The Dollar Cost of Wind Energy (Not A Bakken Story)

I have followed the Cape Wind story near Boston, Massachusetts, ever since I started visiting Boston on a regular basis starting about a year ago.

From the very beginning, it was obvious that a) the wind project was going to be very expensive; and, b) it was being marketed by a small group of self-serving developers (or developer, singlular) and politicians (or politician, singular).

From my perspective, the Boston Globe stressed the "green energy" aspect and not the cost. Today, in a front-page story, the truth is starting to come out: the high cost of this project.

Once the 130 turbines begin rotating, the energy produced will cost up to 50 percent more than energy today from some land-based wind farms and twice as much as some hydroelectric dams. The cost will increase customers’ monthly electric bills about 2 percent, and for many that is too steep in tough economic times.

From the headline, the Globe makes it sound like it was the developer's responsibility to discuss the cost when marketing the project. I remember how hard it was in the beginning to find cost estimates, and only as time went be, due to letters to the editor, did readers find out the real cost. For me, this is a day late and a dollar short for the Boston Globe.

At a time of climbing fossil fuel prices, the administration expected that energy from Cape Wind would not cost much more than energy from other sources. Then came the recession, and a sharp decline in the cost of fossil fuels. State officials continued to make public statements about savings from the project, but the truth was that Cape Wind suddenly looked forbiddingly expensive. Even National Grid, which wants to buy half of Cape Wind’s power, has noted amid its hundreds of pages of legal testimony that the total cost to consumers over the life of the 15-year contract will be more than $560 million over the company’s forecast of energy prices.

"Even National Grid, which wants to buy half of Cape Wind's power...." is stretching the reality. A for-profit entity would not want to enter into this deal. In fact, it was political pressure that pushed National Grid into signing. 

But with regard to cost, it's even worse.

Now, after a new analysis by the attorney general’s office placed the cost of building Cape Wind at more than $2.5 billion, 2 1/2 times the original estimated price tag, the state Department of Public Utilities is weighing whether National Grid’s proposed 15-year contract with Cape Wind is a good deal for ratepayers. A decision is expected by mid-November.

The price tag is 2.5 times the original estimated price tag, and the price of natural gas has fallen to historic lows where it is expected to remain for years.  And that cost will be passed on to consumers.

State officials wanted utilities to enter into 20-year contracts to buy power from renewable power plants, but the utilities balked, saying such deals could cost them millions. It was a major sticking point in the negotiations, but a deal was struck: The utilities agreed to sign 10- to 15-year contracts in return for a guaranteed 4 percent markup over whatever price was negotiated for the renewable power.

The Globe continues to be complicit in hiding the real cost to consumers. The Globe did not mention that the rate paid by consumers would be automatically increased on an annual basis. 

The story has relevance for those living in the Midwest.