NRG Energy Inc. said its wind-power project off the coast of Delaware may take three times longer than planned to get approved after BP Plc’s Gulf of Mexico oil spill spurred a reorganization of federal offshore regulation.
The power producer still plans to get a permit for its $1 billion farm, which already has a contract to sell its 200 megawatts of output to a utility, in two to three years, said Peter Mandelstam, president of NRG’s wind unit. In a “worst- case scenario,” the application that Princeton, New Jersey- based NRG submitted to the federal government June 25 could instead be tied up for seven and a half years, he said.
That’s because the Obama administration is revamping regulation of offshore energy, including a splitting of the former Minerals Management Service into three divisions, amid criticism over the spill. MMS Director Elizabeth Birnbaum stepped down after an April 20 blast on the Deepwater Horizon drilling rig, leased by BP, caused a record U.S. oil spill.
“The permitting process is uncertain at the moment,” Mandelstam, 49, said today in a telephone interview. “We have been caught up in the Deepwater Horizon oil disaster in the Gulf of Mexico.”
Mandelstam said the permitting process could be longer than planned if NRG has to deal with three different divisions of the MMS, now known as the Bureau of Ocean Energy Management, Regulation and Enforcement. Nicholas Pardi, a spokesman for the agency, didn’t respond to a telephone message seeking comment.
NRG acquired the project with its purchase last year of Bluewater Wind LLC, a developer of wind-power farms in the U.S. Northeast. The Delaware project, which is scheduled to come online in 2013 or 2014, was to be the first revenue-producing asset from that transaction.
Pepco Holdings Inc.’s Delmarva Power & Light Co. utility has a 25-year contract to buy the farm’s electricity. NRG and Pepco agreed this year to extend the deadline by which NRG can cancel the contract, Mandelstam said.
The restructuring could benefit the offshore wind-power developers eventually if it leads to creation of a more efficient agency equipped to deal with alternative energy projects, said Tyler Tringas, an analyst with Bloomberg New Energy Finance in New York.
The Obama administration predicted late last year that $80 billion in stimulus spending on renewable-energy initiatives would help create more than 700,000 jobs. The administration aims to double U.S. power generation from renewable sources such as wind and solar.