A project which raised hopes for U.S. offshore wind energy when it was made public five years ago is now all but dead in the water.
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.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.
The News Journal today reports:
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.
All in all, it’s a sad day when the U.S., in such dramatic fashion, continues to fall behind Europe and China in the development of a source of energy as clean and plentiful as offshore wind.
Related:
NRG Energy places US offshore wind project plans on hold
Wind project in jeopardy as NRG drops contract
Will NRG save Bluewater’s wind projects?
Offshore wind turbine goes really, really big
Top brass briefed on giant offshore wind farm scheme
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