Cape Wind Associates, the company seeking to develop America's first offshore wind farm off the Massachusetts coast, said Thursday that a key federal agency has given it the green light to possibly start building by next year.

But that probably won't stop its opponents from keeping up their fight against the controversial project being proposed for the Nantucket Sound.

Cape Wind said that an environmental impact statement from the Minerals Management Service released Thursday approved the project's site and energy benefits.

The report from the Department of Interior agency that oversees offshore energy resources also stated that the project will have minor or negligible impacts on navigation, fishing, tourism and the environment – some of the key objections from opponents including U.S. Sen. Ted Kennedy.

Cape Wind first proposed its 130-turbine offshore wind farm in 2001, but it's faced opposition since its inception. Nantucket Sound residents, organized as a group called the Alliance to Protect Nantucket Sound, have complained the project would ruin the area's views from the shore, hurt tourism, endanger wildlife, threaten boating and produce electricity at inflated prices.

Thursday's favorable environmental report is still subject to a 30-day review and final approval by the Department of Interior under the incoming Obama administration. Massachusetts and other federal agencies still need to give their approvals as well.

Cape Wind said it hopes to finish that permitting process by March, which could lead to construction next year.

So far, all the world's offshore wind power is in Europe – nearly 1.5 gigawatts in 2008, up from 1.1 gigawatts at the end of 2007, according to the European Wind Energy Association. But that's just a sliver of the roughly 94 megawatts of wind power installed worldwide at the end of 2007.

Planned projects, including the 1-gigawatt,  £1.5 billion  ($2 billion) London Array planned for the Thames River estuary, could boost Europe's offshore wind power production to nearly 31 gigawatts by 2015, the EWEA reports (see Masdar Bets on Massive Offshore Wind Park).

The United States had 21 gigawatts of wind power – all onshore – as of Nov. 2008, putting it ahead of Germany as the world's top wind power producing country for the first time last year, according to the American Wind Energy Association.

Cape Wind isn't the only group seeking to build wind farms off America's coasts. Principle Power said in October that it had $20 million to try to build the country's first offshore wind park off the Oregon coast, which it hopes to grow to an eventual 150 megawatts (see Blowing Offshore Power Into Oregon).

Bluewater Wind said in June that it had signed a contract to sell Delmarva Power up to 200 megawatts of power from a project off the Delaware coast  (see Can Bluewater Blow Offshore Wind Into U.S.?). And Garden State Offshore Energy, a joint venture between PSEG Renewable Generation and Deepwater Wind, was picked in October by the New Jersey Board of Public Utilities to build a 350-megawatt wind farm off its coast.

Cape Wind might get a boost from Massachusetts Gov. Deval Patrick's plans, announced Wednesday, to change state regulations to ease wind power development projects. The state is also drawing up plans, expected to be complete by year's end, for managing offshore energy development (see In Massachusetts, Wind Isn't Only For Sailing).

Offshore wind power projects offer benefits, such as stronger and more predictable winds to capture. But they also face added costs and engineering challenges.

And with the economic downturn and credit crunch putting a crimp on wind power projects, it's unclear how quickly those projects may come to fruition (see Energy Financing Gone With the Wind and Wind Power Joins Solar in Layoff Trend).