The future of the long-planned Cape Wind project on Horseshoe Shoal was thrown into uncertainty this week when National Grid and NStar announced they had terminated their contracts to buy power from the private wind developer.
The two major utilities both cited Cape Wind’s inability to meet the terms of its contract with them.
Each utility had agreed to purchase a large percentage of the power expected to come from the 130-turbine wind farm in Nantucket Sound. But Cape Wind failed to secure financing and begin construction by Dec. 31, as required in its contracts.
Without the power purchase agreements in place, Cape Wind now faces a major obstacle in securing financing for the wind farm, which was estimated to cost $2.6 billion.
The news drew reactions on all sides of the controversial project which has been in the works for more than a decade.
In a statement, Cape Wind said it believes the contracts were terminated wrongfully, citing a “force majeure” provision that would extend the Dec. 31 deadline. Force majeure is a legal concept common in contracts that calls for nullifying certain provisions when unforeseen events occur, usually things like natural disasters or war. “We do not regard these PPA terminations as valid due to the force majeure provision,” said spokesman Mark Rodgers in an emailed statement to the Gazette.
He also wrote: “It would be a travesty if delays caused by an interest group funded by one of the Koch brothers could stop a project that would make Massachusetts a leader in offshore wind and create good jobs and help mitigate climate change,” referring to the Alliance to Protect Nantucket Sound, a well-funded group that has been working to block the project for years.
In letters to both NStar and National Grid dated Dec. 31, Cape Wind president James Gordon cited “extended, unprecedented and relentless litigation” by the Alliance, which he said has prevented the company “from achieving critical milestones by this date,” and asked that the contracts not be terminated. By invoking the force majeure clause, Mr. Gordon argued that the legal challenges were unusual and unavoidable and prevented the company from meeting its obligations.
In their own statements, National Grid and NStar both expressed disappointment at needing to end their contracts with Cape Wind. Both companies said they remained committed to providing energy to their customers through other means.
Meanwhile, the Alliance to Protect Nantucket Sound hailed the news. “The decision by NStar and National Grid to end their contracts with Cape Wind is a fatal or near-fatal blow to this expensive and outdated project,” said president Audra Parker in a statement.