New England utility National Grid and offshore wind developer Cape Wind have agreed to enter into negotiations for a long-term power purchase agreement (PPA), according to an announced made by Massachusetts Governor Deval Patrick.
A PPA will be a critical requirement for financing the proposed wind farm in Nantucket Sound, and getting it into construction and operation in time to qualify for federal incentives under the American Recovery and Reinvestment Act that would reduce the cost of the project by 30%.
National Grid has twice rejected proposals by Deepwater Wind–a developer of a project of the coast of Rhode Island. National grid said the proposed price of 25.3 cents per kilowatt-hour is too high compared to the 9.2 cents per kilowatt-hour the company currently pays for electricity generated from conventional sources.
No pricing details for the Cape Wind project were released.
Any power purchase arrangements must be approved by state regulators. National Grid is expected to file shortly with the state Department of Public Utilities (DPU) a Memorandum of Understanding with Cape Wind laying out the rationale for such a contract, as well as the methods and timelines by which the parties will pursue an agreement. If DPU gives approval to the process, National Grid and Cape Wind will engage in negotiations to enter into a mutually agreeable long-term contract and submit any final pact to DPU for review and approval.
“National Grid supports the Commonwealth’s goal to expand renewable generation in Massachusetts, including offshore wind,” said National Grid President Tom King. “We are optimistic that we will successfully negotiate a long-term power contract with Cape Wind that will achieve the renewable targets established by the Green Communities Act.”
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