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Jim Gordon may have an answer to energy problems

July 21, 2007 15:47 IST

Jim Gordon has a vision. It moves him so much that he abandoned his chair about an hour ago and paces the corridors and rooms of his Boston offices. He stops at a map of Cape Cod and taps his finger in the middle of Nantucket Sound. He wants you to understand why it's the perfect site for America's first offshore wind farm.

"Nobody will ever embargo it, nobody will ever manipulate it," Gordon says. "This is our own domestic resource we're blessed to have off of the coast here. We're hoping Cape Wind can inspire other communities to look at their indigenous energy resources."

Here, near the coastline where the Pilgrims first beheld the New World, this former fossil fuel power plant tycoon wants to pioneer a new era in renewable energy. His $1 billion Cape Wind project would be America's first offshore wind farm, with 130 turbines, each higher than a 40-story building, turning the inexhaustible ocean breezes into enough clean energy to supply three quarters of the electricity needs of Cape Cod, Martha's Vineyard, and Nantucket -- all with zero emissions of air pollution, no wastewater discharge, and probably even a reduction in electricity rates for customers.

For all of those reasons, wind is one of the fastest growing sources of renewable energy. And yet, the industry has remained landlocked in the U.S. Gordon is risking his personal fortune and reputation to lead it offshore -- and if he succeeds, he is likely to have far-reaching effects on the future of renewables. But that success is far from guaranteed because there's one major item in the negative column: the storms that come from shore.

For six years, Gordon has weathered a political tsunami of opposition because he wants to erect one of the world's largest collections of wind turbines smack dab in the middle of one of the East Coast's most prominent summer playgrounds. He's been lambasted by Ted Kennedy on the Senate floor, sued, targeted by political dirty tricks, lampooned in cartoons, sued again, and pilloried as a killer of birds, a despoiler of the environment, and a greedy developer.

Wait, isn't he supposed to be the environmentalist? His opponents even tried to blow him out of the water with an act of Congress. By all odds, Gordon should be sunk by now. Yet here he stands, after repelling more shots than Old Ironsides, the famous warship anchored a few miles away in Boston Harbor. Gordon has already sunk $25 million into this project, watched his costs double and still hasn't got his permits, financing, or agreements from utilities to buy the power.

But he does have his vision. Today is the kind of hot summer day when fossil fuel peaking plants are fired up to meet the demand. Offshore, the winds are blowing and -- this part drives Gordon crazy -- nobody is capturing them. And here's Jimmy, tapping his finger on Nantucket Sound. Gordon, 53, speaks in a thick Boston accent so the word milieu comes out as "mill-yer."

His manner is deliberate, even plodding -- his wife describes him as the tortoise that beats the hare -- yet there's a boulder-rolling-down-the-hill momentum that gathers behind him as he becomes electrified by his own vision. His eyes become ablaze behind his round glasses and he jangles coins in the pockets of his linen pants as he paces. Here comes Hurricane Katrina again.

"The most urgent environmental problem facing the Cape and Islands is that it's a low lying coastal community, like New Orleans," says Gordon, hand sweeping over the map like a giant tidal wave. "There's the threat of climate change, with more intense and frequent storms, rising sea levels that are already, according to Woods Hole Oceanographic Institute, eroding precious beaches on the Cape and Islands.

Insurance companies are pulling out of the Cape and Islands. Look, how many billions of dollars of damage was done in New Orleans?"

Understand?

"We have got to do projects like Cape Wind," he concludes. "We have got to start transitioning away from fossil fuels to a more sustainable energy and environmental future."

Can You Sell?

Jim Gordon is traveling back to his past. He's behind the wheel of his Audi Quattro, empty child seat in the back, pulling out of a garage in his Beacon Hill neighborhood. He glides past Boston Commons and the brownstone mansions of Commonwealth Avenue. He's in rewind mode, passing the landmarks of his life, and explaining how he got to wind.

"For some people, the whole thing is to put as much money on the scoreboard as possible," says Gordon. "I think if you don't obsess about that, and put yourself to work on some good and worthy things, it comes back to you in many ways."

Gordon grew up in a rental duplex in a working class neighborhood of Boston. His father owned small corner grocery stores and Gordon spent afternoons and weekends stocking shelves or working behind the counter, where he learned the art of face-to-face business. Yet he had grander visions for himself. He studied film at the University of Miami and Boston University.

"My aspiration was to be a film director," he says. "I thought I was going to be the next Stephen Spielberg."

During his senior year, he tried to break into the business by applying for internships at the local TV stations but couldn't find a job. He tried to get his foot in the door at the new Warner cable station. "When I got down there," he recalls, "they said, 'We don't have any more positions in the television studio, but we do have sales positions. Can you sell?'"

Yes, he could. Gordon went door to door and, he says, broke company sales records. A few months later, the second Arab oil embargo hit and Gordon saw another opportunity. He was waiting in a gas line down the street from his father's store when he had a revelation: energy.

He spent his entire $3,000 savings to start a new business, Energy Management, with virtually no experience. He began banging on doors and making cold calls to businesses and factories, selling off-the-shelf products to improve heat transfer and combustion efficiency. Over the next decade, EMI grew to 45 employees and designed and installed customized systems for factories around New England.

In 1984, the price of energy plummeted and clients began to shelve conservation programs. Gordon shifted into the power-generation business. At the time, the electrical industry was going through deregulation under the Public Utility Regulation Policy Act.

Regulators encouraged entrepreneurs to develop smaller power plants -- a high-risk business with potential for boom or bust. Gordon leveraged himself to the point where he had two lines of credit on his condo. EMI developed two plants for industrial clients (one a wood-fired plant and the other a natural gas-fired cogeneration plant that produced electricity and steam) then built five more natural gas-fired plants on its own around New England.

The last three projects were "merchant" plants, or ones that had no long-term power purchase agreements with utilities; they sold electricity on the spot market. "These guys were going into debt beyond their net worth," says Henry Lee, director of the Environment and Natural Resources Program at the Kennedy School of Government at Harvard University. "Most of us wouldn't sleep at night if we were even close to that exposed."

During these years Gordon proved to be a tenacious businessman. "There would be moments when you'd be absolutely sure this project is over -- multiple times," says Dennis Duffy, an EMI vice president.

"But you've got to be able to ride through those times and just keep pushing. Otherwise you should look for another line of business." For Gordon, it was the right business. "Jim, short of being thrown in jail for something, was going to stick with it, come hell or high water," says Ron Cochran, an engineer who worked with Gordon. "He might be a little offended by this, but he for sure is a hustler personified."

His hustling paid off. In 1999, EMI sold two plants to El Paso Energy and the following year it sold the remaining three to Calpine for a combined total reported to be around $250 million.

After that, EMI shrank from a company of 110 employees to a core management team of a dozen people. A few cashed in their chips and retired. Gordon and his remaining colleagues began looking for the next opportunity. "We looked at the portfolio -- we've got gas, we've got oil, and we've got coal," Gordon says, drumming his desk for emphasis. "But we don't have renewable energy."

Kayaking with Kennedy

Gordon and his team looked at several forms of renewables before deciding that wind offered the best option. He traveled to Europe to study the wind industry that had begun in the North Sea.

New England shared many of the same constraints that had led the Europeans to look offshore: high-energy costs, population density, and a lack of land sites with sufficient wind. A few miles offshore, however, wind resources improved dramatically, often in shallow waters close to the urban centers.

The potential wind resources off the United States are vast. One analysis by the National Renewable Energy Laboratory estimated offshore wind potential of the lower 48 states at 1,000 gigawatts -- more than the current total U.S. electrical consumption.

The trick is reaping this harvest. Only 10 per cent of these sites lie in waters of 30 meters or less, the limit of most current technology; the remaining 90 per cent will require innovations such as floating platforms or tripods.

Gordon saw himself as a pioneer who would open the door. In 2000, EMI began examining 17 sites around New England before picking an area in the middle of Nantucket Sound called Horseshoe Shoal. Massachusetts's law prohibits power generation facilities in state waters but Horseshoe Shoal lies in a patch of federal water completely surrounded by state water. According to studies by the U.S. Department of Energy, it also happened to have some of the best wind in the region.

His choice was seconded a few years later when Boston developer Jay Cashman began searching for his own wind farm site. "He picked the best spot on the east coast of the United States," says Cashman. "If Jim Gordon wasn't there, I would have chosen that spot."

Gordon dreamed big: 130 turbines, each standing more than 400 feet above the waves, higher than the tallest living redwood. The diameter of the blades would be roughly equivalent to a football field. The foundation piles would be driven 80 feet into the sandy sea floor. His project was bigger than any project in operation at the time (many larger ones are under development).

All told, the wind farm would have a capacity of 454 megawatts and generate an average of 170 megawatts per year (turbines usually operate at a fraction of their capacity because wind blows intermittently). One state agency concluded that the added electricity would result in a $25 million savings for customers.

And the energy would be clean. It would offset emissions by 802 tons of sulfer dioxide, 197 tons of nitrous oxide, and 734,000 tons of carbon dioxide -- the equivalent of removing 175,000 cars from the road. The area was served by an aging oil-fired power plant along Cape Cod Canal. (Gordon hasn't completely sworn off fossil fuels: EMI also is developing a diesel-powered peaking plant in Chelsea, Mass.)

Gordon says the wind project will be financed entirely with private capital through a yet-to-be determined combination of debt and equity. "We're confident it can be done," says Ted Roosevelt IV, a Lehman Brothers executive who is arranging financing for Cape Wind.

Cape Wind would benefit from several government incentives: federal production tax credits for renewable energy (which can provide one to two thirds of revenue for many wind projects), a Massachusetts program for renewables, and accelerated depreciation allowing capital investments to be written off in five years. New England relies heavily on natural gas, which has tripled in price since 2000.

"The economics for him are extremely positive in the present market," says Harvard's Lee. "If gas prices remain high, he's coming in with a very cost-competitive form of power."

Still, even some allies within the wind industry express skepticism about Gordon's grand vision for inspiring a huge offshore industry. "No pun intended, it has a lot of wind in its face from a momentum point of view," says Mike O'Sullivan, senior vice president of development for FPL Energy, the largest wind power generator in the U.S.

"First, the construction costs are triple of an onshore project." O'Sullivan speaks from experience: His company is developing another offshore wind project in Long Island. "I believe it's a limited business in the U.S.," he says. "It's not the answer to all the issues everybody is trying to address with a silver bullet."

Gordon was willing to bite the bullet. He expected to be welcomed as an environmental hero and envisioned kayaking around his towers with environmentalist Robert Kennedy, Jr. That part of his vision soon proved to be a mirage.

The Perfect Storm

The offshore site had power all right -- the power of rich and influential opponents. Wayne Kurker was one of the first to raise the alarm. Kurker owns the Hyannis Marina, and in the summer of 2001, he rented dock space to a barge that kept making trips into Nantucket Sound.

One day he inquired about their business and the crew told him they were boring into the sea floor to take samples for building windmills. Windmills? Kurker thought that sounded like a fine idea until they showed him the site on a map. "I asked them if they were out of their minds," he says.

"Nobody comes to Cape Cod to see our industry," says Kurker as he overlooks his docks. "They come for its natural beauty. Many people come to the Cape by water and to pass all that machinery, which I think is a big boondoggle anyway, is not what the Cape is about."

Kurker recounts the story as he sits near a sign that says, "Nantucket Sound Not For Sale." He's a scrappy and voluble former boat mechanic who purchased the rundown marina 30 years ago and built it into a 180-slip complex for smallcraft to megayachts. Across the harbor, ferries glide along the channel on their way to Martha's Vineyard and Nantucket and the shores are lined with large beachfront homes.

A yachtsman from Nantucket stops to chat and soon both are blowing a gale about Gordon and his wind farm.

"He cloaks this project in a green blanket, pretending it's all about doing good for the environment," fumes Kurker. "And that's baloney."

Shortly after the barge episode, Kurker founded the Alliance to Protect Nantucket Sound and the battle was joined. Unlike a typical grassroots organisation, the Alliance had the funds to turn itself into a powerful special interest group with lawyers, flaks, and Washington lobbyists.

The Alliance claims more than 4,000 donors -- some of whom are very generous. A consultant accidentally posted a copy of an alliance fundraising guide on the Web. According to the document, the Alliance raised $8.5 million between 2004 and 2005 -- 94 per cent from 93 major donors who each contributed at least $20,000. "If it is a token gift of $5,000," the guide instructed, "you should delay acceptance."

Gordon had faced opposition before but nothing like this. Opponents sent out mass mailings and took out newspaper advertisements condemning his project. The local paper, the Cape Cod Times editorialized against the project repeatedly and vehemently. The Cape's two ferry lines and the local Chamber of Commerce opposed it.

Author David McCullough, the well-known voice of many PBS documentaries, and retired newscaster Walter Cronkite recorded radio ads against Cape Wind. A pantheon of elected leaders lined up against Cape Wind, including Governor Mitt Romney, Attorney General Tom Reilly, local congressman William Delahunt, and Senator Ted Kennedy, whose family compound is located about seven miles from the site.

Instead of kayaking with Gordon, RFK Jr. paddled him in the op-ed pages of the New York Times for trying to privatize the commons.

Opponents feared the towers would imperil navigation and aviation, disrupt fishing, chase away tourists and destroy their views (the towers would be less than half an inch on the horizon when seen from shore). They objected to Gordon trying to lock up the site without a competitive bidding process.

They compared Nantucket Sound to national treasures like Yellowstone and Yosemite. "If this is the only good site for wind energy, and he's looked up and down the east coast, what does that say about the future of offshore wind in New England and the U.S. East Coast?" asks Charles Vinick, president and CEO of the Alliance to Protect Nantucket Sound. "If there is a great future, there can't be one site."

Gordon, the old salesman, tried to get his foot in the door at some of the seaside estates. He paid $1,000 to attend a fundraiser at the Kennedy Compound, he says, but his check was returned. Once, Gordon called on Bill Koch, a businessman and yachtsman who owns a house on Nantucket Sound.

Koch is founder and chairman of the Oxbow Group, a conglomerate of more than two dozen companies with nearly $1 billion in annual sales of coal, natural gas, petroleum coke, and power generation. Koch also knows something about wind: He is a sailor, and in 1992 he won the America's cup. "He was such as advocate I thought he was an evangelist," Koch recalls of his meeting with Gordon.

"I even said to him, 'Now Jim, cut this B.S. out. . . Well, he kept going on. I finally said, 'Jim, just shut up, let's talk about the economics.'" Koch later became one of the most prominent opponents and co-chair of the Alliance. In an op-ed in the Wall Street Journal, he branded Cape Wind "nonsensical, a giant boondoggle for the benefit of one developer."

Back in his office, Gordon stands at the map and runs his finger along the coast. He traces his opposition to an oligarchy of seaside barons who are bankrolling the opposition.

"They love renewable energy as long as it's in someone else's backyard," he says. "This is a very small group of opposition. They're very wealthy and very politically influential. A lot of these people are so successful, they have a sense of dominion."

But he must give them this: They have slowed him down. The Alliance has filed two lawsuits, and although Cape Wind has prevailed, the controversy has slowed the permitting process and substantially increased his costs. Under the most optimistic scenario, Gordon will get a permit no earlier than late 2008 -- three years after his original target to produce power. The cost of the project has risen from $700 million to a figure that Gordon will only describe as "north of one billion."

"If it goes well, it will make it possible for others to follow," says Ted Roosevelt, great grandson of the conservationist president, who owns a house on Martha's Vineyard. "If it gets killed, that's going to send a signal that offshore wind is very difficult and it will retard the development of these kinds of projects for a decade, if not a generation."

Senator, Can You Help Me?

"It's a war of attrition," says Gordon. "They're trying to wear us down and make us run out of money."

Gordon has spent millions on lawyers, lobbyists and consultants, but two of his most powerful weapons are his own determination and salesmanship. When Walter Cronkite, a longtime resident of Martha's Vineyard, recorded radio ads against the wind farm, Gordon picked up the phone.

"We're renting a summer house in Nantucket and he gets on the phone and cold calls Walter Cronkite," recalls Gordon's wife Meg. "The next thing I know, I'm out buying a box of candy for Jim to bring to his house." He convinced Cronkite to keep an open mind, and the newsman asked the alliance to pull his ads.

Gordon also has proven to be a savvy political operator. When the Democratic convention came to Boston in 2004, somebody distributed a bogus press release claiming that a contractor had refused to work with Cape Wind. Gordon hired a forensic computer expert from Kroll Security who, armed with two court orders, traced the phony release to the home of a staff member of the Alliance to Protect Nantucket Sound.

Gordon sued the staffer and won a $15,000 judgment, which Cape Wind -- not to let a good publicity opportunity slip by -- donated to a charity that helps needy families pay energy bills.

Gordon's strategy includes another unorthodox business tactic: grassroots organising. The Cape Wind web site, with calls for action and warnings of global warming, resembles that of an environmental organisation more than a private utility.

One of the ironies of the Cape Wind debate is that a power plant tycoon has allied with environmentalists who normally are more accustomed to suing utilities. Those allies include Greenpeace, the Sierra Club, and the Natural Resources Defense Council. "We can dance with corporations or we can dance on them," says Kate Smolski of Greenpeace.

"We do not support Cape Wind Associates or Jim Gordon -- we support the project they are building because of the clean renewable energy it will produce."

Such alliances raise an interesting question: Is Gordon the environmentalist he claims to be? Or the opportunist portrayed by his opponents? "My personal opinion is the challenge alone is what keeps him at it," says Cochran, the engineer who helped Gordon develop power plants.

"He wants to beat the odds. He has waaaayyy to much personal money into it for it to be anything else, in my opinion. He certainly has passion for cleaning up the environment and all that good stuff, but I would argue it's because it seems an impossible task -- and he's going to prove that it isn't."

Certainly Gordon could find easier ways to make money. "This may sound corny to you," says Gordon, "but I'm kind of a patriotic person, and I think that if we don't get away from importing most of our energy, we're in trouble. Yeah, I'll be upset if this whole thing is flushed down the toilet, all the money we've invested. But if it's all lost, then I'm glad I tried."

There was a point last year when it did seem all might be lost. A Senate-House conference committee approved an amendment to a Coast Guard budget bill that would effectively kill Cape Wind by giving veto power on navigational issues to the governor of "the adjacent state" -- at the time, that governor was wind farm opponent Mitt Romney.

Gordon read his own political obituary. "Cape Cod Wind Farm Project May Be Headed for Pasture," said a headline in the Los Angeles Times. The amendment was inserted by committee chairman Sen. Ted Stevens of Alaska. Shortly thereafter, it was revealed that Stevens had discussed it with Ted Kennedy.

"Jimmy went to Washington and literally stood in the hallway of the congressional building and flagged people down in between sessions," says Meg Gordon. "He pounded the pavement in Washington for four months straight until he was able to turn around what Kennedy was trying to do."

Even a vacation turned into a lobbying trip. On the first morning of a long-delayed visit to his mother in Florida, Gordon learned that Senator John McCain would be signing books at a nearby bookstore. He spent two hours waiting in line, handed McCain his book, and pleaded, "Senator, Can you help me?" A few days later, McCain announced his support for Cape Wind.

The controversy elevated Cape Wind into rallying point for green energy and Congressional reform. Editorials from coast to coast decried the backroom politics. Even as the project's political fate became more perilous, its public support grew. By last fall, Cape Wind had become a wedge issue in the Bay State elections. Says Gordon, "What doesn't kill you makes you stronger."

Climate Change!

Fast forward eight months. A winter ice storm has turned Boston into a huge skating rink. It's 7 a.m., and Gordon sits in the backseat of a taxi with a copy of the Wall Street Journal folded across his lap.

He wears a heavy overcoat over his suit and big leather boots. Of course, nasty weather makes the wind blow -- 32 knots today, according to his data tower out in Nantucket Sound. Today his turbines would be churning out 422 megawatt hours of electricity -- if only they existed.

But maybe they still will. Gordon has survived long enough to see a political climate change. There's a new Democratic Congress in Washington with a strong interest in renewables. The voters of Massachusetts have elected a new governor, Deval Patrick, who championed Cape Wind as just the sort of clean innovation the state should be encouraging. Everybody is talking about global warming.

One day earlier, Cape Wind had filed its final environmental impact report with the state. On this frigid morning, Gordon is on his way to hear the man who will decide its fate. Ian Bowles, the state's new Secretary of Energy and Environment, is giving a breakfast talk to an energy business group.

Gordon rides the elevator up to the 26th floor of a skyscraper in Boston's financial district near the waterfront. Outside the windows, a single wind turbine is just visible on the horizon -- an experimental project on the shore of the town of Hull -- like a distant dream.

The introductory speaker presents Bowles with a wish list on behalf of the local energy industry. Number three: approve Cape Wind. Bowles's speech outlines a vision for clean energy and technological innovation that seems to describe Gordon's project all but in name. (A few weeks later, the state gives Gordon a green light by certifying his environmental studies and Bowles rules that the environmental impacts of the wind farm "pale in comparison" to the benefits of reducing emission.)

After the breakfast talk, Gordon is back in the old neighborhood, a few doors down from his father's former store, lunching on a plate of pasta. He still has many miles to go: another environmental report from the feds, approval from the U.S. Minerals Management Service, power purchase agreements, and almost certainly more litigation. But he can see his vision inching closer, as surely as he can see the espresso in front of him.

"It's right there," he says, hand grasping the air. "This is what drives me nuts. We don't have to worry about storing nuclear waste for a thousand years or what the Ayatollahs in Iran are going to do. It's right there -- so close."

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Kermit Pattison, FastCompany.com