Cape Wind is gone but its legacy remains


December 8, 2017

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Farewell Cape Wind. The pioneering project that was set to be North America’s first offshore wind farm is now officially dead.

The news last week that developer Energy Management Inc. has cancelled the lease represents a bitter end for the 468MW project, but not a surprising one. Cape Wind was first mooted in 2001 and has spent most of the last 16 years in doubt.

First came the legal fights. Since its inception, the project planned in waters off the coast of Massachusetts attracted objections from people living in Martha’s Vineyard. Backed by the financial clout of the billionaire Koch brothers, their strategy was to delay the scheme in legal battles. By July 2014 the developer had won 26 legal fights, and the project had been scrutinised by US public bodies and regulators for ten years.

It also had funding deals in place with Bank of Tokyo Mitsubishi, Natixis, PensionDanmark and Rabobank; backing from EKF; and power purchase deals. Everything looked good.

But winning legal arguments and funding deals is not always enough. The objectors’ strategy of tying up the project in legal disputes worked. As a result, Cape Wind did not reach financial close in 2014, and enabled National Grid and NStar to walk away from power purchase agreements for 77.5% of the project’s output in January 2015.

That threw the project into a decline from which it never recovered. Yes, the termination last week may be an acknowledgement that the location wasn’t going to work – but it is still a great shame for all of those who worked in vain on Cape Wind for over 16 years, including Energy Management Inc. president Jim Gordon.

And yet, it is too simplistic to see Cape Wind as a failure. It is not going ahead, but it has played a vital role in putting offshore wind on the agenda of US companies and policymakers. The 30MW Block Island may be the first wind farm in US waters, but it was Cape Wind that showed these projects could get the backing they needed to be done at utility-scale – from financiers, politicians, regulators and utilities.

In that respect Cape Wind is a trailblazer. It has helped pave the way for 13 projects we now see in waters off ten states, from Massachusetts and New York to California and Oregon. Steve Lockard, chief executive of blade specialist TPI Composites, said at the WindEurope conference last week that “the momentum and enthusiasm and curiosity from some is growing”. The early work on Cape Wind helped get that going.

And now, in all likelihood, Cape Wind will fade into the background. The main objection to offshore wind on the site will not disappear, and developers are making progress on other projects. Deepwater Wind has been talking since 2010 about the 30MW Block Island being the first phase of a 1GW project.

Meanwhile, Statoil is planning the 1GW Empire Wind in New York waters; Avangrid and Copenhagen Infrastructure Partners are working on the 1GW Vineyard Wind off Massachusetts; and Avangrid is progressing the 1.5GW Kitty Hawk off North Carolina.

In total, projects totalling 9GW are in development off the US coast – but, for the first time in 16 years, Cape Wind is not among them.

We do not expect it to be plain sailing for US offshore wind. There are threats from tax credit reforms, fickle politicians, the lack of a supply chain, and shipping restrictions in the Jones Act that need to be dealt with. But we do expect other firms to succeed where Cape Wind couldn’t and, when they do, it will be partly due to the pioneering work on that development. Gone but not forgotten.

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