Wind project in jeopardy as NRG drops contract

NRG Energy has announced plans to terminate its Bluewater Wind power-purchase contract with Delmarva Power at the end of this year.

Bluewater President Peter Mandelstam said on Monday he holds out hope that a buyer for the offshore wind division would step forward before Dec. 23, the date by which NRG must inform Delmarva if it wishes to end the contract.

The contract is widely seen as Bluewater's most valuable asset, and observers said it would be difficult to build the project without one.

NRG has struggled to secure financing for the massive project and failed to secure federal loan guarantees.

The Bluewater project captured the public's imagination five years ago as a utility-scale, carbon-free source of energy, 13 miles off the Delaware coast. The turbines have been expected to provide 200 megawatts, or enough to power about 54,000 homes.

Bluewater's contract with Delmarva, reached in 2008 and revised in September, calls for Bluewater to forfeit a $4 million security deposit on Dec. 31, or walk away.

In a release Monday, NRG reported it would not seek another extension. The release contained nothing about attempts to sell the contract or the company.

"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," said David Crane, NRG president and CEO.

What's next

The long-term forecast for federal price supports for the wind industry remain uncertain. This has been important to offshore wind developers, given the long time frame for permitting and building an offshore wind farm.

NRG still expects to receive federal approval for a lease to build offshore wind turbines off the Delaware coast, said David Gaier, NRG spokesman. The company would hold onto this lease as an asset, unless NRG finds a buyer for Bluewater, he said.

Even absent the contract, NRG could re-enter the offshore wind business in the future if market conditions are good enough, Gaier said. Or it could sell Bluewater at a later date, he said.

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