Second U.S. Offshore Wind Project Approved
NRG Energy (NYSE:NRG) May Sell Project
Following the Cape Wind approval, the U.S. just approved its second offshore wind project lease.
The Interior Department approved NRG Energy Inc.’s (NYSE:NRG) proposed 450-MW facility on Tuesday. The lease covers more than 96,400 acres of ocean around 12.7 miles off the coast of Delaware, and the facility could be sufficient for over 100,000 households.
Back in December, NRG had shelved the Delaware project and sought buyers for the Bluewater unit as it could not secure enough investors. But the company did keep up pursuit of the lease approval.
Now that the lease has been approved, it’s likely that the whole proposal will seem a lot more attractive to potential investors, though NRG is still considering a sale.
A federal Production Tax Credit on wind energy is set to expire at the end of 2012, and the continued inaction on the matter is seriously hindering the development of wind power in the U.S. The credit pays 2.2 cents per kilowatt-hour for all electricity generated from renewable sources, including, of course, wind.
Amy Grace, a Bloomberg New Energy Finance analyst, said to BusinessWeek:
“There’s still a lot of uncertainty regarding the PTC and an offtake agreement for the project. The bottleneck now is really on the revenue side. How do you get paid for your expensive wind energy?”
In general, onshore turbines have a cost of 8.3 cents per kilowatt-hour of produced energy, while offshore projects can be as costly as 21.8 cents for each kilowatt-hour. The tax credit is necessary to keep them financially feasible.