DOE takes first step on $150m loan guarantee for Cape Wind

The U.S. Department of Energy announced July 1 the first step toward issuing a $150m loan guarantee to support the construction of the Cape Wind offshore wind project with a conditional commitment to Cape Wind Associates LLC.

If constructed, the project would be the first commercial-scale offshore wind facility in the U.S., with a capacity of more than 360 MW of clean energy off the coast of Cape Cod, Mass. The Cape Wind project would use 3.6-MW offshore wind turbines that would provide a majority of the electricity needed for Cape Cod, Nantucket and Martha’s Vineyard, and would create approximately 400 construction jobs and 50 operations jobs.

“In just the last year, eight projects in the Department’s Loan Programs Office have become fully operational, including one of the world’s largest operating photovoltaic solar power plants, the world’s largest concentrating solar power plant, and a vital Western transmission line,” said DOE Secretary Ernest Moniz. “These innovative projects are delivering clean, renewable energy for American consumers today and are helping to diversify our energy portfolio. The Department’s loan guarantees have assisted the launch of new industries in the U.S., and today’s announcement of a conditional commitment to the Cape Wind project demonstrates our intent to help build a strong U.S. offshore wind industry.”

“The U.S. Department of Energy’s announcement today of a conditional commitment for a loan guarantee for Cape Wind is a significant step for this first-in-the-nation offshore wind energy project,” said Massachusetts Gov. Deval Patrick.

“This funding will help Massachusetts make energy history and continue our leadership as a clean energy jobs hub for the entire nation,” said U.S. Sen. Edward Markey, D-Mass. “This kind of public-private partnership is exactly what these energy funding programs are designed to do, demonstrating leading-edge, potentially planet-saving technologies while creating good American jobs.”

The conditional commitment is an important step towards issuing a $150m loan guarantee to support construction of the project. The department said it will continue to monitor the project’s development and work to reach final agreement before closing the loan guarantee. Under the proposed financing structure for the Cape Wind project, the department would be part of a group of public and private lenders. This co-lending arrangement will help build private sector experience with offshore wind projects in the U.S. while reducing taxpayer exposure.

House Energy and Commerce Committee Chairman Fred Upton, R-Mich., a vocal critic of DOE’s gone-bad Solyndra solar loan guarantee, said July 1 about the Cape Wind deal: “After DOE’s embarrassing and costly loan failures, its decision to back Cape Wind raises a number of questions as the project has been mired in controversy and litigation dating back to 2001. While renewable energy is a vital component of an all-of-the-above energy strategy, the administration’s backing of Cape Wind is an unnecessary and ill-advised gamble of taxpayer dollars. And once the project is built, New England ratepayers will be forced to shoulder the costs of Cape Wind’s expensive power generation. We look forward to reviewing the terms of this guarantee and DOE’s due diligence. Our oversight of DOE’s loan programs continues, and we will be watching this project very closely.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.