Feds Give Cape Wind Project $150 Million Loan Guarantee
The Energy Department has given a conditional $150 million loan to the Cape Wind project in Massachusetts in a move to fund the first offshore wind farm in the United States.
Cape Wind will receive the $150 million loan after it secures $2.6 billion in financing, according to the Energy Department. Once it has secured the balance of the funding, it will get taxpayer dollars to help construct 130 wind turbines that will have a capacity of 360 megawatts of power.
“If built, the Cape Wind Project could transform the fishing ports and manufacturing towns in Eastern Massachusetts into a hub for a vibrant U.S. offshore wind industry,” said Peter Davidson, executive director of the DOE’s loan program in a statement. “The lessons that could be learned from this project can help catalyze similar projects in other areas of the U.S. with excellent offshore wind resources.”
Massachusetts Democrats hailed the loan as a boom to the state and a step in the right direction in fighting global warming.
“Offshore wind will not only provide a new, clean source of energy for the United States, it will reduce American reliance on fossil fuel, mitigate climate change and jump start a new U.S. industry that will create thousands of clean energy jobs,” 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 Sen. Ed Markey.
The project will create 400 construction jobs and 50 operation jobs, according to the Energy Department, meaning each offshore wind job will cost taxpayers more than $333,000 per job. In terms of power producing capacity, the 360 megawatt project will cost more than $416,000 per megawatt.
The Cape Wind project also got a pledge for a $600 million loan guarantee from Denmark’s export credit agency.
Cape Wind applied for federal support a few years ago, but faced years of litigation and opposition from some environmentalists, fisherman and conservatives.
A court decision in March turned the project’s prospects around, but critics still oppose the project, citing high costs and the fact that offshore wind power is significantly more expensive than alternatives.
“As a matter of practical energy policy, renewable energy should be embraced as long as it is competitively bid, cost effective, and does not rely on federal taxpayer subsidies as a primary finance vehicle,” wrote Dan O’Connell, president of the Massachusetts Competitive Partnership.
“For these reasons, the federal government should not be investing taxpayer dollars in projects that do not meet this standard,” O’Connell wrote.
The Energy Information Administration says that the levelized cost of generating offshore wind power is $204 per megawatt hour, more than two-and-a-half times as costly as onshore wind power.
Offshore wind power is also at risk to hurricanes and storms that could damage turbines or force them to shut down.
Despite the high costs of power generation and the potential weather hazards, Democrats and environmentalists who want to see more green energy brought online.
“With successful completion of Cape Wind comes the potential to supply three-quarters of electricity used throughout Cape Cod and the Islands with zero net pollution emissions — all while creating permanent jobs throughout the region,” said Massachusetts Rep. William Keating.
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