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Massachusetts Approves Cape Wind / NSTAR Power Purchase Agreement

The Massachusetts Department of Public Utilities (DPU) has now approved a PPA (Power Purchase Agreement) between NSTAR and Cape Wind under which NSTAR would purchase electricity from the Cape Wind project.

Artist’s rendition of Hy-Line Cruises’ Cape Wind Eco Tour.

There are projections that this project will reduce electricity prices by $7.2 billion. And, there are projections the other way, as well. This is dependent on how windy this location is, as well as a variety of other factors.

The potential of offshore wind to affect electricity prices (either negatively or positively, depending on location) and to provide large amounts of the most stable and valuable wind energy is currently hotly debated. Some are so upset about it that they filed lawsuits, blocking the project for many years (though, these are based largely on some people not wanting their view “ruined”).

Offshore wind energy has great potential due to the strong, steady winds offshore. But construction and maintenance offshore is more expensive than onshore, so onshore wind energy is generally much cheaper still.

The president of the Cape Wind project, Jim Gordon, said: “This decision helps secure the position of Massachusetts as the U.S. leader in offshore wind power, launching a new industry that will create jobs, increase energy independence and promote a cleaner and healthier environment.

“With this decision, Massachusetts electric consumers have secured an abundant, inexhaustible, and clean energy resource that provides price stability and avoids all of the external costs of fossil fuels. Finally, our region will no longer be at the end of the energy pipeline, by harnessing an endless supply of offshore wind power, we will be producing homegrown and clean energy right here.”

The power purchase agreement is for NSTAR to purchase 27.5% of Cape Wind’s power.

In December, 2011, the Massachusetts Supreme Judicial Court unanimously upheld the Department of Public Utilities approval of Cape Wind’s PPA with National Grid for 50% of Cape Wind’s power.

Extracts from the DPU Order approving the Cape Wind / NSTAR PPA:

Accordingly, we conclude that the attributes of the Cape Wind facility, when considered in the aggregate, remain unique among Section 83-eligible resources and will provide benefits to NSTAR Electric ratepayers that far exceed those that could be provided by other potential Section 83 contracts. The critical unique attributes of the Cape Wind facility relate to its size, capacity factor, location on the regional transmission system, and stage of development.” p. 149.

Accordingly, as we concluded in D.P.U. 10-54, at 229-230, the Cape Wind facility will produce far greater benefits in terms of its: (1) contribution to narrowing the projected gap between supply and demand of renewable resources; (2) contribution to compliance with GWSA emission reductions requirements; (3) contribution to fuel diversity; (4) price suppression effects; (5) ability to act as a hedge against future fuel price increases and volatility; (6) contribution to system reliability; and (7) ability to moderate system peak load.

“As discussed below, the value of the Cape Wind facility as compared to alternative Section 83-eligible resources is further enhanced when these benefits are considered in combination with the facility’s favorable location on the regional transmission grid and advanced stage of development.” p.150″

Source: Business Wire
Photo Credit: Cape Wind Website

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