Energy Department Backs Cape Wind With $150 Million Loan Guarantee

The U.S. Department of Energy announced today the conditional approval of a US $150 million loan guarantee for the most famous offshore wind farm that isn't, Cape Wind. Though this likely doesn't change the details of Cape Wind's progress toward real, in-the-water spinning turbines, it certainly signals the Obama administration's commitment to helping launch the offshore wind industry in the United States.

Cape Wind will eventually feature 130 turbines, each with a 3.6 megawatt capacity for a total of 468 MW, spinning in the shoals between Cape Cod and Nantucket in the U.S. northeast. It would be capable of powering about three quarters of all of Cape Cod's electricity needs. The project has been hounded for well more than a decade now by legal battle after legal battle, which many boil down to a few very rich people getting upset that their view might be "ruined." But each battle has ended with Cape Wind the victor, and theoretically the permitting and wrangling should be largely behind it.

The $150 million loan guarantee from the Energy Department, which joins about $30 billion in other such loans to energy projects, will go toward actual construction of the project. In an e-mail, Cape Wind's communications director Mark Rodgers said this does not, however, change the wind farm's schedule at all. "We are working to complete project financing by the end of this year, to begin construction next year, and to commission at least a portion of the project by the end of 2016," he said.

Of course, one offshore wind project in one little corner of the northeastern United States doesn't mean that much in the grand scheme of renewable energy transitions, especially when one takes a look at Europe's 7 gigawatts or so of already installed offshore wind. But this loan guarantee announcement adds to a growing body of evidence that the U.S. is finally, mercifully, putting some weight behind this industry. As Rodgers of Cape Wind said, "the significance of today's announcement is that it represents a vote of confidence from [the] U.S. government in Cape Wind, after two years of close vetting." In other words, they took a hard look at this and believe it's worth doing; other projects are likely to get the same sort of endorsement in coming years. Rogers also said having the weight of the Energy Department's dollars will help the company secure additional investments.

This announcement follows closely on the heels of another government agency continuing to get its feet wet in offshore wind. Just a couple of weeks ago the Department of the Interior announced a new huge tract of offshore real estate will be put up for auction in the coming months, a process that will more than double the already-leased areas. The Interior Department offers the space; the Energy Department helps put up the turbines.

In a blog post, Peter Davidson, the executive director of the Energy Department's loan program office, noted that the agency has helped produce a drastic dive in costs for the onshore wind industry, in part, through things like a $1.3 billion loan to the giant 845-MW Caithness Shepherds Flat wind farm in Oregon. The goal, of course, is to do the same thing with offshore wind technology. Davidson wrote:

The National Offshore Wind Strategy, which aims to deploy 54 gigawatts (GW) of offshore wind by 2030, was created to tap into the potential of this domestic resource. The conditional commitment announced today to the Cape Wind Project is an important next step to harnessing America’s offshore wind resources to provide reliable electricity, address climate change and promote economic development.