Cape Wind, the controversial offshore wind development, said Wednesday that it has taken another step in bringing the project to fruition, securing a major portion of the financing needed to build the $2.5 billion project in the middle of Nantucket Sound.
EKF, the Danish Export Credit Agency, recently approved a $600 million loan for the project, the largest investment to date, said Cape Wind president Jim Gordon. Gordon, who announced the loan at the Offshore Wind Power USA conference in Boston, called EKF “a very knowledgable and experienced investor in the offshore wind industry” whose participation in the financing would attract other lenders and investors.
Last year, EKF issued hundreds of millions in credit, financing, and guarantees to support more than a dozen wind projects around the world. In its most recent annual report, the firm called wind energy its largest investment sector.
“This [loan] is a major piece of the financing puzzle,” Gordon said. “The project is going to move forward because it’s critical to the energy and policy objectives of Massachusetts and our nation.”
Critics, however, noted that EKF still needs to complete its financial review before finalizing the loan and releasing the money.
“This is another conditional commitment in Cape Wind’s house of cards,” said Audra Parker, the president of the Alliance to Protect Nantucket Sound, a longtime opponent of the project.
The alliance recently sued in federal court challenging a deal brokered by the state in which Boston utility NStar agreed to purchase a portion of the power generated by Cape Wind at a starting price of 18.7 cents per kilowatt hour — well above typical wholesale prices. The group alleged the deal discriminates against out-of-state power companies.
Cape Wind — racing to become the nation’s first offshore wind development — has been in the works for more than a decade, stalled by acrimonious debate, a long permitting process, and court challenges.
But supporters of the project said EKF’s backing is a signal to other potential investors that the 130-turbine project will one day be complete.
“It builds on the financing that they’ve already lined up,” said Sue Reid, director of the nonprofit Conservation Law Foundation in Massachusetts. “It will send a signal to other financial backers, so this creates real new momentum.”
The EKF loan would bring Cape Wind’s financing to $900 million. Copenhagen Infrastructure Partners, which manages the Danish PensionDanmark fund, has pledged $200 million in financing; and Siemens AG, the German conglomerate, has pledged a $100 million investment.
Cape Wind is also hoping to secure a $500 million loan guarantee from the US Department of Energy. Gordon said he remains confident his project will still qualify for a federal tax credit for renewable energy projects that expired at the end of last year.
Cape Wind is eligible for the credit — which would be worth 30 percent of the project’s capital cost — because it already has spent 5 percent of the project’s estimated costs, Gordon said.
In December, Cape Wind finalized a deal to purchase giant turbines for the project from a Siemen’s subsidiary. Those turbines will be manufactured in Denmark.
Robert Rio, a spokesman for the Associated Industries of Massachusetts, a business group, said the project remains a bad deal for state households and businesses.
“Most of the financial benefits of Cape Wind will be going overseas,” Rio said. “Massachusetts ratepayers pay the bills while the real, good paying industrial manufacturing jobs are developed in Denmark.”