Cape Wind facing key setback in commercial offshore operation

Cape Wind Associates, which is developing the first offshore wind power project in the United States, planned for federal waters off the coast of Massachusetts in Nantucket Sound, has suffered a significant setback in its plans for commercial operation.

Two electric companies that were planning to purchase power from the landmark project have cancelled their contracts citing Cape Wind’s failure to meet a deadline to secure financing and start construction.

NSTAR Electric informed Cape Wind in a Jan. 6 letter that it was terminating a power purchase agreement that it had reached with Cape Wind in March 2012. This is “on account of the failure of Cape Wind to satisfy the Critical Milestones” for financing and the start of construction by Dec. 31, 2014, according to the letter.

Likewise a spokesperson for National Grid confirmed to GenerationHub late on Jan. 9 published reports that his organization had also exercised its rights to terminate its power purchase contract for the same reasons. National Grid had agreed to take 50% of the output from Cape Wind.

In a Jan. 6 posting on Twitter, Cape Wind said that it does not consider termination of the power purchase agreements (PPAs) as valid. “We do not regard these PPA terminations as valid due to the Force Majeure provision of the contracts that extends the milestone dates,” Cape Wind said in the posting.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.