May 18, 2010 - Cape Wind wins FAA approval

Tuesday, May 18, 2010

Significant renewable energy projects like the proposed 130-turbine Cape Wind project in Nantucket Sound tend to raise policy questions cutting across a broad variety of fields. At their heart, perhaps all of these issues can be simplified to one basic question: should we (as a governed society) support this project, after weighing and balancing all of its economic, environmental, and social benefits and costs? On the energy cost side, this question plays out as a query whether the significant price premium agreed to by National Grid and Cape Wind Associates is "worth it".

Different bodies apply this same basic question to other fields: for example, are any negative impacts to aviation outweighed by the societal benefits of the development? Apparently the Federal Aviation Administration believes so. The FAA determined yesterday that the Cape Wind project will not significantly interfere with planes or radar -- a so-called "no hazard" determination.

In reaching this finding, the FAA did impose certain conditions. For example, Cape Wind must upgrade its radar system to ensure it can clearly spot planes flying above the wind farm. The FAA is allowing Cape Wind to try a preliminary $1.5 million radar modification that stands a chance of working. As a backup, Cape Wind must put $15 million in escrow to pay for a more comprehensive digital radar system replacement.

Although the FAA's finding is one of the last remaining permitting hurdles for the innovative offshore wind project, this is not the first time the FAA has performed this evaluation of the project. In fact, before yesterday's finding, the FAA had already reviewed the project three other times. (FAA regulations provide that each determination expires after 18 months.) Interestingly, the FAA's first two determinations were of "no hazard". On the third review, the FAA found that the wind farm was a "presumed hazard" without the radar mitigation measures that will now be required. With Cape Wind having agreed to make the upgrades -- certainly easier now that it has an offtake contract proposed or in place for 100% of the project's energy generation -- this fourth review resulted in the "no hazard" determination that Cape Wind needed.

It can be hard to develop a "grand unified theory of everything", that holy grail of theoretical physicists trying to explain the world around us. When it comes to the policy questions behind energy choices and investment in new projects, a rough draft of that grand unified theory might be: "should we support this project, after weighing and balancing all of its economic, environmental, and social benefits and costs?" To derive the answer, society looks at each of the aspects of the project -- energy costs, aviation, scenic impacts, safety -- and tries to come up with a balanced answer. But can we get it right by taking discrete issue-oriented approval processes, adding them up, and hoping that the summation results in ultimate project approval?

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