Danish firm pledges $200M to Cape Wind

Source: Phil Taylor, E&E reporter • Posted: Thursday, June 20, 2013

A Danish pension fund has pledged to invest $200 million in the Cape Wind project, a long-delayed, 468-megawatt wind farm off Cape Cod, Mass., that hopes to begin construction by the end of the year.

While the investment by PensionDanmark represents less than 10 percent of the project’s estimated $2.6 billion price tag, project owner Jim Gordon called it a “milestone” in the Massachusetts wind project’s decadelong development.

“We are pleased to welcome PensionDanmark and [Copenhagen Infrastructure Partners] into the project as experienced investors in offshore wind,” Gordon said.

Copenhagen Infrastructure Partners, which manages the fund used by PensionDanmark, said it was impressed by the environmental conditions off Cape Cod, the experience of Cape Wind’s turbine supplier, Siemens, and agreements by local utilities to purchase more than 75 percent of the project’s power.

“Investing in energy infrastructure is not new to us,” said Torben Möger Pedersen, CEO of PensionDanmark, in a statement. He noted that the firm has made equity investments in two offshore wind farms in Denmark and three onshore wind projects in the United States. “At a time when bond yields are very low, this is expected to be an attractive investment opportunity for us.”

The $200 million investment is conditioned on Cape Wind financing the rest of the project by year’s end. If the company is able to begin construction by December, it will also qualify for a lucrative 30 percent investment tax credit set to expire then.

The announcement comes three months after project developer Energy Management Inc. announced an agreement with a Japanese bank to help finance the 130-turbine project (E&ENews PM, March 19).

Bank of Tokyo-Mitsubishi UFJ Ltd. agreed to provide a “significant amount” of debt financing for the project, though the specific amount could not be disclosed, said Cape Wind spokesman Mark Rodgers.

Cape Wind is also seeking a loan guarantee from the Energy Department, a proposal that is backed strongly by the state’s entire congressional delegation and environmental groups including Greenpeace, the National Wildlife Federation, the Natural Resources Defense Council, the Sierra Club, Mass Audubon and the Conservation Law Foundation.

The company in November said it is pursuing financing for the project’s output that already has been sold, which would be generated by about 101 turbines.

Environmentalists, labor groups and the Obama administration have backed Cape Wind’s bid to become the nation’s first offshore wind farm. But after more than a decade of development and years after it received final Interior Department approval, the project is yet to place steel in the water amid continuing financing challenges and some lawsuits.

Opponents including the Alliance to Protect Nantucket Sound, backed by the wealthy petroleum coke magnate Bill Koch, said the conditional investment is a small portion of the project’s overall cost. The group has criticized the cost of electricity from the project, which will exceed that of onshore wind or natural gas, and said 2013 is “the beginning of the end” for Cape Wind.

The Danish investment “indicates that there is very little interest in this controversial high-cost project from the private sector,” said Audra Parker, the group’s president.

Aside from Cape Wind, there are other offshore wind projects that are close to entering construction. They include Deepwater Wind’s 30 MW Block Island project in state waters off Rhode Island and Fishermen’s Energy’s 25 MW project in state waters off New Jersey.