The agreement between Delmarva Power and Babcock & Brown now comes down to one thing: economics.
A long, protracted battle may now be at an end. A lot of people are claiming victory and Delaware seems closer to a cleaner source of energy. But a big question remains: Can the participants make the offshore wind project work economically?
It has the potential to do so. The coastline in this part of the country seems prime for a larger offshore wind farm. A big enough project would make it work economically and no doubt someday such a project will exist. But, for now, a lot of questions remain about this particular project and the deal that was just announced. Details are emerging from the contract between Delmarva and Babcock & Brown. It calls for 55 wind turbines to be built off the coast of Rehoboth Beach by Babcock & Brown’s subsidiary, Bluewater Wind.
Delmarva Power agreed to buy up to 200 megawatts of electricity from the project. And, after months of negotiating, the costs will be spread among all of Delmarva’s customers, even those, like many big businesses, who currently buy their own electricity on the open market and use Delmarva only for its transmission lines.
The deal also gives Delmarva more renewable energy credits, which are part of a state plan to force utilities to switch from carbon-based energy to renewables. This could lead to a big savings for Delmarva and have an effect on its long-range use of renewable energy sources.
Spokesmen for Babcock & Brown see the Bluewater Wind deal as an anchor project, something that it can use to leverage offshore wind deals with other states. New Jersey is currently considering proposals from a variety of companies, including Bluewater Wind, to build wind farms off its coast.
If Babcock & Brown can do that, then it could have a booming business and this part of the country will get a big boost in renewable energy. If it can’t, then presumably there will still the contingent of turbines off Rehoboth Beach.
Also what happened to the proposed backup natural gas plant? What role will the state now play?
In other words, the deal, as hard-fought as it was, still has questions that have to be resolved.
The News Journal (Editorial)
24 June 2008
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