Massachusetts Approves Second PPA for Offshore Cape Wind Farm

The Massachusetts Department of Public Utilities (DPU) on Wednesday approved a 15-year Power Purchase Agreement (PPA) between Cape Wind and NSTAR for 27% of power generated by the Cape Wind project, the nation’s first offshore wind farm.

Project developers already have a deal to sell 50% of power from the 130-turbine farm to National Grid, a deal that was upheld in December 2011 by the Massachusetts Supreme Judicial Court. “Taken together, these two PPAs provide Cape Wind with the critical mass to continue securing project financing,” said Theodore Roosevelt IV, managing director of Barclays and Cape Wind’s financial advisor.

In its order, the DPU said it found the "PPA will provide benefits to NSTAR Electric ratepayers that far exceed those that could be provided by other Section 83 contracts." Section 83 of the state’s Green Communities Act requires each electric distribution company to solicit proposals for long-term contracts of 10 to 15 years in duration from renewable energy developers at least twice over a five-year period starting in July 2009. If proposals are deemed "reasonable," the act calls on the company to enter into a "cost-effective" long-term contract to "facilitate the financing of renewable energy generation."

Under terms of the deal, NSTAR will reportedly pay 18.7 cents/kWh for Cape Wind power in the first year of the contract. The DPU on Wednesday also determined the PPA pricing terms were "reasonable," and estimated the monthly bill for a typical NSTAR customer would increase by about 1.4% as a result of the PPA.

The Cape Wind project, proposed in 2001, has run into various legal setbacks and suffered several delays. Construction on the 440-feet-high turbines is slated to begin in 2013, and the project could begin generating power in 2015. Though it is rated at 468 MW, its average anticipated output is 182 MW. The project includes a 66.5-mile buried submarine transmission cable system, an electric service platform, and two 115-kV lines connecting to the mainland power grid.

Sources: POWERnews, Cape Wind, DPU

—Sonal Patel, Senior Writer (@POWERmagazine)