The United States Department of Energy has offered a conditional commitment to provide a partial guarantee for a $1.3 billion loan to support the 845-MW Caithness Shepherds Flat wind farm in Oregon – the world’s largest wind project to date.
The loan will be pooled from a group of institutional investors and commercial banks led by Citigroup Inc., serving as the lender-applicant and joint lead arranger. Other lead arrangers are the Bank of Tokyo-Mitsubishi UFJ Limited, RBS Securities and WestLB Securities Inc.
If approved, the loan would fund the installation of 338 units of General Electric’s 2.5xl wind turbine on private lands in Gilliam and Morrow Counties in north central Oregon.
The project developer, Caithness Energy L.L.C., claimed the $2 billion Caithness wind project will be the first wind facility in North America to use the 2.5xl wind turbine, which has already been deployed in wind projects across Europe and Asia.
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Upon its completion in 2012, the wind farm will generate 2 billion kilowatt-hours of renewable electricity annually – enough to power approximately 235,000 homes – and offset more than 1.2 million tons of carbon dioxide emissions a year. This is equivalent to taking over 212,000 vehicles of the road for a year.
The project will also directly create 400 construction jobs and 35 permanent on-site jobs.
Southern California Edison, a subsidiary of Edison International (NYSE:EIX), will purchase 100 percent of the power generated from the wind farm through 20-year fixed price power purchase agreements.
The wind farm is also the largest project to receive a conditional commitment offer for a loan guarantee under the Financial Institution Partnership Program. The program is designed to expedite the development of the renewable energy sector through guarantees of up to 80 percent of a loan for a renewable energy project by eligible financial firms.
Despite the current government support it enjoys today, the Caithness wind project almost did not push through due to the interference of the Department of Defense. In March, the Federal Aviation Administration and the Air Force refused to give out a critical permit for the project. They argued that the blades of the wind turbines would interfere with a radar system in Fossil, Oregon because radar signals bounce off the blades in certain positions.
The wind farm will help Oregon cement its position as one of the top wind energy markets in the United States. According to the American Wind Energy Association, the state added 691 MW of wind generating capacity in 2009, following Texas, Indiana and Iowa.
