Saturday, October 31, 2009

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 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.

2 Comments:

Anonymous Anonymous said...

So ... let's see. NRG, the PSC and Bluewater have unfinished business regarding backup power, power quality and such. NRG never concealed its interest in putting a big, natural gas-fired system in at Indian River, coat-tailing on the wind farm if needed. Now, perhaps, NRG gets more-direct control over the way wind and its implications for the grid are represented to decision makers and the public. It's going to be interesting to see how soon the talk resumes on new gas lines and new turbines for Indian River. Also interesting that two big utilities, PSEG and NRG, are potentially behind the wheel for most of the big wind plans for the Mid-Atlantic.

3:44 PM, October 31, 2009  
Anonymous Edmund Dohnert said...

While I welcome the strong possibility that Bluewater may very well soon hook up with a company capable of paying for the construction of the proposed wind farm, I have some vague nagging concerns about NRG's true motives.

Could it be that NRG wants to be able to build sort of a token wind farm no larger than the scaled-back version that resulted from that incredibly ugly situation involving Delmarva and the boys in Dover? By doing so, NRG could both claim to be 'green' while at the same time throttling back the pace of wind power development so that it does not interfere with it's more pressing desire to go forward with more natural gas-fired generating capacity. Or to paraphrase that great philosopher, LBJ, maybe NRG believes that "It's better to have Bluewater inside the tent pissing out, than outside the tent pissing in."

Or does my paranoia meter need recalibrating?

5:12 PM, October 31, 2009  

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