Offshore energy: What we know so far
An off-shore energy company has secured a $6 billion loan from a US state to help it develop and operate a massive wind farm on the California coast.
The state has also pledged $1.6 billion in grants and loans to help the company develop its offshore wind projects.
Energy company Wind Mobile is looking for investors to fund a $4.8 billion, five-year deal with California to develop and run the offshore wind project, which will be the largest in the US and one of the largest offshore wind farms in the world.
Wind Mobile chief executive officer Chris Meech said the loan was a good first step to bring energy development to the state, which is facing unprecedented demand for its abundant natural gas resources.
The company, which already has wind farms and is planning to build one of its own in the coming years, has long been keen to develop offshore wind.
“The fact that California has already committed to funding the project is a big step,” Meecher said.
“It shows that we’re serious about offshore wind.”
Meech told Reuters the company was confident it could be able to repay the loan in time for the state to get its offshore project approved, but that it was taking the loans seriously.
“We’re not giving up, we’re taking the steps that are necessary to make sure that we can continue to build offshore wind here in California,” he said.
The project is set to produce 4.3 gigawatts (GW) of electricity, enough to power about 50,000 homes and generate about $4 billion in revenue, according to Wind Mobile.
Wind Mobile said it had secured $3.5 billion in government and private financing to develop the project.
“It’s a huge investment for California,” Miech said.
“This is a major milestone for our company, for the industry and for the world as a whole.”
The $6.5bn loan comes as a big relief to the company, whose previous loan came from the federal government.
California has been one of Wind Mobile’s biggest markets for offshore wind, having signed a deal to buy up the company’s land.
The $1 billion loan, which Meechi said is contingent on the company being able to meet the state’s energy conservation goals, also came as the company announced that it had been granted a $3 billion loan to help pay for an upgrade to its facilities.
The state also announced the signing of a $1bn loan to the California Wind Energy Center, which the company said would allow the company to operate onshore wind energy development, a move that could have implications for other wind projects in the state.
The wind farm, called the Lassen Wind Farm, is expected to produce 3.2 GW of electricity annually, enough for about 70,000 to 100,000 households, according the company.
The company is expected be ready to start operations in 2019, with a projected production capacity of 5.5 GW.
The loan will help fund development costs, but it will also allow the wind farm to become profitable, the company noted.
The announcement came just weeks after Wind Mobile signed an agreement to buy a large chunk of land near Lake Tahoe from a developer who had previously been working to develop it as a wind farm.