It’s long been touted by state officials as the holy grail of green energy supply, but now, the future of an offshore wind farm off Delaware’s coast appears to be in serious jeopardy.
NRG Energy will put the development of the wind farm “on hold for the near term.” The company is shelving the project because it’s been unable to find an investment partner for Bluewater Wind and is planning on terminating a 200-megawatt power purchase agreement with Delmarva Power by the end of the year. The wind project plans called for 49 to 150 turbines about 13 miles off the coast of Delaware.
“We’re not giving up, but at this moment we can’t rationally justify further investment in this project without the prospect that it can move forward within a reasonable time frame,” said NRG President and CEO David Crane in a statement. “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.”
Bluewater Wind Founder and President Peter Mandelstam says the uncertainty of an extension of federal loan guarantees played a major role in the suspension of the project. “It’s been very challenging in the U.S. because we haven’t had a regular, predictable energy policy at the federal level,” Mandelstam says. “When you have regular and predictable policy, the private sector can step up with capital and job creation, and the public sector can put in place policies that allow the private sector to do its work.”
NRG bought Bluewater Wind in 2009 with hopes of powering the wind farm within the next decade, with the help of a loan guarantee from the U.S. Department of Energy. Bluewater started investing in design and engineering studies among other expenditures. Now, just two years later, Congress has eliminated the loan guarantee program for offshore wind. Couple that with failure of federal offshore wind tax credits to be extended beyond 2012, and NRG decided to pull the plug. In a statement released Monday, the company calls the Delaware project “both unfinanceable and financially untenable for the present.”
NRG will close its Bluewater office, but will retain development rights for the project and will try to find partners and equity investors. The company statement says NRG will try to deploy the wind park or other offshore wind opportunities in the Northeast “if and when market conditions improve and the company is able to find partners.”
Mandelstam says they’re working hard to find a buyer before the end of the year in order to keep the power purchase agreement with Delmarva Power in place. He says while natural gas prices may be down for now, the market is still quite volatile making wind a stable alternative. “For the long term, off shore wind is a very good investment for the rate payers of Delaware and elsewhere. That hasn’t changed.”
The NRG announcement was disappointing to Delaware’s senior U.S. Senator Tom Carper (D). In a statement, Carper said, “Unfortunately, businesses small and large are facing a very challenging economic climate, and many are being forced to make tough financial decisions, such as scaling back investments in new business opportunities.” Carper says the federal government needs to be a good partner with private industry to get alternative energy projects going. “Regardless of NRG’s decision, Delaware’s offshore wind project remains a good, viable project.”