A Danish pension fund plans to kick in $200 million to help pay for Cape Wind, edging the controversial $2.6 billion project closer to being fully financed.
In a statement released Tuesday, officials of PensionDanmark — a non-profit labor market pension fund with $24.7 billion in assets — said they would provide a mezzanine loan for the offshore wind project planned for Nantucket Sound off Massachusetts. In its press release, PensionDanmark says its commitment is conditioned on a final investment decision that will be made by the end of the year, according to the Cape Cod Times.
"We think the Cape Wind project makes a perfect fit in our energy sector," PensionDanmark CEO Torben Moger Pedersen told the Cape Cod Times after the announcement.
A mezzanine loan is a hybrid of equity — an investment for a stake in the project — and debt, and it falls between the two forms of financing from both a risk and return standpoint.
The project is not PensionDanmark's first foray into wind energy investments, Pedersen said. PensionDanmark is comfortable with the investment because Cape Wind is similar to an offshore wind farm known as Anholt that the fund invested in off the coast of Denmark, Pedersen said. Anholt includes 111 turbines made by Siemens that are about the same size and technology as the turbines Cape Wind plans to use, he said.
With the Anholt project, Denmark is getting about 25 percent of its electricity from wind energy. The United States gets about 5 percent of its electricity from wind power, according to an April report from the Federal Energy Regulatory Commission.