Cape Wind signs agreement for turbines
Agreement with Siemens could secure tax breaks
Cape Wind Associates said Monday that it has finalized a major deal with the German conglomerate Siemens AG to buy giant turbines, the offshore transformer, and maintenance services for its planned multibillion-dollar wind farm in Nantucket Sound.
Jim Gordon, president of Cape Wind, described the agreement as one of the last major steps toward getting the 130-turbine wind farm built and running after 12 years of acrimonious debate over building such a project off the coast of Cape Cod. It could also prove key to securing hundreds of millions of dollars in federal investment tax credits, which are critical to Cape Wind financing the $2.5 billion project.
The federal government's energy investment tax credit is set to expire at the end of this year, and unless Congress renews it once lawmakers return to Washington after the holidays, only projects that have begun construction or incurred 5 percent of a project's total capital costs by the end of 2013 qualify.
Cape Wind will not begin major construction until next year at the earliest, but Gordon said the Siemens deal and other capital investments mean the project should meet the threshold for the credits.
The Internal Revenue Service will have the final say. A spokesman for the IRS declined to comment yesterday.
Audra Parker, president of the Alliance to Protect Nantucket Sound, one of the most vehement opponents of the Cape Wind project, said Gordon is "clearly having trouble" nailing down finances for Cape Wind.
The Siemens announcement, coming so close to the Dec. 31 tax-credit expiration date, is "just an attempt to qualify for the credits," Parker said.
In addition, Cape Wind is still facing multiple legal challenges, Parker said.
But Sue Reid, director of the Conservation Law Foundation, an environmental advocacy group in Boston, said she's optimistic that Cape Wind will get the tax credits and ultimately prevail in the lawsuits filed against the project. Cape Wind officials said they hope to wrap up financing in the second or third quarter of next year and begin driving pilings into the ocean floor soon afterward.
"Cape Wind is finally on the cusp of becoming reality," Reid said.
Under the deal unveiled Monday, Siemens, through its Siemens Energy subsidiary, will provide the 3.6-megawatt turbines and an offshore electric service platform that acts as a transformer for the power generated by the turbines. Siemens will also provide 15 years of maintenance service for the wind farm. Financial details of the deal were not disclosed.
Siemens Energy is subcontracting the manufacturing of the electric service platform to Cianbro Cos., a Maine engineering, construction, and manufacturing firm. The platform will be fabricated in Cianbro's facility in Brewer, Maine.
The turbines will be manufactured in Denmark and transported to the United States via ship. New Bedford is in the running to be a staging area for the massive construction project. Gordon said he hopes the project will be completed by late 2016 or early 2017.
"This is a significant milestone for this project and we're excited about it," said Governor Deval Patrick, whose administration has pushed hard to get Cape Wind built. "Massachusetts will be a pioneer in the emerging offshore wind industry, which brings with it both clean energy and good jobs."