United States

United States

Cape Wind threatened by utilities over PPAs

UNITED STATES: Two US utilities have cancelled their power purchase agreements (PPA) with the 468MW Cape Wind wind farm, claiming the offshore project has failed to meet its milestones.

Siemens has signed a deal with Cape Wind to provide 130 of its 3.6MW turbines to the project
Siemens has signed a deal with Cape Wind to provide 130 of its 3.6MW turbines to the project

National Grid and Northeast Utilities-owned NStar said they were terminating their PPA contracts with Cape Wind after the developers missed a 31 December deadline for financial close.

Cape Wind Associates has rejected these claims. Cape Wind president James Gordon sent letters dated 31 December to Nstar and National Grid claiming a "force majeure" clause in the contract meant the milestones should have been extended.

In November 2012, Nstar signed 15-year PPAs to purchase 27.5% of the electricity produced by Cape Wind. The deal was made mandatory upon the acquisition of Nstar by Northeast Utilities.

National Grid signed its PPA for 50% in 2010. A statement by the utility said it was "disappointed" by the failure of Cape Wind to meet commitments but added a continued support for renewable energy. "We will continue to pursue other renewable options, including... competitively priced on- and offshore wind."

A National Grid spokesperson added, "We don't share their reading of the contract. Cape Wind did not meet its commitments and declined its option to extend the contract."

Cape Wind says unavoidable delays caused by the Alliance to Protect Nantucket Sound, a local group campaigning against the project, as the reason behind the missed deadline.

In a letter to the two utilities, Gordon said: "Over more than a decade, the Alliance has systematically engaged in a pattern of behaviour calculated to delay the development and financing of Cape Wind's offshore wind facility.

"The US federal district court recognised the substantial adverse effects of the Alliance's litigation strategy as follows: '...numerous courts have reviewed and approved the project and the PPA with Nstar and have done so according to and within the confines of the law.

"'There comes a point at which the right to litigate can become a vexatious abuse of the democratic process.'"

Last year, the Alliance sued Cape Wind on the grounds that Nstar was forced by state officials to purchase the electricity produced by the project at a higher price than the market rate.

A district court judge threw out the lawsuit in May, after he ruled it contravened the US constitution.

In a statement, Cape Wind said, "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 was unable to say what the future holds for the project.

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