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NRG delays Bluewater Wind farm decision

But the firm has already forfeited $2 million of the deposit to delay the completion date. It now has until Sept. 23 to exit the deal, or lose $2.75 million, and until Jan. 1, 2013, to leave before it loses the rest. Bluewater will work to not only restore federal loan guarantee money, but to try to locate some private financing, Mandelstam said.

NRG Energy has bought time to make a decision on whether to pursue its Bluewater Wind project, but observers wonder what the company can accomplish during a short delay to save the enterprise.

The offshore wind developer was up against a key deadline on Thursday, the third anniversary of its landmark power purchase deal with Delmarva Power. In essence, it had a choice of going ahead with the project and forfeiting the remaining $4 million of a security deposit with Delmarva, or walking away from the deal and keeping the cash.

The firms decided to stall, reaching a deal that will allow NRG to see whether Congress will extend tax credits and restore funding for a shelved loan guarantee program the energy firm says is critical to paying for the wind farm it wants to erect off the coast of Delaware.

Last month, NRG Energy said it was delaying by a year critical environmental studies for the wind farm, noting that it still wanted to build it but was unsure whether it was financially feasible given the federal government's withdrawal of funding for loan guarantees and uncertainty about renewing credits beyond this year.

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NRG Energy has bought time to make a decision on whether to pursue its Bluewater Wind project, but observers wonder what the company can accomplish during a short delay to save the enterprise.

The offshore wind developer was up against a key deadline on Thursday, the third anniversary of its landmark power purchase deal with Delmarva Power. In essence, it had a choice of going ahead with the project and forfeiting the remaining $4 million of a security deposit with Delmarva, or walking away from the deal and keeping the cash.

The firms decided to stall, reaching a deal that will allow NRG to see whether Congress will extend tax credits and restore funding for a shelved loan guarantee program the energy firm says is critical to paying for the wind farm it wants to erect off the coast of Delaware.

Last month, NRG Energy said it was delaying by a year critical environmental studies for the wind farm, noting that it still wanted to build it but was unsure whether it was financially feasible given the federal government's withdrawal of funding for loan guarantees and uncertainty about renewing credits beyond this year.

"This agreement recognizes the significant challenges that NRG Bluewater Wind faces," said Peter Mandelstam, president of NRG's Bluewater subsidiary. "We're going to work very hard in that three-month period to make progress."

The deadline extension announced Thursday sets up two new deadlines for the contract requirement that initially had Bluewater pay Delmarva a $6 million security deposit. Bluewater, now owned by NRG, was to get the entire $6 million back upon successful completion of the wind farm.

But the firm has already forfeited $2 million of the deposit to delay the completion date. It now has until Sept. 23 to exit the deal, or lose $2.75 million, and until Jan. 1, 2013, to leave before it loses the rest.

Bluewater will work to not only restore federal loan guarantee money, but to try to locate some private financing, Mandelstam said.

Amy Grace, an analyst for Bloomberg New Energy Finance, is skeptical much can get done in three months.

Congress will be in recess for some of that time, she noted. And even if the loan guarantee money is restored, that's not enough time to win a loan guarantee from the Department of Energy, she said.

At best, NRG will be able to survey the situation and have a better sense of whether it's worth taking the risk that it could win a federal loan guarantee, she said.

"You have to be very confident there is some movement on the other end," she said.

Jeremy Firestone, an associate professor at the University of Delaware, said he was encouraged by the development.

Both parties are being flexible, and NRG "presumably would have preferred to just push the whole thing to 2013," he said.

Delmarva spokeswoman Bridget Shelton said the company wants to move the project forward, but "as far as the future, I'm not going to predict that."

The wind farm plans call for anywhere from 49 large turbines to 150 smaller ones, about 13 miles off the Delaware coast. The contract with Delmarva Power is for a maximum of 200 megawatts, which would be the equivalent of enough power for 54,000 homes.

Bluewater has planned a wind farm of roughly twice that size, but has struggled to sell the rest of the power a bigger farm would generate.

Last month, NRG stated it was slowing down the project after the federal government slashed funding to the renewable energy loan guarantee program.

That congressional action, part of an interim budget-cutting deal, marks a general resistance by Republicans, who control the U.S. House of Representatives, to subsidize renewable power.

But NRG officials have one small reason for optimism: The House Appropriations Committee recently voted to restore a fraction of the loan guarantee money for those projects that have already applied.

"In Washington, you always reason by analogy," Mandelstam said.

In March, Bluewater won the right to exclusively negotiate with the Department of the Interior for a lease to build the farm off the Delaware coast.


Source: http://www.delawareonline.c...

JUN 24 2011
http://www.windaction.org/posts/31191-nrg-delays-bluewater-wind-farm-decision
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