Salazar Approves Landmark Offshore Wind Project [Update]

Interior Secretary Ken Salazar has awarded Boston-based developer Cape Wind a crucial federal permit supporting the development of a landmark, 420 megawatts offshore wind farm off Cape Cod.

“Cape Wind will be the United States’ first offshore wind farm,” Salazar said at a press conference a little more than an hour ago in Boston. He added: “I am convinced that there is a path that we can take forward that both honors our responsibility to protect the historic and cultural resources of Nantucket Sound and at the same time meets the needs to repower our economy with clean energy produced from wind power.”

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The federal permit in effect closes a nine-year  approval process for Cape Wind, which first announced the project in 2001.  The developer quickly faced intense opposition from local residents, Native American tribes and environmental groups, which did not oppose offshore wind development but the location of the Cape Wind project.

But Cape Wind also had a staunch ally in Secretary Salazar who, early in his term at the Interior Department, vowed to develop the country’s largely untapped offshore potential.

Indeed, Europe and in particular Denmark and the UK are years ahead of the U.S. in terms of developing and operating utility-scale offshore wind power plants. Earlier this year, British Prime Minister Gordon Brown announced an ambitious ?75 billion ($119 billion) project to build thousands of offshore wind turbines as part of the country’s Round 3 of bids for leasing of portions of the British sea bed.

Cape Wind says it can generate power by 2012 and aims to eventually supply three-quarters of the power on Cape Cod, reports New England Cable News.

What sort of deal did Salazar broker with opponents of the project with Cape Cod’s Mashpee Wampanoag tribe? Tribe leaders have  all along said that the $1 billion offshore facility and its 130 turbines would desecrate tribal burial sites.

At the press conference Salazar said the project would be scaled down from 170 to 130 turbines. That’s not surprising, since  it is the number of turbines secured by Cape Wind as part of its agreement with Siemens, announced last month.  He’s also called for additional archeological surveys to  limit the impact on potential submerged artifacts.

One potential deal, as G.E.R. reported earlier this month, could be for federal authorities and specifically the Interior Department’s Office of Indian Gaming Management (part of the Bureau of Indian Affairs) to support the Mashpee Wampanoag’s plan to develop a casino.

The project itself now has to secure funding, which in this tight credit environment is going to be challenging. On the plus side Cape Wind has secured wind turbines, a key requirement in getting competitively priced bank debt.

Having a power purchase agreement (PPA) will also help secure bank financing. Cape Wind is currently negotiating  the terms of a PPA with National Grid. On today’s announcement National Grid President Tom King said  it was a “historic step forward for energy policy in the United States, our region and the Commonwealth of Massachusetts.” On the PPA negotiations King said they were going  “very well”  and he  was “optimistic that we will have more to say about our progress in the near future.”

Finally part of the For funding package could also include a government loan guarantee or, if they are extended, a direct cash grant.

Image: iStockphoto

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