The Trickle-Down Effect Of Cape Wind
2010 will be remembered as the year that Massachusetts became the first in the nation to move forward with offshore wind power. Attaining first mover advantage in offshore wind will give Massachusetts a leg up in the significant job creation that is going to come from this important new energy sector.
In October, Secretary of the Interior Ken Salazar issued Cape Wind the nation’s first offshore wind power lease and in November, the Massachusetts Department of Public Utilities approved the long-term power purchase contract between Cape Wind and National Grid.
The Project’s Perks
For National Grid, Cape Wind provides a bundle of products including energy, renewable energy credits, capacity and a stable priced hedge against the volatility of fossil fuel energy prices. Under the terms of the contract, National Grid also receives any future environmental attributes of Cape Wind — including carbon credits — as national and state energy policies continue to push in a greener direction. National Grid also has the option of extending the contract with Cape Wind on a cost-plus basis, which may be significantly below market at that point in time.
For National Grid’s customers, if fossil fuel energy prices stay fairly stable over the next few years, the bill impact from Cape Wind in 2013 is forecast to be an increase of about 1.5 percent for residential customers and 2 percent for commercial customers. For comparison, these same customers saw their electric bills increase 300 percent between the years 2001 and 2008 from rising fossil fuel prices.
Two Massachusetts energy boards found that Cape Wind would exert downward pressure on wholesale electric prices through price suppression. Cape Wind commissioned Charles River Associates to study this price suppression effect and they concluded it would result in $4.6 billion dollars in reduced energy prices over the life of the project.
Clean renewable energy also doesn’t impose the external costs of traditional energy sources such as polluted air and environmental degradation.
Economic Impact
The U.S. Department of Energy (DOE) estimates that over the next 20 years the United States can build 100 Cape Wind-sized offshore wind projects that will help the country attain a goal of meeting 20 percent of its electricity needs from wind power (offshore and onshore) by 2030. According to the DOE, such a buildout of offshore wind power would create more than 40,000 American jobs.
The construction and operations of Cape Wind will create the first thousand of these jobs. Massachusetts Gov. Deval Patrick has announced the creation of a new Marine Commerce Terminal in the port of New Bedford that will be the first site in North America specifically designed for the staging and assembly of offshore wind turbines. Cape Wind will be the site’s first customer.
Cape Wind has also signed a letter of intent with Mass Tank, a Massachusetts-based steel company that is partnering with Germany-based EEW to open a new facility to manufacture some of Cape Wind’s components.
Massachusetts has the right mix of strong offshore clean energy resources, visionary political leadership, a skilled workforce, rich maritime tradition and the nation’s first offshore wind project to become a global leader in this important new energy sector that will create jobs, increase our energy independence and contribute to a cleaner and more hopeful energy future.
Mark Rodgers is the communications director of Cape Wind.
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