Wind power project wavers after subsidy cuts
Wind power development off Delaware's coast is delayed after Congress cuts back two loan guarantee programs. Is company having second thoughts about the wind power project?
NRG Bluewater Wind is delaying construction of a meteorological tower off Delaware's coast, saying its planned offshore wind farm is endangered by cuts in federal support for renewable energy.Skip to next paragraph
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Some interpreted NRG's statement as a sign the firm's commitment to build the wind farm is wavering, although company officials said the move to delay erecting the tower to gather weather data is just a slowdown.
The planned wind farm would put 49 to 150 turbines about 13 miles off the Delaware coast to generate up to 200 megawatts of electricity. Bluewater is under contract with Delmarva Power to begin producing power by 2016.
The delay results from Congress' decision last month to eliminate most new funding for two loan guarantee programs used to finance renewable energy projects. That move was part of a compromise that averted a government shutdown.
Congress also has left uncertain the fate of renewable energy credits important to making electricity from wind or solar projects competitive with power from fossil fuels like coal or natural gas.
Those federal actions have "injected considerable uncertainty into the financing for and viability of all U.S. offshore wind projects," Dave Gaier, NRG spokesman, said in an email to The News Journal.
"But we remain committed to the project and are just slowing down our momentum until we have a clearer picture of the future," Gaier wrote.
Gov. Jack Markell said it would be unwise to spend years waiting for the political climate to improve, noting the state has worked hard to smooth Bluewater's path to construction.
"The announcement puts the project's future into question," Markell said. "If they think they can't build it without the guarantee, then it makes sense to see who might."
It's been nearly three years since Bluewater Wind signed a 25-year contract with Delmarva Power to provide enough electricity to power about 54,000 homes. The contract was hard-fought, and was the first for offshorewind power in the United States. It positioned Delaware to be among the first states to have a wind farm off its shores.
But Bluewater's Australian parent company suffered during the economic downturn, and NRG bought the project in late 2009.
The acquisition brought NRG, long known for its coal-burning Indian River Power Plant, some green credibility. And officials thought it brought Bluewater the backing of a large power company with the deep pockets necessary to finance the billion-dollar wind farm.
NRG officials noted at the time of the sale that federal support would be "crucial" to finance the project, specifically through a federal program that guarantees bank loans for renewable energy projects.
When Bluewater originally sought, and won, the support of Delaware's government, the project was not pitched as contingent on federal loan guarantees, Markell said.
Now those programs are largely gone — among the early casualties in a protracted battle to trim billions from the federal budget with a huge deficit.
In early April, the two loan guarantee programs lost the vast majority of their funding as part of the budget compromise. That, combined with looming expirations of tax and investment credits for wind power, is giving NRG pause, Gaier said.
NRG is considering other ways to work with banks to finance the project, with or without the guarantees, he said.