National Grid agrees power deal for Nantucket offshore wind farm

December 2, 2009

Power utility National Grid has agreed to enter into a 20-year power purchase agreement (PPA) with Cape Wind, which is developing a 420MW offshore wind farm in Nantucket Sound, Massachusetts.

The contract should move the 130-turbine project closer to reality as it bids to become the first offshore wind farm in the US.

It is seen as “critical” to the project securing finance and reaching completion in time to qualify for federal incentives under the American Recovery and Reinvestment Act, which could cut costs by 30%.

The project, which is being developed by New England firm Energy Management Inc on behalf of Cape Wind, is being proposed for the Horseshoe Shoal. In average winds it is expected to provide three quarters of the electricity needs for Cape Cod and nearby islands.

Massachusetts Governor Deval Patrick said the PPA was a major milestone for the Cape Wind proposal, but noted that it still has to go through a State regulatory review.

He said: “For both reducing greenhouse gas emissions and launching the offshore wind industry that will achieve those reductions, it is essential for Cape Wind, like offshore wind in general, to move from wishful thinking to reality.”

Governor Patrick added: “A contract with an electric distribution utility like National Grid will move Cape Wind one step closer to reality.”

Agreement

National Grid is expected to file shortly with the state Department of Public Utilities a Memorandum of Understanding with Cape Wind laying out the rationale for such a contract, as well as the methods and timelines by which the parties will pursue an agreement.

If the Department gives approval to the process, National Grid and Cape Wind will engage in negotiations to enter into a mutually agreeable long-term contract and submit any final pact to DPU for review and approval. The state Department of Energy Resources is also a signatory to the MOU, providing a consultative role required by the Green Communities Act of 2008.

“The Green Communities Act called for long-term contracts to help renewable energy developers get their projects financed,” said Energy and Environmental Affairs Secretary Ian Bowles.

“While these contracts can be arrived at in a variety of ways, a smart, well-structured agreement to purchase the power generated by the nation’s first offshore wind farm, located just miles off the Massachusetts shore, will promote renewable energy and replace fossil-fuel power plants with emissions-free power.”

National Grid President Tom King said: “We are optimistic that we will successfully negotiate a long-term power contract with Cape Wind that will achieve the renewable targets established by the Green Communities Act.

“National Grid recognizes that as a public utility, we need to facilitate these important renewable projects while maintaining a focus on minimizing the cost to our customers. We are proud to be involved in this effort and applaud Governor Patrick for his leadership on this issue.”