The U.S. Department of Energy on Friday offered support for a major wind energy project planned for the Columbia Plateau in Eastern Oregon.

Energy Secretary Steven Chu announced the department was offering to guarantee $1.3 billion of the financing for the $2 billion Caithness Energy LLC Shepherds Flat project.

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“This project is part of the administration’s commitment to doubling our renewable energy generation by 2012, while putting Americans to work in communities across the country,” Chu said in a statement.

This is the same project the U.S. Air Force objected to earlier this year over fears it could interfere with an aging radar facility in Fossil which relies on analog rather than digital equipment.

Plans call for building 338 turbines to produce 845 megawatts of power, equivalent to a nuclear power plant, in remote parts of Morrow and Gilliam counties near Arlington. The project is estimated to generate 700 construction jobs and is slated to go on line in September 2012. The power is to be sold to Southern California Edison at a price fixed over 20 years.

Sen. Ron Wyden, D-Ore., said the loan guarantee removed the last major obstacle to the project. He had pressed the Air Force to drop its objections.

Energy spokeswoman Ebony Meeks said the project was chosen for its potential to create jobs and its use of high-efficiency turbines from General Electric, which have never been used in North America. Final approval will depend on Caithness meeting environmental reviews and securing other financing.

The insurance on the $1.3 billion loan will be paid from federal stimulus money through the Financial Institution Partnership Program, Meeks said.

The loan is expected to be funded by a group of investors and commercial banks led by Citi and joined by Bank of Tokyo-Mitsubishi UFJ, Lt., RBS Securities and WestLB Securities Inc., the department said.

Source: US DOE