Interior Secretary Ken Salazar injected life into the fledgling offshore wind industry yesterday by approving the nation's first project off the coast of Cape Cod, Mass.
Supporters called Salazar's decision to provide a federal permit to Cape Wind a major breakthrough that would prod uncertain investors into backing multiple offshore farms in the years ahead down the East Coast and in the Great Lakes. They said construction could begin as early as this year, after a nine-year slog battling critics.
"Today's decision by the secretary of the Interior launches the American offshore wind industry," said Cape Wind President Jim Gordon. "It now allows us to harness an abundant and inexhaustible resource."
Yet the timeline for construction of the $1 billion wind farm is still in limbo as opponents vowed to fight the proposal with lawsuits under the Endangered Species Act and other statutes. There also are ongoing uncertainties about the project's financing.
For Salazar, the decision involved weighing opposing viewpoints from U.S. senators, Indian tribes, business interests, local officials and wealthy landowners worried about obstructed views of Nantucket Sound.
"I am convinced that there is a path we can take forward that both honors our responsibility to protect the historical and cultural resources in Nantucket Sound and at the same time meet the needs to repower our economy," Salazar said at a press conference at the Massachusetts State House with Democratic Gov. Deval Patrick.
Salazar has listened to opponents for months but ultimately agreed with arguments made in a letter from six bipartisan governors in the Northeast, who said the project's rejection would set a chilling precedent that could block any wind farm near historic sites.
Restrictions to protect Indian artifacts and 'visual impacts'
The project has divided the state's two U.S. senators, with Sen. John Kerry (D-Mass.) in support and Scott Brown (R-Mass.) in opposition. The late Sen. Edward Kennedy (D-Mass.), who sailed the sound's waters, staunchly opposed the initiative.
Cape Wind envisions turbines, each taller than the Statue of Liberty, stretching 25 miles in an area called Horseshoe Shoal. The project, which would be about 5 miles off the coastline, could supply 75 percent of the electricity needs of Cape Cod and nearby islands.
Interior placed several conditions on the farm's construction, reducing the number of turbines from 170 to 130, and ordering the project reconfigured farther from Nantucket Island. The developer must now also conduct additional surveys to ensure protection of any submerged Indian archaeological finds.
If artifacts are found, the developer is mandated to halt operations and notify the Department. There also were requirements that the turbines sport an off-white color to remain visible to birds and contain lighting lower than FAA standards to reduce "potential nighttime visual impacts."
Local opponents including the Alliance to Protect Nantucket Sound and the Lower Laguna Madre Foundation slammed the new conditions as irrelevant and announced plans to immediately file multiple lawsuits in federal court now that an official federal decision stands available for attack. There also are ongoing challenges at the local level and a pending "determination" from the Federal Aviation Administration about whether the turbines could interfere with radar.
On a conference call with reporters, Buddy Vanderhoop of the Wampanoag Tribe of Gay Head (Aquinnah)" called the verdict a "slap in the face" to Native Americans who consider the sound a sacred body of water. Some tribes in the area claim the large turbines would block sunrise views that are an essential part of traditional ceremonies.
"The fight is far from over and ultimately will be settled in court based on facts, not on politics," said Audra Parker of the Alliance to Protect Nantucket Sound.
Next hurdle: the Endangered Species Act
In particular, lawsuits under the Endangered Species Act could snarl things up in the judicial branch, said Hope Babcock, a professor at Georgetown University Law School.
"That statue has real, real teeth," Babcock said. Any harassment or death of one animal that could be tied to a turbine could lead to fines for the developer, depending on the text of the lawsuit, she said. At the same time, she said, legal challenges could get thrown out ultimately, even if they caused delay, because the Interior Department has had nine years to consider all potential legal obstacles.
Even so, the project still lacks two critical components: financing and a buyer for its renewable electricity. The two are linked because securing a long-term power purchaser will boost Cape Wind's prospects of winning financial backing.
This is all needed quickly if the company is to really begin construction this year, in time to qualify for federal support under the federal economic stimulus package. Since December, Cape Wind has been in discussions with National Grid, New England's largest utility, for a long-term power purchase contract.
"This decision allows us to certainly move forward with the power purchase agreement negotiations," said National Grid President Tom King, applauding the milestone decision in an interview. "It's a clear indication that we're going to have the federal support behind the project," he said.
While he said a deal could come in the very near future, its approval by Massachusetts' Department of Public Utilities is anything but certain.
Just last month, Rhode Island's utility commission rejected National Grid's proposal to buy power from a smaller, eight-turbine farm off Block Island out of cost concerns, casting that project in doubt. The proposed power price of 24.4 cents per kilowatt-hour -- about triple current rates -- was not "commercially reasonable" for the state's ratepayers, the commission found.
Negotiating to sell power
As in Rhode Island, Cape Wind's path forward hinges on balancing of the costs of offshore wind power with the state's renewable electricity mandate and urgency to claim jobs in a growing sector.
As it negotiates with Cape Wind, King said National Grid is trying to get the best deal for its customers and advance its renewable portfolio at the same time. He noted that the Massachusetts utility commission will also grapple with those same issues when it decides whether to approve the power purchase. "We're trying to balance all of those aspects," he said.
Massachusetts' top energy official recently expressed concerns over ratepayer costs, telling National Grid and Cape Wind that the rate they negotiate should be "substantially discounted" from the Block Island project. But cost arguments go both ways. Gov. Patrick argued yesterday that the wind farm could stabilize fossil-fueled electricity rates that have doubled over the last decade.
King was optimistic that Cape Wind deal would do better than the Block Island project's pricing. Meanwhile, Gordon predicted that the outstanding challenges to Cape Wind's project would be resolved.
When asked, for example, how Cape Wind would respond if it found an underwater artifact sacred to Native Americans, Gordon said the matter could be resolved by "simply moving a turbine."
For supporters, the decision is not just about mitigating climate change but ensuring that the United States lays claim to jobs in the burgeoning worldwide offshore wind market. The United States, for example, lags far behind Europe, where some 2,000 megawatts of offshore generation exist.
A spur to other offshore wind projects
Cape Wind alone could reduce carbon dioxide emissions enough to match the greenhouse gas output of 175,000 cars annually, along with generating 1,000 construction jobs, Salazar said. States are pushing offshore wind project developers to buy turbines from suppliers that site plants domestically, as well.
Patrick added that the decision allows Massachusetts to be a clean energy leader, on the heels of Siemens' announcement that it is constructing its offshore wind office in Boston because of Cape Wind. A facility under construction near Boston Harbor will be the nation's largest wind turbine blade testing facility.
Meanwhile, the Interior Department is in ongoing discussions with Indian tribes to provide them with funding as part of the decision, an official said.
It also has set new "rules of the road" intended to speed up approvals of the next offshore wind projects. About 54,000 megawatts of offshore wind power needs to be flowing for the United States to get 20 percent of its electricity from wind by 2030, according to the American Wind Energy Association. Wind currently generates about 2 percent of the nation's power.
"At the end of the day, it's my responsibility as secretary of the Interior to make decisions," Salazar said. "I'm very confident it will stand the scrutiny of time."