First U.S. Sale of Offshore Wind Power Signed

Delmarva Power agreed Monday to buy up to 200 megawatts of power from an offshore wind farm to be developed by Babcock & Brown's subsidiary, Bluewater Wind Delaware. The purchase includes energy, capacity and renewable energy credits.

"Babcock & Brown believes 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.

Sunrise at Rohoboth Beach where the Bluewater wind farm will be constructed 11.5 miles from land. (Photo by Stephen Wendell Smith)

The wind farm will be built 11.5 miles off the coast of Rehoboth Beach in Delaware.

"This offshore wind farm will bring clean energy, new jobs, and stable rates to Delmarva Power customers," said Armistead.

According to this 25 year agreement, Bluewater Wind could begin delivering electricity to Delmarva Power's Delaware customers around the year 2012.

Delmarva Power's customers would buy about half the amount of electricity at a lower overall price per megawatt-hour, as compared to the previous offer.

"With the addition of this contract, I'm confident we will meet the aggressive renewable energy goals established by Delaware in 2007," said Gary Stockbridge, president of the Delmarva Power Region.

Under the state's renewable energy goals, Delmarva Power must ensure that 20 percent of its electricity supply comes from renewable sources by the year 2019. Delmarva Power is one of the first investor-owned utilities in the United States to have made contractual commitments that will enable it to meet such aggressive renewable energy goals.

"We're comfortable that, through these wind power contracts, we will fulfill our responsibility to provide customers with affordable energy in a way that helps protect and preserve the environment," Stockbridge said.

This contract will be added to a portfolio consisting of up to an additional 170 megawatts of existing, land-based, wind power contracts recently signed by Delmarva Power, all of which are subject to state approval. When blended together, the various wind power agreements will provide customers with a diverse, stable and reasonably-priced pool of clean, renewable resources.

In addition to the agreement to buy a percentage of the output of the wind farm, Delmarva Power also has agreed, subject to state approval, to implement an optional program that would give Delmarva Power customers the choice to purchase additional offshore wind power.

The costs and benefits of the new contract will be spread among all Delmarva Power customers in Delaware.

"Our analysis shows that the monthly price impact upon Delmarva Power's typical residential standard offer service customers has been reduced from about $20 to about $3.50 per month under the new agreement because of the lower negotiated price, smaller amount, and by spreading it across a larger customer base," Stockbridge said.

"Avoiding higher costs for our customers has been Delmarva's main concern all along. Now that we have a diverse portfolio of wind supply, a lower cost impact, and a regional approach to this project, Delmarva Power supports this agreement."

The agreement requires legislative approval of changes to the state's Renewable Portfolio Standard to allow for renewable energy credits, RECs, from the offshore wind farm to be credited to Delmarva Power's account at a rate of 3.5 credits per REC.

One REC equals one megawatt-hour of electricity, approximately the average monthly amount of energy used by a Delaware household.

The parties will now immediately seek legislative action on the Renewable Portfolio Standard amendment before the Delaware State Legislature adjourns later this month.

Babcock & Brown acquired Bluewater Wind in September 2007, following Bluewater Wind's selection by 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.

"This is an historic day for our country," said Peter Mandelstam, founder and president of Bluewater Wind. "By signing this first-ever formal contract in the United States for the sale of pollution-free, stable-priced energy generated from our offshore wind farm, Bluewater Wind and Delmarva Power will usher in a new era of power generation that benefits from utility-scale power plants located far from our shores."

Mandelstam said the companies now expect development of an even greater interest in offshore wind farms, which will help reduce U.S. dependence on foreign sources of fuel and will combat climate change and sea level rise.

Copyright Environment News Service (ENS) 2008. All rights reserved.