BOSTON (Reuters) - A controversial plan to build the first large U.S. offshore wind-power farm won approval from Massachusetts authorities on Friday but still must clear federal regulatory hurdles.

A power-generating windmill turbine operates in a wind farm on Backbone Mountain near Thomas, West Virginia, August 28, 2006. A controversial plan to build the first large U.S. offshore wind-power farm won approval from Massachusetts authorities on Friday but still must clear federal regulatory hurdles. REUTERS/Jonathan Ernst

Cape Wind Associates LLC, a privately funded Boston-based energy company, has proposed constructing 130 wind turbines over 24 square miles in Nantucket Sound, within view of the wealthy Cape Cod resort region of Massachusetts.

The project, which would meet the energy needs of some 400,000 homes, “adequately and properly complies” with the Massachusetts Environmental Policy Act, said the state environmental affairs secretary, Ian Bowles.

The wind farm would consistently generate 170 megawatts of electricity, enough to power about 75 percent of Cape Cod and the nearby islands of Martha’s Vineyard and Nantucket. At its peak, the wind farm could generate more than 400 megawatts.

Its supporters, including Massachusetts Gov. Deval Patrick, say the project would save millions of dollars in energy costs and help the United States reduce its reliance on foreign oil at a time of high crude prices.

“We have work to do as we build a clean energy economy -- let’s get on with it,” said Patrick, a Democrat.

Opponents -- including some Massachusetts politicians and business leaders with homes on Cape Cod, Martha’s Vineyard and Nantucket -- say Cape Wind’s 247-foot-tall (75-metre-tall) turbines would kill migrating birds and could threaten the region’s lucrative tourist industry.

The lead federal agency needed to approve the project is the Minerals Management Service, a bureau in the U.S. Department of the Interior that manages the nation’s natural gas, oil and other mineral resources on the outer continental shelf. Cape Wind expects a decision from MMS in early 2008.

An early indication of the federal agency’s position on Cape Wind could come at the end of next month when it is expected to release a draft environmental impact report.

COULD BE RUNNING BY 2010

“We’re hopeful that we will complete the permitting process by the end of this year, and hopefully receive a final decision by the first quarter of 2008,” Cape Wind President Jim Gordon told a news conference. “We could be producing clean renewable energy in the 2010 time frame.”

The United States trails Europe in developing offshore wind-power energy production. Denmark accounts for more than half of the world production, followed by Britain. If built today, Cape Wind would be the world’s largest offshore wind-power farm.

The turbines, six miles off the Cape Cod coast, would each rise nearly as high as the Statue of Liberty in New York and be placed to take advantage of the region’s strong winds, shallow depth and historically small storm waves.

The project is opposed by former Massachusetts Republican Gov. Mitt Romney, Democratic Sen. Edward Kennedy and many residents who own coastal property from where the turbines could seen on a clear day.

Kennedy, whose brother former President John F. Kennedy created the Cape Cod National Seashore in 1961, has said he believes Cape Wind would threaten a wildlife sanctuary and has criticized the lack of a competitive bidding process before the project was announced in 2001.