At an energy conference in New York last month, Peter Mandelstam referred to a power purchase agreement for offshore wind development projects as “the gold standard.” He would know. Mandelstam, the founder and president of Bluewater Wind, with PPA in tow, just negotiated the sale of the company to NRG Energy Inc. A 25-year PPA, the first successful one for offshore wind in the U.S, has already been approved by Delaware officials for a planned 200 megawatt project off the coast of that state.
He may soon have company. Events in recent days may finally signify the start of the gold rush that has so far failed to materialize in the U.S. for offshore projects. Consider: Massachusetts officials announced that one of the state’s major utilities, National Grid, and Cape Wind Associates will start negotiations for a PPA; and the New York Power Authority released its long-awaited request for proposals for the development of offshore projects in the state waters of Lake Erie and/or Lake Ontario.
The Cape Wind project in Nantucket Sound has been dogged by controversy for 8 years but it may finally be granted federal approval this year. So far, without a PPA, developers have not been able to conclude financing arrangements. There are also deadlines for it to take advantage of the American Recovery and Reinvestment Act that would reduce the cost of the project by 30 percent. National Grid and Cape Wind will file shortly with the state regulators documents that outlines the need for the 420-megawatt project and timelines for negotiations.
In New York, the Power Authority is seeking proposals for the development of 120 megawatts to 500 megawatts in the first freshwater project in the U.S. The Authority would purchase the full output of the project under a PPA. Final proposals are due in seven months, or June 1, 2010. Winning projects are expected to be selected a year from now, with a hoped-for PPA negotiated by May 31, 2011.
But PPAs are not automatic and often difficult to complete. National Grid has twice in the past two months rejected contracts with New Jersey-based Deepwater Wind for a project off Block Island in Rhode Island. Power prices have been the deal killer, with charges of 25.3 cents per kilowatt hour in 2013 in the latest proposal deemed too steep. Rhode Island officials have until January 31 to approve a contract as negotiations continue. And failure to agree on an acceptable power price scuttled a Long Island Power Authority offshore project a few years ago.
But perhaps in a few months we’ll hear some state say “We’re Number 2,” and it won’t be considered second-best.
There are no comments for this entry.