When the US Department of the Interior (DOI) announced that tiny Vineyard Power was among ten developers interested in building wind farms in the Atlantic Ocean south of Massachusetts, the offshore industry did not know what to make of it.

How could an energy co-operative for the island of Martha's Vineyard - with a budget of less than $150,000 and only one permanent staff member - hope to be among the vanguard of the US offshore wind sector?

Vineyard Power executive director Richard Andre tells Recharge the answer was to form the first partnership between a community-owned energy venture and a large private developer, OffshoreMW - whose main backer is prominent Wall Street asset management firm the Blackstone Group.

Blackstone is also the lead investor in WindMW, which is building a 288MW project in the German North Sea.

Andre argues that with federal and state governments pushing forward with offshore wind, it makes sense for island residents to own and share in the potential benefits.

Vineyard Power also brings local knowledge and community relations to the table - no small benefit. It was specifically formed in 2009 to provide renewable power to the island.

The partnership with OffshoreMW, known as Martha's Vineyard Offshore Wind Alliance, is interested in 518sq km of ocean starting 22km south of the island. This zone is located within a 7,700sq km lease area in federal waters proposed by the DOI's Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE).

Before selecting three leasing blocks for itself as part of the partnership's joint 38-block proposal to the BOEMRE, Vineyard Power surveyed island communities and took into account members' concerns over impacts on commercial fishing, construction cost, sealife and ocean views.

The BOEMRE is now reviewing the financial, legal and technical qualifications of the developers, some of whose preferred zones of interest overlap. This autumn it expects to detail ground rules for a competitive auction process for qualified bidders.

The Martha's Vineyard partners envisage a wind farm of up to 1GW to be built in stages.. "OffshoreMW believes 1GW is their sweet spot," says Andre. "But it won't be right away."

Whichever developer ultimately builds the offshore wind farm, the Port of New Bedford in Massachusetts has been designated as the staging area for construction and supply of materials.

Andre sees the co-operative possibly taking an initial 40MW of power from a future wind farm. This would be an investment of about $195m, including pre-development costs - the largest infrastructure project in the island's history.

OffshoreMW would build out a certain amount in a first phase and sell the power under long-term contract to the mainland. Vineyard Power is looking at applying for a Department of Agriculture rural development loan to fund half the $195m, although Andre cautions that winning approval is not a "slam dunk". Another 35% would come as equity. "We're looking for investors," he says.

The balance could be either debt or equity, combined with a plan to monetise the project's renewable-energy credits by pre-selling them.

A final element would be to use a tax credit for wind investment or production, presuming Congress extends the present scheme.

Future build-out for Vineyard Power will depend on growth of the island's energy demand. Andre speculates it could reach 100MW of wind power in the coming decades if technology enables widespread use of electric vehicles and energy storage.

Meanwhile, Vineyard Power aims to sign up 8,000 members before the wind farm's commercial operation. The co-operative is currently formed by 1,100 permanent and temporary members.

There are about 16,000 permanent residents on Martha's Vineyard, and up to 85,000 more arriving each summer to take in the natural beauty, and gawk at the rich and famous, such as President Barack Obama, who holidays there. There are roughly 3,000 commercial power users.

A share in the co-operative requires a one-time payment that began at $50, but is now $150 and increases each quarter until 2015. At that point, membership will cost $975. Andre also has plans for solar arrays.

"We want to do generation only," he says. "We began this with the idea of what a 21st-century utility might look like."