Danish Pension Fund Invests in Cape Wind Project
PensionDanmark is investing $200 million in Cape Wind’s planned 468-MW offshore wind farm, which is sited off the coast of Nantucket Sound. The project has drawn sustained opposition during its 12 years of development.
The Danish investment, announced on June 16, will help secure project financing, says the owner. “This important investment is a milestone in the Cape Wind project,” says Jim Gordon, Cape Wind president.
The goal is to finalize construction of North America’s first offshore wind farm, which is also one of the largest planned, with 130 3.6-megawatt turbines, the statement noted. The investment, in the form of a mezzanine loan, is expected during the first phase of the project; it will cover 101 of the turbines.
While Cape Wind does not have a purchase agreement for 23% of its power, it is moving forward with financing for 101 of the turbines. After it finds a buyer, the company plans to find an investor for the rest of the turbines. Energy utilities National Grid and NStar have made commitments to purchase 77% of the wind farm's output once it has been constructed.
“As a lighthouse project, Cape Wind is crucial to advance the offshore wind industry in the U.S.,” the PensionDanmark statement said.
Torben Moger Pedersen—chief executive officer of PensionDanmark, Denmark’s largest labor pension fund—said, “We have made equity investment in two offshore wind farms in Denmark and three onshore wind farms in the U.S.A. [in Texas and Pennsylvania] and provided debt financing for onshore wind parks in Sweden and Belgium. At a time when bond yields are very low, this is expected to be an attractive investment opportunity for us.”
PensionDanmark considers Cape Wind to be an attractive project because of its experienced supplier base, an in-place 15-year power purchase agreement, and use of proven and operationally stable technology, says Christian Skakkebaek, a partner in Copenhagen Infrastructure Partners (CIP), manager of PensionDanmark.
Several environmental groups, a Native American tribe and local residents have filed lawsuits to block the project, although public opinion polls show overwhelming support among area residents. Cape Wind hopes to commission the project in 2016.
