Cape Wind loses out on US loan guarantee

By Jay Lindsay
Associated Press / May 14, 2011

E-mail this article

Invalid E-mail address
Invalid E-mail address

Sending your article

Your article has been sent.

Text size +

Cape Wind’s attempt to win a US Department of Energy loan guarantee has been placed on hold, in a setback to efforts by the nation’s first offshore wind farm to secure financing.

In a letter sent this week, the department said that with the multibillion dollar loan program’s September expiration date approaching, remaining funds would be used on projects whose applications were further along.

“This is not a statement about the quality of your project, but simply about its readiness to proceed at this time,’’ read the letter, sent to Cape Wind and other applicants whose projects were placed on hold.

The letter said that if the federal loan guarantee program receives more funding, the department could resume working on Cape Wind’s application.

But Jonathan Silver, director of the loan program, made no promises. “We must caution you, however, that there is no assurance that we will ever be in a position to continue our evaluation of your project,’’ his letter read.

Company spokesman Mark Rodgers declined to comment on how big a piece the possible loan guarantee was projected to be in the overall financing of the 130-turbine project, estimated to cost $2.6 billion.

He said Cape Wind was pursuing all financing options, with Barclays Bank as its adviser. The company has “a long and successful history’’ of winning financing for energy development projects, Rodgers said.

The state’s political leaders had pushed hard for the loan guarantee, with Senator John F. Kerry writing a letter in February to Energy Secretary Steven Chu, also signed by all 10 members of Massachusetts’ delegation in the House, that asked Chu to speed up Cape Wind’s application.

Cape Wind, planned for Nantucket Sound, said yesterday that it will still seek the loan guarantee, because it would reduce costs for state electricity customers. The state attorney general has estimated that a Department of Energy loan at 5 percent interest would drop the starting price for National Grid to buy Cape Wind’s power from 18.7 cents per kilowatt hour to about 17.3 cents.