power prices have also failed. The NSTAR PPA established a base price equal to $187/MWh.
Even before the latest round of bad news, Cape Wind seemed to have lost its position as the first offshore wind development on the East Coast.
Deepwater Wind in Rhode Island has assumed the lead, promising “steel in the water” by this summer.
Its 30-MW Block Island Wind Farm is to be located about three miles off the coast of Block Island, R.I., and is fully permitted. The Block Island project has a PPA with National Grid that includes a fixed price of 24.4 cents/kWh with an annual 3.5% escalator.
The pilot project is a precursor of the planned 1,000-MW Deepwater Wind Energy Center, located off the coasts of Massachusetts and Rhode Island.
Last year, Deepwater Wind signed contracts with Alstom as its turbine supplier and long-term maintenance and service provider.