Offshore Wind Power | Delaware Project
To our knowledge, the 2006-2007 Delaware Request for Proposals (RFP) under House Bill 6 (143rd General Assembly) is the first time worldwide that offshore wind has competed in an all-source RFP against coal and natural gas. There were four administrative steps reslting from the HB6 legislation: a Request for Proposals (RFP) for a new power plant was reviewed and finalized, three bidders submitted proposals, after lengthy evaluation the PSC and three other agencies selected the winning bidder, a power purchase agreement (PPA) was negotiated (twice), then the PSC and agencies approved the PPA.
|Map of two proposed sites off the Atlantic Coast of Delaware. From submission of Bluewater Wind to Delaware PSC|
In the numerical scoring, price was the most heavily-weighted criterion, computed as net present cost over the life of the contract. In the bid evaluation, cost included projected costs for CO2 emissions and expected fuel price increases over the contract life. The explicit weighting for environmental considerations and for climate change were small (8% and 4%). The bid price for offshore wind was about 10% less expensive than IGCC coal with sequestration, and about 5% less than IGCC without sequestration. Both projects were 600 MW, larger than any currently-built IGCC or wind project. Per PSC order of 22 May 2007, offshore wind won the bid for primary power and the wind bidder entered negotiations for a power purchase agreement. The PPA was finalized and submitted to the four agencies at a hearing on December 18, 2007, but was not approved. What followed was a legislative debate and hearings of the Senate Energy and Transit Committee, which to some observers seemed to be intended to kill the project. See the majority and minority reports on these hearings (below). We also have some video footage of the hearings, that gives a sense of the public and civic group participation, and how it was received (click on "Delaware Senate Hearings").
Finally, on June 24, 2008, Delmarva Power and Bluewater Wind signed a renegotiated PPA, with Delmarva buying only 200 MW of capacity, and Bluewater allowed sell up to and additional 400 MW, for a total project size of up to 600 MW, if contracts are made. In our view, and the developer's, the PPA is the most critical precondition for the project, because it confirms the stream of payments needed to borrow money to build the project. It is like needing to show that you have a job before you can get a home mortgage.
A truncated but very readable account of the winding two-year road from RFP to PPA is documented in a 14 September 2008 article in the New York Times Magazine, Wind-power Politics. For a more colorful window on the activists involved see the March 2007 article in Salon, Gone with the wind. Archivists can find running coverage by the Delaware papers--the News Journal, Cape Gazette, and State News.
Below under the link to "Key final PSC documents on selection of power bid" link are the PSC documents regarding the bidding and the PSC. The DE PSC web site has many more than the key ones we extract here. For those interested in an example PPA, we strongly recommend using the 18 Dec 2007 PPA as a guide, that could be replicated in other states. By contrast, the final signed PPA of 23 Jun 2008 is the result of a series of complex compromises, including downsizing the contract size to less than what would be commercially viable at this cost/MWh, multiplying the value of RECS, and other odd compromise terms. Thus, as a model for others, the 18 December 2007 PPA is preferred over the final one.
Information for the public:
An offshore wind project for Delaware? Questions about the project being asked by the Delaware public, 14 March 2007.
Wind Power and Delaware’s Waters, Meredith Blaydes Lilley and Willett Kempton. This is a summary of environmental costs and benefits of offshore wind, written for the public. (The Blades and Kempton article starts on page 3 of this document, page 9 of the complete publication.) Published in Estuary News, Vol 20, Issue 5, Summer 2010.
The proposed contract: Summary of Bluewater Wind Power Purchase Agreement, Jeremy Firestone, Feb 2008.
Selected CEOE Researcher Testimony on RFP and PPA:
Point and Counterpoint on Bids, Firestone and Kempton, Mar 2007; Additional Point and Counterpoint, Firestone, 6 April 2007; Summary and review of Agency consultant's "Interim Report on IRP in Relation to RFP", Kempton, 9 April 2007; Delaware Offshore Wind Power Resource and its Economic Potential, Amardeep Dhanju; Integrating Delaware's Offshore Wind into the Regional Grid, Meredith Blaydes; Health impact of the proposed 600 MW wind project in Delaware, W. Kempton (CEOE, UD) and J. Levy, Harvard School of Public Health; Testimony of Jeremy Firestone before Delaware House Energy and Natural Resources Committee 12 March 2008.
Key final PSC documents on selection of power bid:
Interim Report on IRP in Relation to RFP, New Energy Opportunities et al (state consultant), 4 April 2007; Addendum to Interim Report, (state consultant), 1 May 2007; Final Staff recommendation, (PSC staff), 2 May 2007, and the final PSC Order 7199. For other Delaware Public Service Commission documents, including the three (redacted) bids, see Delmarva power RFP.
PSC documents for 18 December 2007 Power Purchase Agreement (PPA): Assessment of Power Purchase Agreement between Delmarva Power And Bluewater Wind Delaware LLC, by Independent Consultant, 13 December 2007; PSC Staff Report On The Power Purchase Agreement Between Delmarva Power And Bluewater Wind, Delaware Public Service Commission Staff, 14 December 2007. Want to cut through the spin of the parties? Read the PPA yourself: December 2007 PPA. After reading it, you may find "interesting" the way the Senate Energy and Transit Committee interpreted it in their Majority Report, in comparison to the same Committee's Minority Report.
PSC documents for Final, 23 June 2008 Power Purchase Agreement: The final agreement by Delmarva Power to purchase 200 MW offshore wind from Bluewater Wind is in this signed Power Purchase Agreement. It is evaluated in the Report on final PPA by PSC's Independent Consultant, 3 July 2008. The PPA was approved by the PSC and agencies on July 31. This was the first PSC decision anyone could remember that received an ovation from the (packed) gallery.