Cape Wind Offshore Plant Sees Legal Hurdles Resolved by Year-End

Cape Wind Associates LLC, the developer seeking to build the first U.S. offshore wind farm, expects to resolve by year-end the last lawsuits delaying the project, clearing the way for construction to begin before a key tax credit expires this year.

Two legal appeals remain after the company won 13 previous challenges, Vice President Dennis Duffy said today at the American Wind Energy Association’s Offshore Windpower 2013 conference in Providence, Rhode Island.
Cape Wind, based in Boston, has spent more than a decade pursuing the $2.6 billion project in Nantucket Sound, fighting opposition from environmental groups, local fishermen and members of the Kennedy family. It must begin construction by Dec. 31 to earn the federal investment tax credit.

“What we are focusing on right now is ensuring we qualify for the ITC before the end of the year,” Duffy said in a speech.

“We are waiting for those decisions and we think we’ll have them this fall,” Duffy said. “That will give us the opportunity to get the notice to proceed to get the project really going.”

The 468 megawatt project has the backing of Danish investor PensionDanmark A/S, which committed $200 million in June, conditional on construction beginning this year. Efforts to arrange other equity commitments are “underway,” Duffy said. National Grid Plc and Northeast Utilities’ Nstar unit have agreed to buy most of the power.

Anticipated Rulings

Cape Wind will probably be able to move forward before the end of the year, said Michael Ernst, director of regulatory affairs at Tetra Tech Inc., a Pasadena, California-based construction and engineering company.

“The decisions should be out this fall,” and the judges are probably writing their rulings now, he said in an interview.

Opponents doubt that Cape Wind will meet the deadline.

“With the looming tax credit expiry, the whole house of cards will begin tumbling down,” Audra Parker, director of the Alliance to Protect Nantucket Sound, said in a phone interview. “Time is running out.”

The ITC provides a 30 percent tax credit for eligible renewableenergy projects. Cape Wind already has state and federal permits.

Cape Wind may spur additional U.S. offshore wind projects, said Sebastian Chivers, senior vice president at the renewable energy-consulting company TUV SUD PMSS, a unit of the Munich- based technical services provider TUV SUD AG.

“I’m convinced there will be a booming offshore wind market in the U.S.,” he said in an interview. Cape Wind is “what the industry needs: a full-scale project up and running.”

Copyright 2013 Bloomberg 

Lead image: Offshore wind via Shutterstock

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