Lurking off the coast of Massachusetts like a shark out of a Steven Spielberg movie is a green energy project that is being rushed through the permitting process to meet statutory deadlines. If it goes under, it could end up costing U.S. taxpayers millions.
For almost two decades, efforts have been underway to build a wind farm on Horseshoe Shoal in Nantucket Sound, off the coast of Cape Cod. For almost as long, the effort has been opposed by local residents worried about the project’s cost and potential impact on the environment.
It’s not a small venture. The project would consist of 130 wind turbines, each 440 feet tall. It’s expected to cost $2.6 billion to build.
If this sounds like a lot of time and effort and expense to produce — at 23 cents per kilowatt hour — some of the most expensive electricity in the U.S., it is. The roughly 450 megawatts of power Cape Wind is expected to generate would be, according to estimates from different business groups in the state, as much as two to three times as expensive as the energy generated by conventional means.
This is probably why the backers of Cape Wind have had to look for financing outside the United States to raise the capital they need to complete the project. They have entered into an agreement with the Bank of Tokyo–Mitsubishi UFJ, which will act as “coordinating lead arranger” for the commercial portion of the project’s debt — financing that is yet to be arranged. But according to published reports, the Japanese firm won’t go forward until and unless the U.S. Department of Energy agrees to guarantee the loan.
The DOE has already turned down the Cape Wind project once. But Obama’s Department of Energy has a history of guaranteeing loans for politically well-connected green energy companies — think Solyndra — and the Massachusetts congressional delegation, led by Rep. Bill Keating, is ratcheting up the pressure on DOE to approve the loan guarantee before the expiration of the program under which the loan guarantee could be made. Don’t be surprised if the project eventually gets the go-ahead. If it does, there’s a good chance it will fail miserably, leaving you and me holding the bag.
It’s especially curious that Cape Wind’s backers are pressuring the administration to approve the loan guarantee now considering that the project’s very future remains in doubt. The U.S. Court of Appeals for the District of Columbia recently found that the Federal Aviation Administration failed to adequately review the potential hazard the “Cuisinart blades in the sky” might pose to commercial and civil aviation. If the FAA rules the turbines are a hazard, or if the courts do, the U.S. Department of the Interior will likely modify or revoke Cape Wind’s lease.
Rather than rush through approval of the project and the loan guarantee for Bank of Tokyo–Mitsubishi UFJ, it may be time to pull the plug. The red flags are already flying high and mighty on Cape Wind. It would be a mistake for the federal government to further commit taxpayers to a project that may turn out, like Solyndra, to just be so much hot air.
George Landrith is the president of Frontiers of Freedom, an organization founded by the late U.S. Sen. Malcolm Wallop, R-Wyo, and a graduate of the University of Virginia School of Law, where he was Business Editor of the Virginia Journal of Law and Politics.
