Bluewater Wind Delaware, LLC, a subsidiary of Babcock & Brown (BBW.AX), announced a significant milestone in the development of the first U.S. offshore wind farm.
The company signed a 25-year contract with Delmarva Power for the sale of up to 200 megawatts (MW) of power from the wind farm that will be built 11.5 miles off the coast of Rehoboth Beach in Delaware.
"This contract is a significant step toward developing Delaware’s first offshore wind farm, which will almost certainly be the first offshore wind farm in the country," said Hunter Armistead, head of Babcock & Brown’s North American energy group. "This offshore wind farm will harness the strong winds off the coast of Delaware to bring clean and renewable energy, stable power rates and new wind jobs to the area."
Bluewater Wind will determine the final size of the wind farm within two years, during which time the company will seek additional buyers of power. The wind farm is expected to have an output of up to 600 MW.
In addition to its contract with Delmarva Power, Bluewater Wind has entered into a Memorandum of Understanding with the Delaware Electric Municipal Corporation for the sale of approximately 100,000 to 150,000 megawatt hours of power and 17 MW of capacity to its nine municipal members.
"This is an historic day for our country," said Peter Mandelstam, founder and President of Bluewater Wind. "We now expect even greater interest in offshore wind farms, the development of which will help reduce our dependence on foreign sources of fuel and will serve to aid in the fight against climate change and sea level rise."
The agreement requires legislative approval of changes to the state’s Renewable Portfolio Standard (RPS) to allow for renewable energy credits (RECs) from the offshore wind farm to be credited to Delmarva Power’s account at a rate of 350% (or 3.5 credits) per REC. One REC equals one megawatt-hour of electricity, which equals the average monthly amount of energy used by a Delaware household. The parties will now immediately seek legislative action on the RPS amendment before the Delaware State Legislature adjourns later this month.
Following the necessary legislative changes to the RPS, the agreed-upon contract will be considered by the four state agencies, perhaps as early as July.
Approval by the four state agencies will then lead Bluewater Wind to continue its development efforts. Final regulations regarding the leasing of land on the Outer Continental Shelf will need to be adopted by the U.S. Department of the Interior’s Minerals Management Service (MMS); draft final regulations are currently being reviewed by the President’s Office of Management and Budget (OMB). The MMS said it hopes to adopt final regulations by the end of 2008.
In the interim, Bluewater Wind will begin the initial planning stages for the wind farm that will include avian studies, installation of a meteorological tower and onsite wave buoys, commencement of more site borings, designation of the final wind farm layout, and work on staging, operation and maintenance ports.
Babcock & Brown acquired Bluewater Wind in September 2007, following Bluewater Wind’s selection by the four state agencies in a state-mandated competitive bidding process to negotiate a contract with Delmarva Power to provide new power generation from an in-state source.
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