Making big environmental news today is New Jersey-based NRG Energy's announcement that it will terminate its Bluewater Wind power-purchase contract with Delmarva Power at the end of this year.
The project captured the public's imagination five years ago as a utility-scale, carbon-free source of energy, 13 miles off the Delaware coast. The turbines have been expected to provide 200 megawatts--enough to power about 54,000 homes.
"Our people have worked hard and we've made a considerable financial investment in the wind park, but that effort cannot overcome the difficult and unfortunate realities of the current market," said David Crane, NRG president and CEO.
The alternative energy publication Recharge said: that the decision "highlights the difficulties that even well-capitalized developers such as NRG face in financing offshore projects with long lead times, as they struggle to navigate costly permitting and energy tax policy uncertainties at the federal level."
According to Recharge:
NRG said its decision was in response to Congress eliminating funding for the Energy Department’s Section 1705 loan guarantee program, and failure thus far to extend federal investment and production tax credits (PTCs) for offshore wind that expire next year.
NRG says its Bluewater Wind subsidiary, which it acquired in November 2009, was in line for a loan guarantee for the Delaware project before Congress earlier this year removed some of the program’s funding as part of a broader spending reduction.The News Journal today reports:
Even so, NRG says it has supported the Delaware project with “significant investments” in development, including design and engineering studies, state and federal permitting and leasing fees, ecological assessments, and professional and consulting fees.
"But Bluewater has been unable to find an investment partner, despite interest from two dozen potential candidates and an attractive 25-year power purchase deal with Delmarva Power & Light. That deal in June 2008 was the first involving an offshore wind project. Delmarva would initially buy power for between 13 cents and 14 cents per kWh, with a 2.5% annual increase for the contract life.
NRG still expects to receive federal approval for a lease to build offshore wind turbines off the Delaware coast, said David Gaier, NRG spokesman. The company would hold onto this lease as an asset, unless NRG finds a buyer for Bluewater, he said.
Even absent the contract, NRG could re-enter the offshore wind business in the future if market conditions are good enough, Gaier said. Or it could sell Bluewater at a later date, he said.
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