The agreement took months to negotiate, and now Deepwater Wind and the state will be able to build an offshore wind farm, Gov. Donald L. Carcieri told the Providence Business News.

The wind farm will include 100 turbines with the capacity to generate 1.3 million megawatt-hours of electricity per year. That is estimated to be enough to provide 15 percent of Rhode Island's electricity demand.

If all other approvals are granted, construction is expected to begin in late 2010.

"This agreement sets the stage for Rhode Island to be the leader in the emerging renewable energy industry in the Northeast, and brings us one step closer to increasing our use of renewable energy sources to generate 20 percent of our electricity needs," the Republican governor said.

Deepwater Wind will use an Ocean Special Area Management Plan from the R.I. Coastal Resources Management Council to choose a location. Then the project will be built in two phases.

In the first phase, Deepwater will build a 20-megawatt wind farm in state waters, and in the second phase, Deepwater will build a much larger project in federal waters after receiving approval from the U.S. Minerals Management Service. Together, turbines installed in the two phases will generate about 1.3 million megawatt hours of electricity.