Cape Wind Gets U.S. Loan Guarantee for Offshore ProjectJustin Doom
Cape Wind Associates LLC received a conditional $150 million loan guarantee from the U.S. Department of Energy to build what may be the nation’s first offshore wind farm, off the Massachusetts coast.
Cape Wind has received commitments for about half of the estimated $2.6 billion it needs, and will qualify for the Energy Department guarantee when it arranges for the balance, said Peter Davidson, director of the department’s loans program.
“The pieces are falling into place,” Davidson said yesterday in a telephone interview. “It’s important to demonstrate that new technologies are viable to commercial banks and lenders.”
The project has been in the works for more than a decade and has generated strong opposition from members of the Kennedy family, American Indians, local fishermen and the Koch brothers. Cape Wind applied a few years ago for federal support, and the project gained traction after a March court ruling, Davidson said.
The project ultimately may include 130 3.6-megawatt Siemens AG turbines, according to its website. The Energy Department’s support and the current financing sought covers 101 turbines, which will produce power that’s been sold under two long-term contracts, Mark Rodgers, a Cape Wind spokesman, said today. The remaining 29 turbines will need to be financed separately, after the company secures another power-purchase agreement.
Cape Wind expects to close financing on the 101 turbines by the end of this year, Rodgers said. Bank of Tokyo-Mitsubishi UFJ, Rabobank Group and Natixis have agreed to provide a combined $400 million in debt, in addition to soliciting additional banks for support. Pension Danmark pledged $200 million, and Siemens is considering a $100 million equity investment. EKF, Denmark’s export credit agency, pledged a $600 million loan guarantee in February.
“We have more debt and more equity to arrange at this point, and we’re working on that now,” Rodgers said.
The U.S. in 2010 awarded a lease to Cape Wind for an area 5 miles (8 kilometers) off Cape Cod that covers about 25 square miles.
“The developer puts the rest of the deal together, lining up the rest of the debt capital and equity capital,” Davidson said. “When they come back to get the loan guarantee at the end, we go through a checklist. All the conditions have to be met.”