After nearly a decade, the Cape Wind offshore project has a lease approval from the Department of Interior, but it is not quite up and running. Once the 130 turbines that stand 440 feet high (taller than the Statue of Liberty) start moving, consumers will pay a hefty premium for the electricity the nation’s first offshore wind farm generates. The Boston Globe reports:
[T]he 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.
And let’s not forget that onshore wind is pricier than more conventional, reliable sources of electricity. A new analysis from the Attorney General’s office pegs the cost of the project at $2.5 billion—more than twice the original estimate. Cape Wind stands to receive hundreds of millions of dollars in federal subsidies, and to replace one offshore natural gas platform, we would need 59 Cape Wind projects, which means more than 7,700 turbines covering an area the size of Rhode Island. We would need 24 of these projects to replace one of the 104 nuclear plants we have in the United States.
The Cape Wind offshore wind farm has been in federal review for nine years and just recently received lease approval from the Interior Department. The project still has some hurdles to overcome, mainly the contract that Cape Wind negotiates with the utility to buy the wind power. The 130-turbine project that would spread across 25 square miles received support and opposition from environmentalists—some arguing we need more clean energy production, others arguing that it will harm the marine’s ecosystem. The late Senator Ted Kennedy long argued that the aesthetic beauty of the Nantucket Sound would be ruined and tourism would suffer as a result. Indian tribes argue it will destroy sacred land.
The debate has become so contentious that few actually considered the economics of the project. Beth Daley of the Globe writes, “They were focused on making Cape Wind happen; they didn’t worry nearly as much about the cost, a Globe review of state documents shows.”
Wind power without subsidies, mandates, or tax credits can benefit Americans by creating a more robust, competitive energy market. The reality is that decades of subsidies and tax credits haven’t helped wind projects compete; they’ve stifled them in mediocrity and complacency. Special-interest politicking creates benefits for few and disperses the costs on the rest of us. Audra Parker of the Alliance to Protect Nantucket Sound explains it well, saying consumers “will be needlessly paying billions of dollars in electric bills and subsidies to line the pockets of a private developer.”
Nicolas Loris is a Research Assistant at The Heritage Foundation’s Roe Institute for Economic Policy Studies. Loris studies energy, environment and regulation issues such as the economic impacts of climate change legislation, a free market approach to nuclear energy and the effects of environmental policy on energy prices and the economy.
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