NRG Bluewater Wind said on Thursday it will take three more months to seek private finance and federal loan guarantees that would enable construction of Delaware’s proposed offshore wind farm.
The renewable energy developer said it had agreed with Delmarva Power to extend Thursday’s deadline until Sept. 23 for making a decision on whether to proceed with the long-delayed project.
The agreement postpones a non-refundability clause in NRG’s letters of credit for the project. Of $6 million it originally posted in 2008, $2.75 million that was due to become nonrefundable on Thursday now does so on September 23. A further $1.25 million becomes nonrefundable on Jan. 1, 2013. The remaining $2 million became nonrefundable a year ago.
“The agreement recognizes the significant challenges that NRG Bluewater Wind faces and especially the withdrawal of the Department of Energy’s loan guarantee authority,” said the company’s president, Peter Mandelstam.
Delmarva Power welcomed the deadline extension. Spokeswoman Bridget Shelton said it increases the chances of the wind farm becoming a reality.
“By granting an extension, it helps move the project forward,” Shelton said.
Governor Jack Markell’s office is pleased that the extension allows more time to work out the concerns that threaten the project, but spokesman Brian Selander also noted the limited nature of the extension, saying that the Governor did not want an “open ended” timetable.
In May, NRG stopped work on a weather tower because cuts in federal loan guarantees – prompted by a budget deal – had created uncertainty over offshore wind projects.
The hiatus raised fresh doubts about whether the wind farm, which could contain as many as 150 turbines 13 miles off Rehoboth Beach, would ever be built.
Before the uncertainty over financing and construction, the Bluewater project was on track to become the first U.S. offshore wind farm. Proponents hoped it would establish Delaware as a national leader in offshore wind farm technology and create thousands of local jobs.
In 2008, the company signed a 25-year power purchase agreement with Delmarva Power to supply up to 200 megawatts of electricity by 2016.
Mandelstam said the company will continue discussions on Capitol Hill to restore the loan-guarantee program, and said he was encouraged by a recent vote in the House of Representatives to appropriate $160 million in loan-guarantee authority.
Delaware’s congressional delegation has been working in recent weeks to extend federal tax credits and revive a loan guarantee program. Thursday, Senators Tom Carper (D) and Chris Coons (D), along with Rep. John Carney (D) welcomed the extension of the NRG deadline.
“We look forward to working closely with NRG, Governor Markell, and the Obama Administration over the coming months to ensure that this project continues to move forward and that the federal government does all it can — in the form of loan guarantees and tax incentives — to bring this project to light,” the Delegation said in a joint statement.
Meanwhile, NRG is holding talks with private financiers including European banks in hope of attracting debt financing to allow construction to begin.
The dual approach “shows how serious we are about moving this project forward,” Mandelstam said.
NRG is also holding “detailed discussions” with wind-turbine manufacturers about a possible partnership in the wind farm, he said.
Mandelstam said he was encouraged by the recent decision of Siemens, a leading European wind turbine manufacturer, to take an equity stake in the long-delayed Cape Wind project off Massachusetts, showing that global players are now more serious about the fledgling U.S. offshore wind industry.
