BOSTON, Feb 26 (Reuters) - Cape Wind said on Wednesday it has secured $600 million in financing for its proposed $2.5 billion wind power farm off the Massachusetts coast, and expects to have the rest locked up by the end of the third quarter.
Danish state-owned export credit agency EKF approved the loan pending due diligence, Cape Wind President Jim Gordon said at a power industry conference in Boston. EKF is the project’s biggest financial commitment to date.
“EKF is a very knowledgeable and experienced investor in the offshore wind industry and they recognize that Cape Wind makes sense both economically and environmentally,” Gordon said. “Moving Cape Wind forward will help further diversify New England’s electric generation portfolio.”
The project would have the capacity to produce 468 megawatts of electricity, enough to power nearly a half-million homes.
Cape Wind is among a handful of proposed offshore wind farms in the United States but is seen as more advanced in the process of getting government permits. Other proposed projects include wind farms off Rhode Island, Delaware, and in the Gulf of Mexico.
Cape Wind has been fighting for more than a decade to build America’s first offshore wind farm, on a site between Cape Cod, Nantucket and Martha’s Vineyard, but has been stalled by fierce legal challenges and government permit hurdles.
Opponents claim the project’s 130 turbines would be an eyesore, hurt summer tourism, and pose environmental threats, by injuring migratory birds or causing pollution from leaks in the installations. Supporters argue the wind farms will provide clean, renewable power to help meet rising demand.
The loan agreement was “a significant step forward both because of the size of the funding commitment and because it provides a signal to other financial stakeholders,” said Cape Wind spokesman Mark Rodgers.
The company expects to complete project financing in the third quarter of this year, Rodgers said, adding that construction would begin shortly after, with initial power production starting as early as 2016.
The financing follows conditional commitments of $200 million from the Danish Pension Fund, $100 million from technology and engineering company Siemens AG, and an undisclosed sum through the Bank of Tokyo-Mitsubishi, Rodgers said.
Those commitments are conditional on the entire financing package coming together, he said.
In December, Cape Wind announced a contract to supply Siemens with 3.6 megawatt turbines, an offshore platform, and a service agreement for the first 15 years of commercial operation.