Should Cape Wind Receive $150 million Federal Loan Guarantee?

Should Cape Wind Receive $150 million Federal Loan Guarantee?

The U.S. Department of Energy has announced that it will grant a $150 million loan to advance the Cape Wind energy project in Massachusetts, provided backers can secure an additional $2.6 billion in financing. If successfully built, Cape Wind will consist of 130 wind turbines capable of producing 360 megawatts of electrical power.

The project has been controversial since its inception. Cape Wind has been praised by supporters as having the potential to transform Eastern Massachusetts into a national hub for wind power production. Backers say that Cape Wind is a model for wind projects being considered in other parts of the country. Wind power is often cited as a key component of “clean energy” alternatives to fossil fuels, and is praised for producing very little pollution while being endlessly renewable. Greater use of wind power would reduce reliance on fossil fuels, while construction of the wind turbines is estimated to create about 400 jobs. An additional 50 permanent operational jobs will be created once construction is completed.

Not everyone is impressed. Critics point out that the number of jobs divided by the money spent means that each job will be created at a cost of over $300,000 apiece. Some suggest that is too much money for too few jobs. Critics also point out that even with government subsidies, wind energy is more expensive to produce than more traditional energy sources. Fisherman have complained that the wind turbines will upset their fishing opportunities by restricting access to areas that are now available for fishing. Meanwhile, free market conservatives argue that the project represents a potentially disruptive intrusion into the energy market that will have unintended consequences.

Despite the offer of the Energy Department money, it remains to be seen whether the rest of the $2.6 billion in financing will come together in order to trigger the $150 million loan, although European investors recently came forward with an offer of $600 million. However, political, regulatory, financial and environmental hurdles remain, leaving it still uncertain whether supporters or critics of the project will ultimately prevail.

 

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