Cape Wind's Federal loan guarantee "on hold" indefinitely
Credit: By Rich Eldred, Cape Codder, www.wickedlocal.com 13 May 2011 ~~
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Cape Wind will wait much longer for a Federal loan guarantee.
“The Department of Energy (DOE) has notified Cape Wind that our application is not one that can be completely processed by the program’s September 30 deadline and consequently is ‘on hold’ until further resources can be made available to the program,” Cape Wind explained in a statement on Friday.
Cape Wind, of course, plans to construct 130 wind turbines on Horseshoe Shoals in Nantucket Sound. National Grid has agreed to buy half of the energy produced for 18.7 cents a kilowatt, plus an annual 3.5 percent step increase, but Cape wind is still seeking a buyer for the rest. The department of energy loan guarantee would reduce the cost of the energy to Massachusetts residents, Cape Wind explained.
“Cape Wind will continue to pursue the matter,” the company said in the statement. “Cape Wind intends to secure project financing expeditiously so that the United States does not fall even further behind Europe and China where governments have established offshore wind development as an important national priority worthy of support.”
With all the debate over the Federal budget deficit, future loan guarantees might well wind up on the chopping block. The program has doled out most ($1.6 billon dollars) nearly all of the $2.4 million available.
“In light of the impending, statutorily imposed deadline, we expect that all, or nearly all, of the remaining funding will be utilized by a group of other projects already in the pipeline that have the strongest chance of completing all necessary steps prior to the September 30th deadline,” Jonathon Silver, Director of the loan program’s office, wrote on May 10. “Unfortunately, this means that we will simply not have the opportunity to support every project that has applied for the program.”
“Today (May 10) we are notifying a group of companies that are farthest along in the process that we will be working with them to take the final steps required to complete a loan guarantee. Given the rigorous technical, legal, and financial requirements, it is possible that not all of these projects will succeed by September 30th, but each of them will have a chance to compete for the remaining funding,” Silver continued.
Cape Wind, however was not in that group – they received worse news.
“Currently, there are a number of projects that are closer to the conditional commitment stage than yours,” Silver wrote Cape Wind. “We expect these projects, if they reach financial close, to utilize all of our remaining appropriation. Given this reality we are unable to continue working on your application at this time.”
“To be clear, your project is not being terminated; it is being put on hold,” Silver pointed out. “If in the future, the Loans Programs Office has sufficient budget resources, we would be pleased to continue our evaluation of your project (but) there is no is no assurance that we will ever be in a position to continue our evaluation of your project.”
The projects foes were not unhappy with this news.
“The news from DOE comes after a failed effort to solicit NSTAR and other utility companies to buy the other half of Cape Wind’s power and is a real setback for this overpriced project,” said Patty Dineen, a spokesman for the Alliance to Protect Nantucket Sound. “Despite the efforts of the Obama and Patrick administrations to paint Cape Wind as a done deal, this project faces numerous challenges: 11 lawsuits, high costs, and lack of buyers and financing.”
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