Beacon Hill Institute on the Draft Environmental Impact Statement for the Cape Wind Energy Project

The Beacon Hill Institute at Suffolk University has studied the Cape Wind proposal in considerable detail, and offers the following comments on the Draft Environmental Impact Statement (DEIS) Reference file no. NAE-2004-338-

1. A systematic cost-benefit analysis – missing from the DEIS – shows that, with 90% confidence, the costs of the project outweigh the benefits by between $83 million and $333 million, with a mean measure of net cost of $209 million (equivalent to 2.0 cents/kWh produced). This breaks down as: a. Cost of 9.06 cents/kWh (close to the DEIS estimate of 9.00 cents) b. Benefit of 7.06 cents/kWh, of which the savings are: fuel (4.95), capital and operating costs, (0.98), improvements in public health (1.02) and greater energy independence (0.10). The project is of interest to a private developer only because of subsidies of 4.04 cents/kWh, via accelerated depreciation allowances, Massachusetts “green credits,” and a possible Federal Production Tax Credit.

2. The DEIS conclusion of “no adverse impacts to tourism and recreation” is not supported by the data. a. The only tourism study considered in the DEIS, from Scotland, used a biased sample and does not report the most relevant results (i.e. how many would be deterred, or attracted, by the windmills). b. A Beacon Hill Institute survey of 497 randomly-selected tourists, undertaken in the relevant Cape Cod towns in summer of 2003, found that 5% would visit the Cape less, and 1% would visit more if the windmills were built. Using spending information, and an estimate of the number attracted to the Cape, the BHI study found a net loss in spending on the Cape of at least $57 million annually.

3. The DEIS conclusion that the project would not adversely affect property values is based on a flawed study, ignores other research, and is untenable. a. The DEIS discussion relies primarily on a study by the Renewable Energy Policy Project (whose goal is to “accelerate the use of renewable energy”) in 2003. Its conclusion that wind farms elsewhere in the United States did not harm property values relies on the use of an inappropriate counterfactual, and is largely based on much smaller projects. b. Even if wind farms are associated with higher property values, this is likely attributable to increased tax payments and royalties to local communities and owners – which makes them not comparable to the Cape Wind case (no royalties, minor local tax payments).

4. The DEIS estimates of the value of health improvements are greatly exaggerated (at $53 million annually). Our own estimates show health improvements of $7 million, and even this may be overstated. a. The DEIS assumes that the Cape Wind project would offset the dirtiest power plants in Massachusetts. This is incorrect, and it would be more appropriate to use the marginal emissions numbers from ISO-New England, which show avoided emissions that are one fifth as high for NOx and one seventh as high for SO2. b. The DEIS uses outdated emissions data (from 2000 rather than 2002). c. Even the $7 million may overstate the health benefits. BHI assumed that all of the output of the Cape Wind project would offset fossil fuel generation and its associated air pollution. However, it has been argued, convincingly, that the caps imposed by law and regulation on SO2 emissions would continue to be binding, and so the wind farm output would not lead to a reduction in SO2 emissions overall.

Bhi Written Comment22205 Final

Download file (309 KB) pdf

FEB 17 2005
back to top