Deadline looms for US' 468-MW Cape Wind offshore project - report

Dec 2, 2013 - The developer of the 468-MW Cape Wind project off Massachusetts might face serious financing difficulties if it fails to start construction before the expiration of a key government incentive, the Associated Press said Saturday.

In order to qualify for the US government’s investment tax credit (ITC), which covers up to 30% of the capital cost of wind farms, the firm behind the project has to launch construction by December 31 or show it had incurred 5% of the project’s total cost by end-2013. Also, reaching the final investment decision on the project by the end of the year is a key condition set by PensionDanmark for investing into it USD 200 million (EUR 147m) in the form of a mezzanine loan.

The news agency cited Cape Wind’s spokesman Mark Rodgers as saying that financing will be obtained and the installation will be constructed even if it does not qualify for the tax credit. If it misses the ITC subsidy, the starting price of the wind farm’s generation will rise to USD 0.227/kWh from USD 0.20, with 3.5% annual hikes, according to the report.

The 130-turbine wind farm in Nantucket Sound, worth USD 2.6 billion, was proposed by US company Energy Management Inc. Cape Wind Associates is a joint venture of Energy Management and First Wind Energy LLC. Although the huge project received the US government's nod in 2010, the project has faced delays due to considerable opposition on environmental concerns and difficulties in securing funding.

(USD 1.0 = EUR 0.735)

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