NRG and Bluewater: Is There a Catch?

Could this be a trick or a ploy? Could NRG have bought Bluewater Wind to somehow control the growth of windpower? Could NRG have bought the windpower football just to pull it away from Charlie Brown?
I don't think so. NRG VP Drew Murphy yesterday repeatedly spoke of claiming the first mover advantage in talking to local and national media. He noted the proximity of offshore wind to a large load centers—in contrast to onshore wind in Texas and the Midwest which will require billions in transmission lines to get to customers.
Writing in the News Journal, Aaron Nathans spoke with a number of environmentalists whose reactions to the acquisition ranged from suspicious to enthusiastic. One suspicion expressed in comments to this blog and privately, is that NRG would use the acquisition to keep a lid on wind power. For instance, would NRG prefer to sell power from coal rather than sell power from the wind farm?
I discussed this yesterday with Nathans and professor Jeremy Firestone, who said, "You're always going to put the wind onto the system. You'd never turn it off."
I agree. Once the wind farm is built, NRG would want to sell every drop of power it produces. The wind farm's peak capacity will be higher than needed to meet the needs of the power purchase agreements (PPAs) with Delmarva Power, the Delaware Municipal Energy Corporation (DEMEC) and any other customers that sign on in order to ensure a steady flow of power. Once the wind farm's PPA customers needs are met, any additional power generated can be sold to the grid at any price Bluewater can get.
Unlike a coal plant, which would have to burn more fuel to generate more power, there is no marginal cost to selling extra wind power. If the turbines are already spinning, any additional power sold to the grid goes straight to the bottom line—even if it is sold at two cents a kilowatt hour.

NRG Is Buying Bluewater Wind

Bluewater Wind is making "an important announcement" today in two separate public meetings, upstate and downstate. I'm guessing that Bluewater will announce new financing from a new parent company. Last week, the News Journal published a story that NRG was in talks to buy Bluewater and finance the construction of the country's first offshore wind power project.
Update: It's official; NRG is buying Bluewater: Peter Mandelbaum will remain president of Bluewater Wind and lead wind power development for NRG.
Stay tuned.

2nd Delaware Environmental Summit

I reported on the first Delaware Environmental Summit back in January. Most of Delaware's environmental advocacy organizations came together to discuss priorities and strategy for the year. Now we are organizing a follow up:

The 2nd Delaware Environmental Summit
Saturday, November 14, 2008
8:30 a.m. to 12:30 p.m.
Wilmington University, Dover

Objectives
1. Support the ongoing advocacy work of Delaware’s environmental organizations.
2. Enhance the coordination among Delaware’s environmental organizations.
3. Where needed, foster new collaborative efforts among environmental advocates.
4. Engage new partners in environmental advocacy.

As we come towards the end of an eventful year, we are gathering to make plans for 2010. Please join us to discuss recent progress and make plans for environmental advocacy efforts for the coming year. Participants will be given a chance to discuss their priorities for the coming year and start to make detailed plans for collaborative efforts to achieve our objectives in the following areas:

Air Quality
Energy and Climate Change
Food and Agriculture
Green Economy
Land Use
Law and Regulation
Nature and Wildlife
Water Quality
Zero Waste

We are asking organizations to contribute $25 (covering all members of that organization) and unaffiliated individuals $5 to defray the cost of the Summit. Please bring your check or cash with you to the registration table at the Summit.

Directions to Wilmington University in Dover: The Dover campus is located on Route 13 North (at Scarborough Road), at the intersection of Exit 104 from Delaware Route 1.

Please register by 5:00 p.m. November 9th.

Affiliation or organization:
Name:
E-mail:
Address:
City: State: Zip:
Phone:

Organizations are asked to offer a brief (two pages only) summary of their policy objectives for the year. Please send it to politics@delaware.sierraclub.org by November 9th, 2009.

Please join us if you want to help shape environmental policy in the coming year.

"Well, someday is here."

Aaron Nathans reports in the News Journal that Delmarva Power could have killed plans to build the first offshore wind power project in the U.S. when Bluewater Wind failed to deliver a letter of credit last July. Bluewater is looking for a new investor after its highly leveraged parent company, Babcock & Brown began to collapse under the weight of its debt. Delmarva Power declined to cancel the power purchase agreement (PPA) after Bluewater failed to deliver the letter of credit.
Earlier this week, Nathans broke the story that NRG, which competed to build a new power plant in Delaware, is planning to buy Bluewater. Nathans asks why have two opponents gotten in bed with the upstart wind power company?

It wasn't that long ago that Bluewater Wind's main opponents were Delmarva Power and NRG Energy.
But if Bluewater's offshore wind farm gets built, it may have both to thank for keeping the project afloat.

Why? NRG and Delmarva Power fought Bluewater tooth and nail. Nathans asked me:

"You know how people say soccer is the sport of the future and always will be? I think that's how people have felt about wind power," said Noyes, whose blog is called TommyWonk. Company officials thought of offshore wind as "experimental, nice to do someday. Well, someday is here."

The fundamental reason that NRG would want to buy Bluewater and Delmarva isn't fighting the deal is that wind power is makes economic sense for the investor and the customer. Nathans points out that "Bluewater's main asset is the Delmarva contract." NRG would be buying a PPA that provides 25 years of revenue, which is hard to do in any business. And Delmarva Power is buying 25 years of power at a set price, which is almost impossible to do in the energy business.
Update: I'll be discussing Bluewater with Allan Loudell on WDEL, 1150 AM, today at 5:35

Barack Obama, a Year Later

A year after his election, how popular is Barack Obama?
I went over to PollingReport.com to take a look at the numbers. Polls asking about job performance doesn't allow us to go back a year, since he was in office yet. But some polls have continued to ask the favorable/unfavorable question through the campaign and into his first year in office. Of these, the CNN, Gallup and NBC News/Wall Street Journal polls ask the question frequently enough to give us a rough comparison to a year ago. By looking at the number from just before the election, we avoid the glow that surrounded Obama after his historic win and before his inauguration.

Gallup, Oct. 1-4, 2009: 56 favorable, 40 unfavorable
Gallup, Oct. 10-12, 2008: 62 favorable, 35 unfavorable

CNN, Oct. 16-18, 2009: 60 favorable, 39 unfavorable
CNN, Oct. 17-19, 2008: 62 favorable, 35 unfavorable

The NBC News/Wall Street Journal poll asks a slightly different question:

NBC/WSJ, Oct. 22-25, 2009: 36 very pos., 20 somewhat pos., 11 somewhat neg., 21 very neg.
NBC/WSJ, Oct. 17-20, 2008: 39 very pos., 18 somewhat pos., 10 somewhat neg., 24 very neg.

By using the last weeks of the 2008 campaign as a baseline, we get a better understanding of his relative political strength, and Obama is holding up rather well amid the din. This is worth noting considering that the cries of socialism we heard during the campaign seem tame compared to the invective and epithets that have been hurled in Obama's direction in his first year in office.
As for last night's election results, Nate Silver of FiveThirtyEight cites exit polls that show Obama's strength extends to folks who voted for Republicans. In Virginia, 20 percent of those who approve of Obama voted for GOP candidate Bob McDonnell. In New Jersey, 27 percent of those who expressed approval for Obama voted to oust John Corzine.
Overall, Obama has seen his poll number fall a just few points from the last weeks before the election in which he beat John McCain 53 percent to 46 percent and 365 to 173 in electoral votes.

Lester Brown Reports Carbon Emissions Have Dropped

Lester Brown of the Earth Policy Institute reports that U.S. carbon emissions have dropped nine percent in the last two years.

For years now, many members of Congress have insisted that cutting carbon emissions was difficult, if not impossible. It is not. During the two years since 2007, carbon emissions have dropped 9 percent. While part of this drop is from the recession, part of it is also from efficiency gains and from replacing coal with natural gas, wind, solar, and geothermal energy.
The United States has ended a century of rising carbon emissions and has now entered a new energy era, one of declining emissions. Peak carbon is now history. What had appeared to be hopelessly difficult is happening at amazing speed.

A small portion of the drop could be attributed to the economic slowdown, but I don't think carbon emissions will climb again once the economy starts growing again. After all, GDP didn't fall nine percent during the recession.
Instead, we will see increasing investment in low carbon technologies like solar, wind and energy efficiency, while coal power projects are being cancelled. This doesn't mean climate legislation isn't needed. CO2 is still accumulating in the atmosphere. What this news means is that it is possible to shift our civilization away from carbon.

Will NRG Buy Bluewater Wind?

One can almost hear the synapses clicking wildly as environmentalists across the state succumb to acute cognitive dissonance. The News Journal reports that NRG Energy, Inc., owner of the Indian River power plant, is in "serious negotiations" to buy a majority stake in Bluewater Wind.
Bluewater has been shopping for a new owner since Babcock & Brown found itself, shall we say, overextended. Babcock is being broken up and sold off piece by piece. Bluewater hired investment banker Credit Suisse to look for a new owner.
I've taken a quick look at NRG's finances. Profits are down from a year ago, but the balance sheet is holding up; net current assets were $3 billion at the end of the third quarter. Bluewater will need about a billion dollars or so over the next three years to build the wind farm, though this number could climb if the company signs up more buyers and builds builds more capacity. In return, Bluewater will throw off 25 years of guaranteed revenue thanks to the Power Purchase Agreement (PPA) with Delmarva Power.
The Indian River power plant near Millsboro has been the perennial number one on Delaware's air pollution hit parade, though NRG has agreed to close the two oldest and dirtiest units and invest $500 million in new emissions controls.
NRG competed with Bluewater Wind and Conectiv to build a new power plant in Delaware. To the surprise of nearly everyone, Bluewater won the competition and went on to negotiate a PPA with Delmarva Power.
NRG's energy portfolio includes coal, natural gas, nuclear, wind and solar power plants.
Opponents of action on climate change have been struggling to come to terms with the significance of big energy companies supporting cap and trade legislation and investing in renewable energy projects. Now the shoe is on the other foot, and it's the turn of environmental advocates to come to terms with big energy companies supporting cap and trade legislation and investing in renewable energy projects, while continuing to own and operate coal power plants. If renewable energy makes economic sense (as I and others argue), then we should expect—and welcome—big energy companies buying into wind and solar projects.