NEW YORK — NRG Energy paid about $10 million for Bluewater
Wind, an energy company that holds the only power purchase agreement for an
offshore wind farm in the United States, according to an analyst estimate
issued Tuesday.
While the purchase price isn’t particularly big, the project
carries apparent front-runner status for the U.S.’s first offshore wind farm —
a pet topic of the Obama administration as well as a lucrative target for the
financial community to tap into federal tax credits and loan guarantees.
NRG declined to release the purchase price for Bluewater
Wind after announcing the deal on Monday with its former owner, Australia’s
Babcock & Brown.
The Princeton, N.J., merchant power company and utility
operator said Bluewater’s 450 megawatt offshore wind project planned off the
coast of Delaware could start producing billable electricity by late 2013 or
early 2014.
During a conference call to tout the merger, NRG officials
said they hope to become first movers in the U.S. field of offshore wind
energy, drawing from a wealth of expertise in Europe, home of more than 30
offshore wind projects.
“We do think that there is a real advantage to being
early in a space like this rather that coming sort of into it too late when
there is too many people trying to carve up the pie,” NRG Executive Vice
President Andrew Murphy said.
NRG was drawn to the offshore wind project as it moves to
reduce its carbon footprint.
“We’d been coming to a conclusion before we approached
Bluewater that offshore wind for the East Coast, especially the Northeast
really makes sense, because it’s one of the few renewable resources that you
can really build with scale and make a big enough scale to actually make them
economic,” he said.
Murphy said the proximity of offshore wind resources to big
population centers in the Northeast makes sense as well.
Analysts at Tudor Pickering Holt said the deal delivered a
“nice green headline” to NRG, but the Bluewater acquisition amounts
to a neutral right now for NRG shares, since any payoff is still years away.
NRG will take on Bluewater’s employees, buys development
pipeline, and 25-year power purchase agreement with a unit of Pepco Holdings
Inc. for the offshore Delaware project, analysts noted.
Bluewater Wind Founder Peter Mandelstam said investment
banker Credit Suisse drew interest in the firm from 87 interested parties,
including groups in the Middle East, groups in Central Asia, groups in the Far
East, in Europe and the United States.
“It was a good marriage that Credit Suisse
brokers,” he said.
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Mandelstam said the company has won an approval to build two
towers in the Atlantic Ocean — one in Delaware and one in New Jersey — to
assess wind strength. Construction on the two towers is expected next year.
Murphy said the Power Purchase Agreement for the offshore
wind project will allow the company to raise financing to build the wind
towers, while the final permitting process continues.
Murphy said NRG plans to apply for federal support in the
form of Department of Energy loan guarantees — money included in the Obama
administration’s economic stimulus plan. He also pushed for the continuation of
production tax credits from the United States as well.
The production tax credit will be “crucial, especially
for the early projects to make them economic,” he said.
Mandelstam said he expects healthy interest from banks to
finance the offshore projects after extensive experience in Europe.
“We see these banks who are established in Europe
coming to the U.S.,” he said. “And of course some U.S. banks we’ve
reached out to want to get their feet wet, pun intended to do financings of
offshore wind.”
Mandelstam praised a recent $500 million issued by the U.S.
Department of Treasury for wind energy projects.
The current round of production tax credits for wind expires
in 2012, and Mandelstam called on Congress to extend them.
“We have every confidence that Congress will extend
them, they are very good deals for the U.S. taxpayers, they leverage a great
deal of private capital at a small cost to the Treasury and produce a lot of
well paying green jobs,” he said.
Via McClatchy-Tribune News Service.
