Cape Wind project gets lift; Pension Danmark to continue finance commitment to Massachusetts wind farm project
The outlook for Cape Wind, a U.S. offshore wind farm project, brightened a bit as its main public investor, Pension Danmark, said it would keep its financial commitment to the project even though a key year-end deadline was missed.
Pension Danmark committed to pump $200 million into Cape Wind, but the package was conditioned on the project finding additional investors by the end of 2013. On Thursday, officials with Denmark’s largest public pension fund told The Wall Street Journal it is sticking with the project.
“We are keen to see the project being realized and reaching financial close later in 2014,” Christian T. Skakkebaek, senior partner in Copenhagen Infrastructure Partners K/S, or CIP, said. Pension Danmark is investing in Cape Wind through CIP.
The deadline has been extended, but no exact date or other details were disclosed. Mr. Skakkebaek said there is “still some work to be done before our mezzanine loan commitment of $200 million can be made unconditional.”
The Cape Wind project has seen its share of headwinds since being approved by the Interior Department in 2010. While the Obama administration is pushing additional renewable energy projects, the project is proposed for a location in Nantucket Sound, a popular tourist and summer destination off Massachusetts. Local residents, including the Kennedy family, and energy businessman William Koch oppose the project as do fishermen.
The extension comes after Cape Wind on Dec. 23 announced the signing of a contract with German wind turbine maker Siemens AG that could help it qualify for tax credits. Siemens will supply 3.6-megawatt offshore wind turbines, an offshore Electric Service Platform and a service agreement for the first 15 years of commercial operations.
“The project is progressing well and expects to qualify for ITC [investment tax credit] for a significant part of the invested capital,” Mr. Skakkebaek said. The construction of some components for the 130 wind turbines project began in December, which is a condition for qualifying for the U.S. government’s tax credit.
The Danish investment is only a sliver of the estimated $2 billion needed to get the project off the ground, but Cape Wind is hopeful.
“We are confident about finding additional investors and expect to complete [financing] in the second or third quarter of 2014,” Mark Rodgers, a Cape Wind spokesman, said. “Financing a project of this magnitude takes time.”
While it lacks external financing, the project is progressing based on in-house financing, Mr. Rodgers said. “We have extended our office and hired additional staff.”
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