Wonky Wednesday: Progress on Wind Power
Two breaking developments mean that the prospect for wind power in Delaware is looking brighter. First, we have this interesting news from the PSC, via the News Journal:
Delmarva Power should contract with Bluewater Wind to build a smaller wind park than originally proposed, and Conectiv Energy to build a natural gas plant to back it up, according to a Public Service Commission staff report released today.
Bluewater, which wants to build an off-shore wind park, had originally proposed a 600 megawatt facility; the report suggests the PSC instead approve a 200-300 megawatt facility.
Here’s the punchline from the staff report, which is available as a PDF here:
Staff recommends exploration of building additional generation assets in southern Delaware, coupled with development of demand response programs, energy efficiency programs, renewable distributed generation, short- and long-term bilateral contracts, and market purchases. With respect to the bids, Staff recommends that the State Agencies direct Delmarva to negotiate with both Conectiv and Bluewater for a hybrid energy supply that combines a 200-300 MW offshore wind farm with a 150-200 MW synchronous condenser CCGT in Sussex County.
Delmarva has been pushing for the PSC to do nothing about new generating facility in Delaware. Over at TommyWonk, I have posted a rather technical letter to the PSC on why continuing to rely on three year contracts, as is done now, does not protect consumers from price shocks:
While a long term supply contract creates a risk for the company, purchasing power every three years is not without risk. Specifically, three year purchases of power leaves Delmarva’s customers more exposed to the risk of future price increases—which is precisely the risk that the RFP is intended to ameliorate.
One reason Delmarva has resisted the RFP is that it doesn’t want to be saddled with more generating capacity than it can sell to its regular customers, which may be why the PSC staff are recommending a smaller wind farm.
But concerns about being able to use the full capacity of a wind farm should be ameliorated by the announcment today that the Delaware Municipal Energy Corporation has agreed to buy $200 million to $300 million of electricity from Bluewater Wind over a twenty year period:
The agreement between DEMEC and Bluewater Wind is for the offshore wind energy generator to supply electricity, associated capacity, and related environmental attributes (also called Renewable Energy Credits) to DEMEC for 20 years. The contract is the first in the nation to provide for the purchase and
delivery of energy from an offshore wind park and is valued between $200 million and $300 million over the life of the contract.
Taken together, these developments mean that wind power has moved a long way towards adoption. But popular support is still important. Go to the “Choose Wind” page to find out how you can help make wind power a reality in Delaware.
Great news Tommy. Thanks for the update.
To quote a fellow traveler: Onward!
By the way, if there are any readers who have been to Dover yesterday or today to lobby on this issue, I’d love to know how it went.
Tom,
I’m told by John Flaherty that they delivered 1200 letters yesterday supporting wind power.
Today both the Senate Energy Committee and the Senate Natural Resources & Environment Committee met. The Senate conference room was literally over-flowing with wind power supporters, we were stacked up out in the hallway. Due to time constraints we didn’t get to speak, but boy did we glower!
They have to be getting the message that Delaware wants wind power.
Well done!
The genuine outpouring of public support for wind is hard to ignore. Given the prevailing political winds, it will be hard for anyone to push the PSC, Controller General, OMB and DNREC to come down with a decision contrary to staff recommendations.
What we need is people writing and phoning to constantly remind elected officials that public sentiment and the technocrats’ analysis in sync on this issue.
It’s really heartening to see this level of public support for clean energy. You can check our Web sites for fact sheets and background information.
Regards,
Thomas O. Gray
American Wind Energy Association
http://www.awea.org
http://www.ifnotwind.org
risingwind.blogspot.com
A researcher has been telling the legis that BWW is planning to use state to float bonds
Not a bad option. We (Delaware) would own the means of production.
I’d invest in a “wind bond”
Tom,
Can someone (like the State Treasurer say) issue a tax exempt municipal “Clean Energy Bonds” that could be marketed to people who don’t tend to invest in bonds?
I think they could be popular.
The Delaware Economic Development Authority (DEDA) manages the issuance of what are known as revenue bonds. Utilities are eligible for revenue bond financing.
Revenue bonds are underwritten by the revenue generated by a particular project or enterprise, in contrast to general obligation bonds, which are underwritten by the taxing power of the issuing authority.
Delaware enjoys a AAA rating which makes the state’s bonds popular with investors. Bonds issued to finance wind power might attract more attention, if not more investors.
What a wonk-a-riffic response!
WonKTASTIC.
What happens to the bonds if BWW goes bankrupt?
(if they underestimate the % of downtime and or maintenance cost)
Steamy just can’t cope with the idea of clean energy.
I just keep asking the grownup questions.
I guess the same question, for the same reason, could be asked about NRG. I suppose that something could/should be added to the contract that ownership of the windpark could revert to the State or that an ample amount of insurance be issued to cover tearing down the windpark in case of abandonment.
Revenue bonds do not provide for recourse to the issuing authority’s taxing power. In other words, the bondholders would not be able to go to the state to demand payment of principal or interest.
Hypothetically speaking (which is what we’re doing here), if Bluewater Wind were to declare bankruptcy, the bondholders would have a claim on the company’s assets that supercedes that of the company’s equity investors.
Thanks Tomy, nothing like facts to liven- up a conversation.
LG, I believe the BWW proposal includes a bond (a third party guarrenty) to cover removal at the end of the 25 year expected life of the windfarm.