Energy Management Inc. (EMI), the developer of America’s first offshore wind park known as Cape Wind, has confirmed a plan to sell equity in the landmark $2.5bn (€1.8bn) project to investors to close a funding gap.
So far, EMI has managed to raise $1.3bn for the project from a variety of sources, including PensionDanmark, the Danish labour market scheme, the Danish Export Credit Agency EKF, three major international banks and German technology firm Siemens. The 468MW wind park will be based in Nantucket Sound, off the coast of Massachusetts.
PensionDanmark, a major renewables investor, has provided a mezzanine loan totalling $200m, while the EKF is lending another $600m to Cape Wind. In late March, the project secured another $400m in loans from three banks, including the Bank of Tokyo-Mitsubishi UJF Ltd., Rabobank of the Netherlands and French asset manager Natixis. Siemens, whose Danish subsidiary is providing the park’s 130 turbines, also has invested $100m.
To close the funding gap and begin construction of the wind park next year, EMI has begun selling equity in the wind park and is being advised by UK bank Barclays. A spokesman for EMI declined, however, to provide moredetails, including how much money the developer sought to raise in the move.
Speaking in late February, EMI President Jim Gordon said further financing options were a $500m loan guarantee from the US Department of Energy or a federal tax credit for renewable projects. Although the tax credit, which covers 30% of the project’s capital costs, expired last year, EMI remains confident that it is still eligible. That’s because it met a federal requirement that it spend at least 5% of the project’s costs before the credit expired.
Beyond financing, Cape Wind faces a legal challenge from one of the project’s chief opponents. The Alliance to Protect Nantucket Sound recently filed a lawsuit alleging that the Massachusetts state government discriminated against out-of-state power companies by awarding a contract for some of Cape Wind’s power to Boston utility NStar. According to the Boston Globe, NStar will source power from the facility at near $0.19 per kilowatt-hour, which is above wholesale prices.
EMI said in any case that it plans to begin onshore cable route construction later this year and ocean construction in 2015. Commercial operations would then begin in 2016, it added.