One of the three initial developers that expressed interest in building wind energy projects off the coast of South Jersey is putting all of its wind projects on hold – a sign officials say is indicative of poor federal policy, a difficult economic climate and the extreme expense involved in the project.
Princeton-based NRG Energy said this week that the lack of an investment partner for its Delaware project and the elimination of federal tax credits and loan guarantees make further development in the near term of any of its proposed offshore wind energy projects financially impossible. The company is also putting its offshore wind subsidiary, Bluewater, up for sale.
“After two years of hard work and a significant investment, we couldn’t, in good conscience, invest more time and resources into the Delaware Wind Park without some assurance that we could move that project forward in a reasonable time frame,” NRG spokesman David Gaier said Wednesday.
Federal tax credits and loan guarantees for wind energy development are set to expire at the end of 2012, and without those subsidies, offshore wind development could be impossible, said energy analyst Paul Patterson, of New York-based Glenrock Associates.
“When it comes to getting these things crossing the goal line, they need a considerable amount, large amounts of, copious amounts of government support for them to be economically viable,” Patterson said.
NRG Bluewater, the offshore wind subsidiary of NRG, along with Fisherman’s Energy of New Jersey and Garden State Offshore Energy were among the first companies to announce interest in developing offshore wind farms as part of a state-driven effort to generate renewable energy.
New Jersey has aggressively sought renewable energy development, including offshore wind, as part of a policy effort for much of the state’s electricity needs to come from renewable sources. DEP spokesman Larry Ragonese said the company’s withdrawal is not reflective of a larger trend.
“These are big projects in a new industry here for us. So it doesn’t go as quickly as you’d like it to go and NRG and Bluewater’s issues is their particular company and corporate issues,” Ragonese said. “They were one of the early players of this, but there are others that are interested. … Hopefully they’ll restructure what they want to do and will be part of the projects.”
NRG Bluewater was the first company to sign a contract for offshore wind development in the nation; it signed with Delmarva Power in 2008 to develop the Delaware Wind Park. NRG also operates, or has a part-interest, in nearly 50 power plants of various types, including coal, natural gas and nuclear. The company has aggressively sought renewable energy development in the past few years and considers itself the largest solar developer in the country, according to its website.
In June, the federal government launched a call for bids to develop offshore wind projects along the New Jersey coast. To date, 11 companies – NRG Bluewater included – have submitted proposals for projects that would generate about 12,000 megawatts of electricity, Ragonese said.
“We expected maybe a handful, we didn’t expect nearly a dozen,” Ragonese said.
Fishermen’s Energy, which seeks to build an offshore wind farm about three miles off the coast of Atlantic City, shows signs of moving forward, even though the federal government has yet to approve any leases in New Jersey.
Fishermen’s Energy recently installed a wind measuring device on the roof of a Margate apartment building. The device, which is typically used at major airports to detect wind shear and turbulence for airplanes, will be used to make detailed weather measurements, ultimately helping developers and engineers figure out where best to place offshore equipment. A company news release said this is the first time the “WindTracer Doppler lidar” has been used in such a manner.
Garden State Offshore Energy is moving forward in evaluating possible projects to bring between 350 megawatts and 1,000 megawatts of wind generation off the coast, the current economic and federal regulatory environment makes actual development difficult, said Mike Jennings, a spokesman with PSEG, which is a partner of Garden State.
“What happens without a comprehensive federal position regarding taxing and permitting, the industry will struggle and will have to rely more on state initiatives,” he said. “We may put in a project or at the end of the day, we may decide not to.”
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