Cape Wind Project: Started in 2001, the Cape Wind project is an offshore wind farm that will consists of 131 turbines situated within a 24 square mile area on the south coast of Cape Cod. The peak nameplate generating capacity is 454 megawatts (MW) and will deliver 170 MW on average due to the intermittent nature of wind. The developer, Cape Wind Associates, claims that 170 MW is nearly 75 percent of the 230 MW used by Cape Cod, and the islands of Martha’s Vineyard and Nantucket. Project cost is expected to be $2.5B. This post discusses subsidies and contribution by wind energy to Massachusetts’s electricity generation. Please see the posting of April 18 for reference to postings regarding other issues.
Subsidies: “The Cape Wind project owners would be eligible to receive a federal tax credit, currently $0.021 per kWh for electricity produced during the first 10 years of the project life. Using the production expected by Cape Wind (1,150,000,000 kWh per year), a $0.021 per kWh credit (adjustable for inflation), would permit the owners to avoid federal corporate income taxes of $24,150,000 per year or $241,500,000 over 10 years.”
“ Wind farm owners are also permitted by the IRS to use the lucrative 5-year double declining balance accelerated depreciation” (5-yr; 200%DB) to recover the capital costs from their otherwise taxable income. Depreciation deductions would permit the owners to avoid $490 million in federal corporate income taxes – in addition to the Production Tax Credit – again shifting the tax burden to ordinary taxpayers.”
Insignificant Cape Wind Contribution to Electricity Generation in Massachusetts: According to the Independent Systems Operator (ISO) of New England, Massachusetts generated 13,765 MW of electricity during the peak summer period of 2009. Thus, the maximum fraction of electricity generated by the Cape Wind project compared to the summer of 2009 is 450/13,765 or 3.3 percent.Tags: Cape Cod, Cape Wind, Capital Cost, Development Time, Electricity Generation, Massachusetts, NIMBY, Offshore Wind, Subsidies