💎 Fed’s first rate cut since 2020 set to trigger market. Find undervalued gems with Fair ValueSee Undervalued Stocks

$150M Could Blow Toward Offshore US Wind Farm

Published 07/02/2014, 11:56 AM
Updated 07/02/2014, 02:15 PM
$150M Could Blow Toward Offshore US Wind Farm

By Maria Gallucci - Federal energy officials are betting that the Cape Wind offshore wind energy farm will finally get built after more than a decade of delays. If that happens, the energy project would be the first of its kind in the country.

The U.S. Department of Energy has promised the project’s developer a $150 million loan guarantee, an important development that could help the builder complete all of its necessary financing by the end of this year, supporters said. The $2.5 billion offshore wind project would install about 130 massive turbines in the Nantucket Sound in Massachusetts.

The DOE’s conditional commitment “demonstrates our intent to help build a strong U.S. offshore wind industry,” Energy Secretary Ernest Moniz said in a statement on Tuesday.

A loan guarantee offers assurances to financial lenders that if Cape Wind’s developer, Energy Management Inc., were to default on a loan, the government would purchase the debt and pay it down. The same loan program has attracted criticism in recent years for giving a $535 million loan guarantee to Solyndra LLC, the failed solar panel maker that went bankrupt in 2011.

Cape Wind officials first applied for the loan guarantee in 2009, but a host of financial, regulatory and legal challenges plagued the project, casting doubt on whether it could actually get built. The project attracted notable opposition, including billionaire businessman William Koch, who donated about $5 million and led an adversarial group against the wind farm's "visual pollution" that he said it would create, the New York Times noted last year.

Today, however, Cape Wind has secured nearly 60 percent of its financing, and it's obtained all of the permits necessary for it to proceed. Most of the legal disputes are resolved, as well: Most recently, a federal judge in May dismissed a lawsuit against the project, bringing it over the threshold marking where it is likely to get completed, energy officials said, according to the Boston Globe.

The Energy Department said the "co-lending arrangement will help build private sector experience with offshore wind projects in the U.S. while reducing taxpayer exposure." Federal officials will monitor Cape Wind's development throughout the year and work to reach a final agreement before officially closing the loan guarantee.

Cape Wind’s developers said the offshore wind project is on track to start construction in 2015 -- 14 years after it was first proposed. Once completed, the project will have the capacity to generate more than 360 megawatts of energy, enough to power tens of thousands of homes in Massachusetts.

© Reuters. Wind turbines are seen off the coast of southern England. The U.S. still doesn't have a single commercial-scale wind turbine in its waters.

A handful of project developers have been scrambling in recent years to build the first commercial-scale offshore wind farm in the United States. Like Cape Wind, however, overwhelming costs and regulatory hurdles have kept any of them from getting built thus far.

In Europe, on the other hand, more than 2,000 commercial wind turbines are already spinning in the waters near 11 countries, with a cumulative power generation capacity of about 6,500 megawatts, according to the European Wind Energy Association.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.