NRG Energy’s Bluewater Wind subsidiary had been lead developer of the Mid-Atlantic Wind Park planned to be located off the coast of the US state of Delaware.
Now that it’s failed to find an investment partner, it plans to terminate the project’s 200 MW power purchase agreement with he Delmarva Power & Light Company by the end of the year.
“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’s President and CEO.
“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 timeframe,” he said.
Since NRG acquired Bluewater Wind in November of 2009, the Company has made significant financial investments in development including design and engineering studies, state and federal permitting and leasing fees, ecological assessments, and professional and consulting fees to move the Wind Park forward. At the time of the acquisition, the outlook for offshore wind was positive.
The Wind Park was in line for a Department of Energy loan guarantee, a necessary element for this capital-intensive project, and NRG Bluewater had received preferential development rights for a project off the coast of New Jersey and has submitted proposals for projects off the coasts of Maryland and Massachusetts.
A little more than two years later, the outlook for offshore wind and for the Delaware project has changed dramatically. In particular, two aspects of the project critical for success have actually gone backwards: the decisions of Congress to eliminate funding for the Department of Energy’s loan guarantee program applicable to offshore wind, and the failure to extend the Federal Investment and Production Tax Credits for offshore wind which expire at the end of 2012 and which have rendered the Delaware project both unfinanceable and financially untenable for the present.
In addition, a central element of the Wind Park’s business plan, previously communicated to public authorities in Delaware, was to find an investment partner. To date the company has been unable to find a partner, despite the attractiveness of the PPA and after having approached more than two dozen prospective investors over the course of several months.
NRG will close its Bluewater Wind development office but preserve its options by maintaining its development rights and continuing to seek development partners and equity investors. If and when market conditions improve and the company is able to find partners, Crane said NRG will look to deploy the Wind Park and explore other viable offshore wind opportunities in the Northeast.
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