NRG Energy officials are counting on Congress to reauthorize a loan guarantee program that the firm says is "crucial" to the success of a planned wind farm off Rehoboth Beach. Right now, the planned wind farm doesn't qualify for the program because it only covers projects set to start construction by Sept. 30, 2011. And that's a year or more before the construction on the Delaware project would start. Without the federal loan guarantees, NRG would need to pay higher interest rates on any borrowing, which could cut into the project's profitability.
NRG Energy officials are counting on Congress to reauthorize a loan guarantee program that the firm says is "crucial" to the success of a planned wind farm off Rehoboth Beach. Right now, the planned wind farm doesn't qualify for the program because it only covers projects set to start construction by Sept. 30, 2011. And that's a year or more before the construction on the Delaware project would start. Without the federal loan guarantees, NRG would need to pay higher interest rates on any borrowing, which could cut into the project's profitability.
NRG Energy officials are counting on Congress to reauthorize a loan guarantee program that the firm says is "crucial" to the success of a planned wind farm off Rehoboth Beach.
Right now, the planned wind farm doesn't qualify for the program because it only covers projects set to start construction by Sept. 30, 2011. And that's a year or more before the construction on the Delaware project would start.
Without the federal loan guarantees, NRG would need to pay higher interest rates on any borrowing, which could cut into the project's profitability.
NRG, one of the nation's largest energy companies, acquired the wind farm project in its purchase of Bluewater Wind on Monday. It would place about 79 turbines 14 miles off the shore of …
... more [truncated due to possible copyright]NRG Energy officials are counting on Congress to reauthorize a loan guarantee program that the firm says is "crucial" to the success of a planned wind farm off Rehoboth Beach.
Right now, the planned wind farm doesn't qualify for the program because it only covers projects set to start construction by Sept. 30, 2011. And that's a year or more before the construction on the Delaware project would start.
Without the federal loan guarantees, NRG would need to pay higher interest rates on any borrowing, which could cut into the project's profitability.
NRG, one of the nation's largest energy companies, acquired the wind farm project in its purchase of Bluewater Wind on Monday. It would place about 79 turbines 14 miles off the shore of Rehoboth Beach.
Drew Murphy, NRG's regional president, said federal loan guarantees would be "crucial" in providing assurances to banks, making it easier for them to lend.
But the loan guarantee program, which was funded under the stimulus, applies only to renewable energy projects that start construction by the September deadline, said Department of Energy spokeswoman Ebony Meeks. The stimulus included $4 billion for loan guarantees for "rapid deployment" of renewable energy systems.
The NRG-Bluewater project is expected to start producing electricity by 2013, and any permitting delays could push it back further.
Peter Mandelstam, NRG's new head of offshore wind operations, said the federal government would have to extend the deadline to make this work, but he expressed confidence that would happen.
"It's still new, but I believe it's a good program, good public policy," Mandelstam said.
NRG's acquisition of Bluewater shows just how confident NRG is that things will work out, he said.
"Obviously NRG has made, in the acquisition of Bluewater Wind, a very definitive statement," Mandelstam said. "It's a real vote of confidence for the offshore industry in general, and the Delaware project in particular."
Tyler Tringas, wind energy analyst for New Energy Finance, wasn't so sure about the prospect of Congress extending the program in its current form.
"I think they would not have much luck trying to get the current program extended further, as it is very clearly supposed to be 'stimulus funding' for near-term projects," Tringas said. NRG might find it easier to find support from the Department of Energy under a different program, he said.
Bette Phelan, spokeswoman for Sen. Tom Carper, said there is an effort in the Senate to extend the program as part of an energy bill sponsored by Sen. Jeff Bingaman, D-N.M., the energy committee's chairman. The committee approved it in July, but it's been awaiting action on the Senate floor ever since, she said.
The American Clean Energy Leadership Act of 2009, in which the provision is included, is separate from the better-known Senate climate bill, but leaders are talking about folding them together on the Senate floor, holding up final consideration. The energy bill's best-known aspect is a plan that would require every state's utilities to buy renewable electricity, much like the requirement that Delaware put on Delmarva Power.
Carper supports the extension, Phelan said. The bill would create a "Clean Energy Investment Fund" to offer loan guarantees to "riskier technologies with a higher potential to address our climate and energy security needs" on a more permanent basis, according to a description of the energy bill in the Senate.
Carper staffers say the loss pool that would guarantee the loans could initially flow from revenue gathered when polluters buy allowances. It would later be self-sustaining as money is paid back into the program and re-used for projects.
Asked if the Bluewater project would fail if it did not receive the loan guarantee, Lori Neuman, spokeswoman for NRG, said the company would continue to seek out other incentives, and work to finance offshore wind projects in the commercial bank market.
Murphy also said on Monday that it was critical to get extended a production tax credit that has been offered to wind farm developers since 1992 and has been renewed many times. It is currently set to expire at the end of 2012.
The American Wind Energy Association is lobbying for Congress to provide a separate tax credit for offshore projects, recognizing the long planning and construction phase, Mandelstam said.