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United States

Dragged into the water

Power purchase agreement (PPA) talks for what could be the first offshore wind plant in the US moved forward last month. Project developer Bluewater Wind and Delaware electric utility Delmarva Power filed "term sheets" with regulators showing the wind plant would likely cost ratepayers $0.1059/kWh and cost $1.6 billion for a 450 MW project. The filing, made at the request of state agencies, represents the bidders' best offers and does not represent final agreements, stresses the utility.

The momentum, however, was enough to persuade wind investor Babcock & Brown (B&B) to buy Bluewater for an unknown sum. The financial backing from a proven wind owner/operator with $50 billion in assets puts the project on firmer legs. "Bluewater is an ideal party to expand our portfolio of wind energy projects and realize our goal of developing offshore wind," says B&B's Hunter Armistead.

Delmarva Power was forced into power purchase negotiations by lawmakers and state regulators directing it to secure an environmentally sensitive 25-year power contract. Between bids for a coal plant, a natural gas plant and the wind proposal, state regulators backed the offshore plant (Windpower Monthly, July).

The power supply arrangement under review is a hybrid structure that would consist primarily of 450 MW wind and 200 to 300 MW of natural gas generation. Bluewater says the provisional $0.1059/kWh price for wind compares with Delmarva's base summer rates of $0.1068/kWh and winter rates of $0.1162/kWh.

The developer fears Delmarva will oppose the term sheet proposal arguing it is too expensive for ratepayers. The state's Public Service Commission (PSC) will review the terms and with three other state agencies decide whether to direct Delmarva to sign an agreement.

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