Offshore, Project Development, Wind Power

Deepwater Gets Financing for First US Offshore Wind Farm

Deepwater Wind LLC received $290 million in financing that will allow it to begin building its Block Island offshore wind project in Rhode Island, the first one in the U.S.

“We’ll have steel in the water this summer,” Chief Executive Officer Jeff Grybowski, a former chief of staff to the governor of Rhode Island, said Monday in a telephone interview. “It’s an enormous step for the project, and it’s an equally enormous step for the offshore wind industry in the U.S.”

Other U.S. offshore wind projects have struggled to reach completion. The $2.6 billion Cape Wind project off Massachusetts has been under development for 13 years, stalled by legal battles with local fishermen and Native American tribes. Two utilities in January filed to cancel power-purchase agreements with the 468-megawatt project after it missed a Dec. 31 deadline to complete financing.

Deepwater won a July 2013 U.S. government auction to develop wind farms off the coasts of Rhode Island and Massachusetts. The Providence, Rhode Island-based company also has proposed a project as large as 1.2 gigawatts off the coast of Long Island.

“Deepwater Wind succeeded where Cape Wind failed — they chose a less controversial site and a more manageable size,” said Amy Grace, an analyst with Bloomberg New Energy Finance. “This is a major milestone.”

The $290 million in debt financing is from Societe Generale SA and KeyBank NA. Financial terms weren’t disclosed. D.E. Shaw & Co., the $36 billion New York-based hedge fund, also contributed about $70 million in equity to Block Island.

The 30-megawatt wind farm will use five 6-megawatt turbines manufactured by Alstom SA. They are scheduled to be installed in mid-2016, with the project expected to be operational by the end of that year. National Grid Plc has agreed to buy the wind farm’s output under a 20-year contract.

Copyright 2015 Bloomberg

Lead image: Offshore wind via Shutterstock