The 28-year lease for 25 square miles in federal waters will cost Cape Wind an annual fee of $88,278 before construction and a 2 to 7 percent operating fee during production based on revenue from selling the energy.This may help spur the approval of similar projects off New Jersey's coast.
“This is the beginning of a new era for our Nation in offshore energy production,” Salazar said in a speech to the American Wind Energy Association in Atlantic City where he was signing the lease this morning. “Responsibly developing this clean, renewable, domestic resource will stimulate investment in cutting-edge technology, create good, solid jobs for American workers, and promote our nation’s competitiveness, security, and prosperity.”
The expected announcement brings Cape Wind, which has undergone nine years of permitting, that much closer to construction. The state Department of Public Utilities is currently reviewing a deeply controversial contract between the utility and the developer to sell 50 percent of it energy at more than double the cost of current fossil fuel prices. They are expected to make a decision, widely expected to be an approval, by Nov. 15.
It was not immediately clear how the lease payment was arrived at – or how it compares to offshore oil and gas leases.
“We’re ready to roll up our sleeves and get to work building America’s first offshore wind farm that will create hundreds of jobs, increase our energy independence and promote a healthier and more hopeful energy future,” said Cape Wind President Jim Gordon.
Cape Wind, about five miles from the closest Cape Cod shore, is expected to produce the equivalent of up to 75 percent of the electricity demand for the Cape and Islands. Salazar gave the project final federal approval in April.
Meanwhile, major companies are looking to get into the wind power business including
Northrup Grumman. The major aerospace and naval shipbuilder is getting into the wind power game after signing a deal with a Spanish company to build an offshore wind turbine. They have the experience necessary to build major structures offshore that are capable of withstanding the forces of nature typically encountered offshore, so this is a good fit and will help create jobs.
Opponents to land-based wind power facilities have plenty of fodder in thwarting construction of projects. Besides the typical NIMBY mentality, some are pointing to studies claiming that wind power projects can affect local weather patterns. Much more frequently, the opposition is based on the noise made by the blades cutting through the air. Some projects have restrictions on when they can operate, reducing their efficiencies and output.
The net result of land-based opposition will be an increased cost associated with construction offshore, and increased costs for running transmission lines to the offshore projects, but once these sites are built, they will provide a renewable source of electricity.