PROVIDENCE, R.I. – Deepwater Wind has tied up financing for what could be the first offshore wind farm in the United States.
The Providence-based developer announced on Monday that it has closed on more than $290 million in financing for its five-turbine demonstration wind farm planned in waters off Block Island. The money is coming from Societe Generale of Paris, France and KeyBank National Association, of Cleveland, Ohio.
The finance agreements come after Deepwater has secured all permits for the 30-megawatt project, clearing the way for construction to begin in Rhode Island in the coming weeks. Although manufacturers in France and Louisiana have started building the turbines and the steel jackets they will stand upon, work has yet to start at Deepwater’s staging site in the Quonset Business Park.
The announcement is also notable because it follows news in January that the 130-turbine Cape Wind project in Massachusetts, which had been on track to be first in the water, had failed to meet a deadline to secure financing and had lost crucial power-purchase agreements with utilities National Grid and NStar. That project suffered another blow on Monday when its lease on port facilities in New Bedford fell through.
In contrast, financing has gone smoothly for the test project that Deepwater is set to build off Block Island. With only five turbines, it’s much smaller than Cape Wind and, Deepwater CEO Jeffrey Grybowski said, that was key.
“As a company, we thought it was always important to start the industry in the U.S. with a small project,” he said. “Everything is easier, especially the financing.”
Grybowski said that the project is also a good financial bet because it will be located in waters set aside for offshore energy by the state and because Deepwater was selected in 2008 as Rhode Island’s “preferred developer” of offshore wind. Those factors make it less risky as an investment, he said. The company is planning a 1,000-megawatt project in Rhode Island Sound after the Block Island Wind Farm is completed.
Deepwater is being backed by D.E. Shaw, an international investment firm with $36 billion in international investment as of March 1, and renewable energy company SunEdison. They are putting up more than $70 million in equity investment in the Block Island project, with more than 90 percent coming from D.E. Shaw, according to Grybowski. The financing from Societe Generale and KeyBank comes in addition to that money.
Societe Generale has invested in a number of offshore wind projects in the United Kingdom and Germany. “We at Societe Generale are proud to be a partner of Deepwater Wind, the U.S. leader in offshore wind power,” Alexander Krolick, director of energy-project finance in the Americas at Societe Generale, said in a statement.
This is KeyBank’s first investment in offshore wind. Andrew Redinger, of KeyBank, said, “We are pleased to provide financing for the first offshore wind project to be fully financed in the U.S.”
The money they are putting up will cover construction of the wind farm, which is estimated at $225 million, as well as transaction fees, insurance and initial costs of operation. It does not cover the $107-million cost of the transmission cable from Block Island to the mainland. National Grid will develop that portion of the project.
Deepwater expects to start installing the latticework jacket foundations for the turbines this summer. The turbines themselves will follow next year and the wind farm is expected to be in full operation in late 2016.
“We are on the cusp of bringing offshore wind from theory to reality in the U.S.,” Grybowski said.
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