By law, Delmarva Power must generate 20% of its power supplies from renewables by 2019, or face financial penalties. If an offshore REC is worth 3.5 times more than an onshore REC, meeting the mandate becomes that much easier, making it worthwhile for Delmarva to offer a much higher power purchase price for offshore wind than would otherwise make financial sense. On land, a megawatt hour of green power is granted a single REC, while an offshore megawatt hour would represent 3.5 RECS, if lawmakers agreed. The approach is not without precedent in Delaware; land-based wind projects online by end 2012 get 1.5 RECS/MWh and solar PV located in state by 2014 gets three RECS.
Meantime, Bluewater hopes to find other utility customers with which it can sign PPAs so it can build out the project to its planned 600 MW. Delmarva's PPA is for the output of just 200 MW. If the project proves not to be viable because no change in the law is made, or other power purchasers fail to come forward, Bluewater is free to walk away from the agreement with Delmarva without penalty.
Aside from finding an entity willing to pay a premium for the power, Bluewater Wind must wait for rules and regulations from the federal government for offshore wind development and conduct numerous environmental and technical studies, including more precise meteorological studies. "We think we've reached the first significant milestone and from here on we are very optimistic," says Babcock & Brown's Matt Dallas.