US dips its toe in the water, again


September 9, 2011

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The struggle to secure the US’s first major offshore wind scheme continues, as opponents to the project have taken action at the Massachusetts Supreme Court over the agreement signed between the developer, Cape Wind, and the National Grid regarding the supply of power.

The court action, launched by the ‘Alliance to Protect Nantucket Sound’ (APNS), claims that the Purchase Power Agreement (PPA) signed between the two parties unfairly places an increased cost burden on power consumers in Massachusetts, as lower priced renewable energy contracts from other states were not considered by the grid.

It is, of course, another tactic by opponents of the development to derail the scheme, which, when construction eventually starts, will be a crucial step on the path towards US offshore wind.

What’s broadly more interesting though, is that it does cast a new light on the nature of PPAs signed between Independent Power Producers and utilities, particularly at the rate at which consumers will be signed up to over the contract’s length.

Whilst APNS’ grievance is to serve their own ends, perhaps it may be worth a re-examination of the way in which PPAs are signed. With utilities increasingly moving towards ownership of wind projects, the PPA, which has strongly supported the growth of US onshore wind, may not be wholly suitable for the offshore realm.

This, coupled with merchant wind developments that don’t sign an upfront pricing agreement, foregoing initial guaranteed revenue to instead rely on market price to provide better returns, suggest that there is room in the market for a rethink.

This would, perhaps, have the effect of demonstrating to consumers that the developers and utilities behind a particular project had sought to keep prices as competitive as possible, thereby going some way to removing arguments that wind energy has to be prohibitively expensive for consumers.

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