The End of Cape Wind

The New York Times recently covered the downfall of Cape Wind, the planned installation of 160 wind turbines off the coast of Massachusetts. The article portrays Cape Wind, and its founder Jim Gordon, as clean energy martyrs and the determined affluent opponents, who did not want their ocean views impaired, as villains. While the opposition to the project played a role, Cape Wind power also would not have been competitive in the marketplace.

Two Regulation articles have described the economic problems of Cape Wind. Ryan Murphy and Sophia Morales discuss  Cape Wind’s prices. Even with hundreds of million dollars in government subsidies, the off-shore wind farm would still have charged 26.4 cents per kilowatt hour in 2023. Compared to both traditional energy sources and other green energy—10.5 cents per kWh from a Canadian wind farm and as low as 6 cents per kWh from Quebec hydroelectric—Cape Wind prices would have been high.

Supporters of green energy projects often argue that they help create jobs. The Times article even mentions in passing that Cape Wind would have spurred other wind farm projects on the East Coast. In the Winter 2009-2010 issue, however, John Lesser analyzes this claim. While subsidized green energy creates some visible jobs, it increases the price of electricity and thus eliminates other jobs indirectly. As Lesser argues, “This course of action will cost jobs because businesses, forced to pay higher electricity prices, will either relocate, contract, or disappear altogether.”

The story of Cape Wind, despite the narrative the Times presents, is one of bad economics. The protracted political battle and the fact that it took this long for the project to officially end speak less about the viability of Cape Wind and more about the damage caused by green energy subsidies.

Written with research assistance from David Kemp