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 detractors, 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 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.
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.