"A Major Setback" Or Deal-Breaker -- January 7, 2015

The Boston Globe characterizes it as "a major setback." Everything I've read suggests this is a "deal-breaker." There is another interesting bit of trivia in the article that also suggests this is much more than "a major setback."

The story:

The Cape Wind plan was dealt a major setback Tuesday when two power companies that had agreed to buy energy from the Nantucket Sound wind farm terminated their contracts with the developers, raising questions about the future of the $2.5 billion offshore project.

National Grid and Northeast Utilities said Cape Wind had missed the December 31, 2014, deadline contained in the 2012 contracts to obtain financing and begin construction, and chosen not to put up financial collateral to extend the deadline.

More:

In a separate e-mail, National Grid spokesman Jake Navarro said the utility was “disappointed that Cape Wind has been unable to meet its commitments under the contract, resulting in today’s termination of the power purchase agreement.”

Under the 2012 agreement, Northeast Utilities and NStar agreed to buy 27.5 percent of Cape Wind’s production. National Grid had previously signed on to purchase 50 percent.

A Cape Wind spokesman said the developer does not “regard these terminations as valid” because of provisions that, the company argued, would extend the deadlines.

And deep in the story:

Ian Bowles, who as Patrick’s first energy and environment chief helped shepherd the offshore project, said Tuesday’s news may have spelled the end for Cape Wind.

“Presumably, this means that the project doesn’t go forward,” he said in a telephone interview.

The jeopardy in which Cape Wind finds itself reflects a changed energy market, in which developers bear more risk than the eventual ratepayers, Bowles said.

“The risk is on the developer to either build it or not. And in this case, the developer appears to have failed,” he said.

Advances in the state’s renewable energy and efficiency policies have lessened the importance of Cape Wind in its overall energy landscape, Bowles said.

And here is that bit of trivia I alluded to in the beginning, another nail in that coffin:

Governor-elect Charlie Baker is set to take office Thursday. Once a critic of Cape Wind, Baker shifted positions during last year’s campaign, calling the project “a done deal.”

On Tuesday night, a Baker spokesman issued a statement that hinted that the new governor would not interject himself into the contract dispute.

By the way, "...the state's renewable energy and efficiency policies have lessened the importance of Cape Wind...." I assume they mean the state has already backtracked or is likely to backtrack on renewable energy mandates.