Wind farm too expensive. But why?

Forbes writes about the Long Island wind farm that couldn't. In the beginning, the cost of construction for the wind farm was "between $150 and $200 million. In 2004, FPL Energy won the right to build the project with a bid of $356 million, pending regulatory approvals. The latest estimates put the cost at $697 million."

One of the common arguments against the wind farm is NIMBY (not in my backyard). This wind farm was going to be placed offshore, partly to avoid any NIMBY issues. It is, of course, more expensive to build over water than over land. Economists would say that this added cost is internalizing an externality. That is, the cost is paying to avoid an undesirable outcome (having to look at the windfarm).

So, why not apply this same logic to fossil fuels? There are lots of externalities associated with them such as pollution, emissions, and traffic congestion. Perhaps if this 'true' cost had to be paid to burn fossil fuels, this wind farm would have been more competitive.

Or, with ballooning cost estimates from $150 to $697 million, perhaps not.