NRG cancels deal with Delmarva Power
NRG Energy, the parent company of Bluewater Wind, notified Delmarva Power this week it is canceling the long-term power purchase agreement with Delmarva Power, which the parties signed in 2008 to provide Delaware customers with up to 200 megawatts of offshore wind energy.
On Dec. 16, NRG announced that it was suspending active development of offshore wind projects, citing the fact that Bluewater Wind has been unable to find an investment partner. They said then that they intended to terminate the project’s 200-megawatt power purchase agreement (PPA) with Delmarva Power & Light Company (DP&L) at the end of the year.
On Dec. 16, NRG President and CEO David Crane said, “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. 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.”
NRG spokeman Dave Gaier said this week that, “We’ve continued to hold discussions with several potential buyers and investors but haven’t yet concluded a deal. As a result, yesterday [Tuesday] we notified Delmarva Power & Light that we’re terminating the 200 MW Power Purchase agreement, effective at year end.
“We’ll prudently maintain our offshore wind assets—which includes working with the Bureau of Ocean Energy Management (BOEM) on a lease for the Delaware project—and continue to seek a buyer or major investor for that project as well.”
Delmarva Power officials accepted the termination, which was allowed under the terms of the agreement, and said they would continue to support the state’s long-term renewable energy goals.
“Delmarva Power and NRG worked hard to see this project come to fruition,” said Gary Stockbridge, Region President for Delmarva Power. “But the inability to secure a financing partner prevents us from moving forward.”
Stockbridge said Delmarva Power has put in place land-based wind projects, solar energy projects and, more recently, supported the state’s effort to bring fuel-cell developer Bloom Energy to Delaware. “We have a very diverse and balanced clean energy portfolio in place and are confident that we will continue to be able to meet the goals that have been set of 25 percent by the year 2025.”
While expressing disappointment earlier this month at NRG’s decision, U.S. Sen. Thomas Carper (D., Del.) said he will continue to work with U.S. Sen. Chris Coons (D.-Del.), U.S. Rep. John Carney (D., Del.), Gov. Jack Markell and the Obama administration to do what they can to move forward with alternative-energy projects — including offshore wind energy production off the coast of Delaware, saying he still believes it is a viable project.
Delmarva Power officials said that under the power purchase agreement, Bluewater Wind posted security during the development period of the contract and with the contract having been cancelled prior to Jan. 1, 2012, $2 million of that security will be credited to Delmarva Power customers. The details and the timeline of how the credit will work for Delaware Delmarva Power customers will be finalized in the coming weeks, said Delmarva Power spokesman Matt Likovich.