The promise of a $150 million federal loan guarantee for Cape Wind keeps the controversial offshore wind project on a path to start construction in Nantucket Sound as soon as early next year, a spokesman said.
Once finalized, the loan guarantee should give Cape Wind the boost it needs to line up the final pieces of financing for the estimated $2.5 billion project by the end of the year, said Cape Wind spokesman Mark Rodgers.
“Things will happen very quickly after that,” Rodgers said. “We would begin construction early next year, in 2015, putting in foundations.”
The US Department of Energy announced the federal backing Tuesday, five years after Cape Wind first applied for a loan guarantee to help finance the construction of a 130-turbine wind farm off of Cape Cod. Supporters of Cape Wind called the loan guarantee a vote of confidence for the project, while opponents criticized it as a misuse of taxpayer money.
“This loan guarantee means that not only will the ratepayers of Massachusetts be liable for billions of dollars in costs, but the US taxpayer will also be on the hook for this ill-advised project,” said Robert Rio, a spokesman for the Associated Industries of Massachusetts, a business group that believes Cape Wind is overpriced.
Longtime Cape Wind opponent Audra Parker, president of the Alliance to Protect Nantucket Sound, agreed. The project’s high costs and poor location, she said in a statement, “guarantee that its power will become some of the most expensive in New England and the nation.”
NStar and National Grid, the state’s largest utilities, have agreed to buy 77.5 percent of the power generated by Cape Wind at a starting price of 18.7 cents per kilowatt hour, well above typical wholesale prices.
The proposed offshore wind farm, which would be the nation’s first, has spent more than a decade gathering the necessary permits, fighting numerous legal challenges, and arranging customers and financing.
Several large equipment contracts and financing deals were announced this year, with funding commitments totaling more than half Cape Wind’s estimated costs.
Those commitments are one reason federal energy officials said that they decided to move forward with the loan guarantee.
Sue Reid, director of the nonprofit Conservation Law Foundation in Massachusetts, said in a statement that the promised award shows “how close the nation’s first offshore wind project is to being built, at long last.”
Reid and other environmentalists say the loan guarantee signals the government’s commitment not only to building Cape Wind, but also a new industry. The United States lags far behind Europe and China in developing offshore windpower. European nations have already permitted or built many offshore energy projects.
Kit Kennedy, director of the energy and transportation program at the Natural Resources Defense Council, an advocacy group in New York, said in a statement that “Cape Wind can finally kick-start the nation’s offshore wind industry” and allow the United States to capture “the enormous clean energy potential blowing off our shores.”