Deepwater buys US offshore lease rights from NRG Bluewater

Deepwater Wind has acquired the lease rights to an offshore wind zone controlled by NRG Energy off the coast of Delaware, with the Block Island developer intending to sell the power into Maryland.

NRG Bluewater Wind has sold its project assets, including an active federal lease covering 96,400 acres (39,012 hectares) that would have held the two-phase 450MW Mid-Atlantic Wind Park, to Deepwater Wind, an NRG spokesperson confirms.

A spokesperson for Rhode Island-based Deepwater Wind also confirmed the deal.

The acquisition is contingent on approval by the US Interior Department’s Bureau of Ocean Energy Management, which oversees offshore wind development beyond state territorial limits.

The zone would hold Deepwater's 120MW Skipjack project, first revealed last week. Deepwater has bid Skipjack into the approval process currently underway in Maryland that will determine the state’s first offshore wind project.

Deepwater did not initially reveal where it had obtained Skipjack, but said the project would be located in federal waters starting 17 nautical miles (31.5km) northeast of Ocean City, Maryland.

New Jersey-based NRG, the largest US independent power producer, bought the zone through its 2009 acquisition of offshore developer Bluewater Wind. At that time, Bluewater held the only long-term PPA for an offshore wind project in the US, with utility Delmarva Power.

Although NRG froze development activity in 2011 after failing to find investors to back the project, it secured the federal lease rights for the zone the following year with an eye towards future development or an eventual sale.

Just two projects registered to compete to become Maryland’s first offshore wind farm – Skipjack and a 750MW project proposed by US Wind, the Baltimore, Maryland-based developer owned by Italy’s Toto Holding.

Although Skipjack is located off the coast of Delaware, it is eligible to compete for an off-take deal under Maryland’s offshore wind carve-out, established by the state’s Offshore Wind Act of 2013.

Maryland regulators are expected to decide between US Wind and Deepwater's projects by May 2017.

Following Deepwater’s surprise unveiling of Skipjack, US Wind this week issued a statement claiming its project would create more local jobs and be built along a faster timeline – while hammering the point that its headquarters are located in Baltimore.

“We welcome the competition but we feel our proposal is superior in every way,” says Paul Rich, US Wind’s director of project development.

“Of the two applicants, US Wind is the only Maryland-based company,” Rich says, adding the company has already spent more than $20m on its project. “We live here, we are hiring here, and we can’t wait to start generating clean, renewable Maryland energy.”

Deepwater, however, argues that its smaller Skipjack project would be the “right size for Maryland’s first offshore wind farm”, and could be built in a single construction season “with considerably less risk than a larger project”.

Deepwater, whose largest shareholder is US hedge fund D.E. Shaw, is close to finishing its pioneering 30MW Block Island project off the coast of Rhode Island.

US Wind says its 187-turbine proposal would create “thousands” of construction jobs and “hundreds” of permanent positions. Baltimore is among the growing list of Eastern US cities hoping to establish itself as part of a future offshore wind supply chain.