Published on July 5th, 2014 | by Tina Casey2
$150 Million Loan Heats Up Offshore Wind Power Race
July 5th, 2014 by Tina Casey
The Cape Wind offshore wind power project in Massachusetts is thisclose to receiving an Energy Department loan guarantee of $150 million. Although the news got buried by some other things that were going on last week, the massive 340-MW wind farm is especially significant because it is a linchpin for the Obama Administration’s ambitious plan for developing 54 GW (yep, that’s gigawatts) of commercial scale offshore wind power by 2030.
Right now the number stands at zero GW, so how’s that 54 thing going to happen?
How To Wake The Sleeping Offshore Wind Power Giant
With a few notable exceptions, Republican policymakers have been remarkably enthusiastic in their attempts to stymie federal support for wind power development in the US, which makes that 54 GW offshore wind power goal might seem pretty remote.
However, in a recent blog post about offshore wind power, the Energy Department’s loan office made it clear that they’re going to leverage the stunning success of their onshore wind power initiatives under the Obama Administration.
Here’s a few tasty nuggets from the post:
1. Energy Department loan guarantees can prove the commercial viability of large scale wind projects. That’s demonstrated by a $1.3 billion partial loan guarantee for the Caithness Shepherds Flat onshore wind farm.
2. Energy Department assistance can drive down the cost of wind power. Onshore wind costs have dropped in the US by about 90 percent since the 1980’s.
3. Wind power creates jobs. The Energy Department estimates that onshore wind employs about 50,000 people in the US. Let’s add that includes a significant number of veterans thanks to a proactive wind industry recruiting policy.
As for early criticism that US wind projects were relying too heavily on imported turbines, the Energy Department estimates that domestic content had reached about 72 percent by 2012, up from only 25 percent in 2005.
The Cape Wind Offshore Wind Power Project
For all that track record of success, the Cape Wind project illustrates what the Obama Administration has been up against.
If you’re guessing that this involves the Koch brothers somehow, your guess is correct.
It’s common knowledge now that industrialists Charles and David Koch have played an important role in fighting against renewable energy development in the US, and their friendly relations with key policymakers have certainly proved effective on multiple levels.
What’s not so well known is the role of another Koch brother, William, who has been the major funder behind a legal battle against the Cape Wind project.
That money appears to have gone down a black hole, however, with Cape Wind winning a huge legal victory earlier this year.
$150 Loan Guarantee For Cape Wind
The Cape Wind offshore wind power project is billed as the first commercial scale offshore wind farm in the US. Located in Nantucket Sound off Cape Cod, the project will involve about 400 construction jobs and 50 permanent jobs. Aside from generating clean energy, it is also intended to provide for greater grid reliability in the Cape Cod region.
Cape Wind is a particularly significant offshore wind power project because it is located in an area with “some of the best offshore resources in the U.S.,” according to the Energy Department.
In other words, the Obama Administration is not going to pass up a chance to make Cape Wind a showpiece for offshore wind power, adding even more weight to its successful record with onshore wind power.
What with the Supreme Court and all it seems that the Cape Wind loan announcement got buried under other news last week (our excuse is that we were distracted about a new $4 billion round of funding for other aspects of the loan guarantee program), so let’s go ahead and catch up now.
The $150 loan guarantee is not final yet but the July 1 announcement officializes a conditional commitment. If and when the loan agreement is nailed down, it will bring us taxpayers (so group hug) into a consortium of both public and private lenders.
The Energy Department anticipates that this will become a model for financing future development:
Under the proposed financing structure for the Cape Wind project, the Department would be part of a group of public and private lenders. This co-lending arrangement will help build private sector experience with offshore wind projects in the U.S. while reducing taxpayer exposure.
More Offshore Wind Power On The Way
In addition to the Cape Wind showcase, earlier this year the Energy Department announced funding for three cutting edge offshore wind power projects that it expects will add even more weight to its leverage.
One off the coast of New Jersey, will be constructed with a new “twisted jacket” foundation, which has lower manufacturing costs than conventional foundations. The New Jersey wind farm will also help researchers analyze how offshore wind turbines interact.
A project for Oregon also focuses on foundation innovation, and the third project will be in Virginia, with the aim of proving demonstrating hurricane resiliency.