Last month, Cape Wind received approval to proceed with it's 130-turbine off-shore wind power (OSW) park.  Half of he energy (and RECs) will be purchased by National Grid, and the other half as I understand it is being shopped around right now.  The price is north of 20 cents per kWh ($200 per MWh).

Make no mistake, OSW is not "cheap" when compared to "traditional" (read: fossil-fired) resources.  Most renewables are not, but OSW is particularly expensive due to extremely high capital costs.  However, it is worth noting that the Cape Wind rice is notably hire than that for the Bluewater Wind PPA in Delaware.  It is worth mentioning that I have worked as a consultant to Bluewater/NRG.

Why are capital costs so high?  In short, constructing power generation resources in the ocean is expensive and time consuming.  There is a construction season that allows the build-out a few months of boat-based construction per year.  Expensive, but worth it.  OSW is the new frontier.  It provides access to power-starved eastern cities that are otherwised constrained by a dearth of generation resources and choked transmission.  OSW is now here, so I believe we will be seeing a lot more activitiy in this arena.  The upside of that is economies of scale and technological advances should help bring those high capital costs down.

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