Will NRG Buy Bluewater Wind?

One can almost hear the synapses clicking wildly as environmentalists across the state succumb to acute cognitive dissonance. The News Journal reports that NRG Energy, Inc., owner of the Indian River power plant, is in "serious negotiations" to buy a majority stake in Bluewater Wind.
Bluewater has been shopping for a new owner since Babcock & Brown found itself, shall we say, overextended. Babcock is being broken up and sold off piece by piece. Bluewater hired investment banker Credit Suisse to look for a new owner.
I've taken a quick look at NRG's finances. Profits are down from a year ago, but the balance sheet is holding up; net current assets were $3 billion at the end of the third quarter. Bluewater will need about a billion dollars or so over the next three years to build the wind farm, though this number could climb if the company signs up more buyers and builds more capacity. In return, Bluewater will throw off 25 years of guaranteed revenue thanks to the Power Purchase Agreement (PPA) with Delmarva Power.
The Indian River power plant near Millsboro has been the perennial number one on Delaware's air pollution hit parade, though NRG has agreed to close the two oldest and dirtiest units and invest $500 million in new emissions controls.
NRG competed with Bluewater Wind and Conectiv to build a new power plant in Delaware. To the surprise of nearly everyone, Bluewater won the competition and went on to negotiate a PPA with Delmarva Power.
NRG's energy portfolio includes coal, natural gas, nuclear, wind and solar power plants.
Opponents of action on climate change have been struggling to come to terms with the significance of big energy companies supporting cap and trade legislation and investing in renewable energy projects. Now the shoe is on the other foot, and it's the turn of environmental advocates to come to terms with big energy companies supporting cap and trade legislation and investing in renewable energy projects, while continuing to own and operate coal power plants. If renewable energy makes economic sense (as I and others argue), then we should expect—and welcome—big energy companies buying into wind and solar projects.

John Carney and DelaWind

I wrote back in May about former Lt. Gov. John Carney's involvement in a project called DelaWind, which was formed to build wind towers for Bluewater Wind and other wind power projects. With some trying to stoke some controversy over Carney’s role in the venture, I thought it would be useful to take a closer look.
DelaWind was started by a firm called Transformative Technologies (TT), which Carney joined after leaving office. TT, which is privately held, designs, manages and invests in projects like industrial waste heat recovery. TT's chairman, Dennis O’Brien has been involved in the steel industry for years.
TT had approached Evraz Claymont Steel about buying the plant, but the parties couldn’t agree to a price. But the idea of using steel from the plant to build wind towers is very much alive. Amer Industrial Technologies, Inc., an Edgemoor steel fabricating company, has taken a 95 percent stake in DelaWind, leaving TT with just five percent. Amer fabricates specialized components like heat exchangers for nuclear plants, which requires far greater tolerances than steel towers. Evraz Claymont Steel has agreed to supply the steel for building the towers.
The idea makes logistical sense. Both Amer and Claymont Steel are located along the Delaware River, just a few miles apart. It makes economic sense for at least part of the Bluewater Wind project to be manufactured here in Delaware, a point Jack Markell made in his state of the state speech in April:

Let’s work to ensure that the Claymont Steel Mill produces the steel for the windmill towers and foundations, not just for Delaware, but other projects as well.

Gearing up to build the towers will require capital. DelaWind filed an application for roughly $6 million in tax credits under the 48C Advanced Energy Manufacturing Industrial Tax Credit program created by the American Recovery and Reinvestment Act (ARRA) and administered by the Department of Energy. Credits are being awarded on a competitive basis using technical criteria including job creation, reductions in air emissions, potential for technological innovation and commercial deployment, and project time. A decision on this competitive application is expected by December 16.
DelaWind also filed an application with Delaware Economic Development Office (DEDO) for $350,000 in financing. I am told that the request is expected to go before the Emerging Technology Pre Venture Fund Board pending a decision on the federal tax credit application.
Some Republicans have tried to make John Carney’s involvement in this project an issue. Ron Williams mentioned the controversy, and Dave Burris weighed in with a headline calling it a “sweetheart deal,” and quoting State Senator Joe Booth who characterized it as “thinly veiled political pay back.”
I don't see much that is objectionable in this project. DelaWind didn't need John Carney's name to get the attention of state government. DEDO would roll out the welcome mat for this proposal whether or not his name was associated with it.
Carney plans to wrap up his involvement with DelaWind early next year to run for Congress. He played an crucial role in getting the Bluewater Wind project through the General Assembly, and is working hard to see to it that a significant portion of the project is fabricated here in Delaware. I don't know anyone who wouldn't like to see Delaware steel workers play a significant role in building this historic project. But it's one thing to say it would great to do this in Delaware, and another to put a credible enterprise together, which is what Carney and his colleagues have done.

The President Visits Dover Air Force Base

President Obama flew to Dover Air Force Base in the middle of the night to pay his respects to the Americans killed in the line of duty in Afghanistan.

The New York Times reports that the family of Army Sergeant Dale R. Griffin of Terre Haute, Indiana agreed to allow media to cover the return of his remains. The Pentagon allows media coverage of the return of fallen service members with family permission.
Photo: Doug Mills/New York Times

Investing in Our Energy Future

Little more than a year after General Motors closed the Boxwood Road plant, Fisker Automotive announced plans to buy the facility and retool it to build plug in hybrid cars. Henrik Fisker stood with Vice President Joe Biden and Governor Jack Markell to make the announcement. Fisker will buy the plant for $18 million and invest ten times that amount to gear up to build a new sedan called Project Nina.
News Journal reporter Ginger Gibson calls it "a political victory of monstrous proportions" for Governor Jack Markell. But there is plenty of credit to go around with an announcement this big, and Markell covered the bases, mentioning Senators Carper and Kaufman, Energy Secretary Steven Chu, DNREC Secretary Collin O'Mara, DEDO Director Alan Levin, the United Auto Workers, and of course Joe Biden.
Fisker likewise gave ample credit to Markell and his team:

“The governor pulled together faster than I can take my family of four people to dinner,” Fisker said.

While Biden was in Delaware, President Obama traveled to the country's largest solar power plant to announce $3.4 billion in grants to promote smart grid technology. These grants will save energy by funding the installation of millions of smart meters in homes and businesses and in control systems to make the grid itself more flexible and responsive. This is important for renewable sources like wind and solar, and will help reduce energy loss between generators and end users. For instance, $13,698,091 will be going to PJM Interconnection, LLC, which manages the grid in our part of the country, for technology to "provide real-time data on the operating conditions of the transmission system."
In his remarks today, President Obama compared our current electrical grid to the old transportation grid:

To offer one analogy, just imagine what transportation was like in this country back in the 1920s and 1930s before the Interstate Highway System was built. It was a tangled maze of poorly maintained back roads that were rarely the fastest or the most efficient way to get from point A to point B. Fortunately, President Eisenhower made an investment that revolutionized the way we travel -- an investment that made our lives easier and our economy grow.

The payoff for investing in smart grid technology is obvious. A one percent improvement in energy efficiency is equivalent to increasing generating capacity by the same amount.
Converting a GM factory to build plug in hybrids is admittedly risky; there is no assurance that Fisker will succeed in the long or even medium term. But I am convinced it's a risk we have to take. Someone is going to build the future; why shouldn't we?
Even though we are putting billions into GM and Chrysler, we don't have to limit our vision or our investments to the old way of doing business. As Obama put it, we have to look to the future and not be held hostage to the past:

It's a debate between looking backwards and looking forward; between those who are ready to seize the future and those who are afraid of the future. And we know which side the United States of America has always come down on. We know that we've always been a people who were unafraid to reach for that more promising future.

The High Line

The High Line, New York City's newest and most unusual park, is situated on an abandoned elevated rail line that snakes through Chelsea. It seemed more like conceptual art when it was first proposed, but has proved to be a smashing success. Thousands of residents and tourists crowded the High Line on a sunny Sunday afternoon.
Even though the park is sited thirty feet above the pavement, the designers have created ways to connect the park to the street below.Unexpected connections have developed with the park's surroundings. This fire escape at 20th Street has become a popular venue for musicians, like this jazz band that entertained strollers.
I imagine that the real estate values are climbing all along the High Line. Construction and renovation can be seen all along the park.

The Underrated Jack Markell

Chris Cillizza, who writes The Fix for the Washington Post, asked readers to vote for the most underrated governor from six relatively small states, and our own Jack Markell came in first, just ahead of John Hoeven (R-North Dakota) and Mike Beebe (D-Arkansas). I don't know that the results carry much significance except that Cillizza has a few more readers in Delaware than in Arkansas, Mississippi, Nebraska, North Dakota or Tennessee.
Of course it's early in Markell's first term to offer a meaningful rating on many fronts. We'll see what comes of the plans from his cabinet secretaries for reorganizing state government. So far the most significant achievement may be getting a budget through the General Assembly on time, a feat that many of Markell's higher profile colleagues couldn't pull off. This could be one reason Markell enjoys solid approval rating from the three polls that have asked the question.
Maybe Cillizza could follow up with a poll on the most underrated lieutenant governor (is it even possible for a Lt. Gov. to be overrated?), and we could try to get Matt Denn noticed among the political junkies in Washington.

"The stupidest costume known to humankind"

Monday's bogus press conference, purportedly from the U.S. Chamber of Commerce, was perpetrated by a group of pranksters called the Yes Men, who followed up yesterday by bouncing around the Capitol in “SurvivaBalls,” which they call “the stupidest costume known to humankind.”
There's plenty of stupidity to go around in the climate change debate, but this is far more entertaining than the usual glum utterances from the global warming deniers and coal boosters.
Photo: The Yes Men

U.S. Chamber U-Turn on Climate Change a Hoax

It seems I was not alone in being taken in by this. Talking Points Memo reports that the announcement that the announcement that the U.S. Chamber of Commerce was doing a 180 degree turn on climate change was a hoax that took in the New York Times and other big news organizations.
So to any readers who caught this post in the ten minutes before I took it down, I apologize.
Back in August, a Chamber VP embarrassed the organization's members by calling for a “Scopes monkey trial of the 21st century" to try the question of climate change. The fake news that the Chamber is conceding the science of global warming included this memorable quote:

Climatologists tell us that if we don't enact dramatic reductions in carbon emissions today, within 5 years we could begin facing the propagating feedback loops of runaway climate change. That would mean a disruption of food and water supplies worldwide, with the result of mass migrations, famines, and death on a scale never witnessed before.
Needless to say, that would be bad for business.

The New York Times reports on the fault lines in the business community on climate legislation. The fact that informed observers could be taken in by the hoax is a sign that the fight among business interests is gaining attention.
The hoax was posted at http://www.chamber-of-commerce.us/090118tjd_prosperity.html.
It gets weirder. The Guardian reports that someone posing as the Chamber CEO actually made a presentation at the National Press Club:

Barely 20 minutes into the Q&A section of the press conference, an agitated spokesman for the Chamber burst into the room, screaming that the event was a hoax.

Oh well. That was fun while it lasted.

Citizens for Clean Power on the Indian River Power Plant

Citizens for Clean Power (CCP), which has been fighting to clean up the Indian River power plant, issued this statement this morning on the Order to reduce emissions from the coal plant:

For the first time, DNREC acknowledges a connection between emissions from the Indian River plant and increased asthma, heart disease and cancer rates in the region. This comes after more than six years of relentless effort by CCP's Dr. Kim Furtado to compel the state to address these problems.
However, the latest order simply reflects the terms of a 2007 Consent Order between DNREC and NRG. No new reductions are ordered. After Regulation 1146 was adopted, the power plant actually increased its emissions due to increased production. Even after the new controls are in place, thousands of tons of toxic sulphur dioxide and nitrous oxide will be emitted annually from the stacks at Indian River, along with heavy metals.
So long as Delaware continues to allow release of harmful chemicals and residues into our air, water and ground by coal-burning plants, public health and the environment will be threatened. Gov. Markell and Sec. O'Mara deserve recognition for their efforts thus far.

Is the glass half full or half empty? Shouldn't CCP be happier with the reductions? Here's one perspective: The plant will still emit 6,000 tons of SO2, 3,000 tons of NOx and 2,300 tons of particulates each year. It's far less than is being emitted now, but could one imagine a permit for a new facility allowing such emissions? And as I mentioned earlier, the Order doesn't address carbon emissions or the danger posed by accumulating coal ash on the edge of our inland bays.
Our industrial economy is caught in a devil's bargain, from which we are not easily extricated.

DNREC Orders Emissions Reductions at Indian River Power Plant

NRG’s Indian River power plant near Millsboro has been the perennial number one on Delaware's air pollution hit parade. That is due to change under the terms of a Secretary's Order announced yesterday. According to the Order, NRG has agreed to close the plant's two oldest and dirtiest units, and spend $500 million on new pollution controls on the two newer units. Unit 1 will be shut down by May 1, 2011 and Unit 2 by May 1, 2010.
DNREC's press release estimates the emissions reductions under the Order:

The combined impact of these changes will be an overall reduction in NOx and SO2 emissions at the facility of nearly 90 percent by the project’s completion, advancing both air quality and water quality goals for the state. These reductions in emissions are estimated to generate approximately $2 billion in avoided health care costs. Further, the shutdown of Units 1 and 2 will also reduce water intake at the facility by approximately 60 percent and make a measurable improvement in the water quality, improve aquatic habitat, and help rebuild fish populations.

We're talking about reductions of 14,000 tons of NOx and nearly 60,000 tons of SO2 annually, a figure that Jeff Montgomery of the News Journal describes as "the equivalent of 300 train-cars of raw sulfur a year."
And for those who bemoan the effects of environmental regulation on the economy, the work envisioned will create 500 construction jobs.
The Order does not address all of the environmental problems at the plant. It is limited to air emissions and does not mention the growing hazard of coal ash accumulating at the site. It does not address CO2 emissions. And as the New York Times reported this week, cleaning up air emissions at coal plants can lead to dirtier water. Still, this Order will likely set an enduring record for reducing air emissions in Delaware.

Why Offshore Wind Lags on the West Coast

Kate Galbraith of the New York Times Green Inc. blog last week took a look at why the West Coast isn't seeing as much interest in offshore wind power as the East Coast:

The main problem, experts say, is topography. Whereas the continental shelf extends for miles off the East Coast, the bedrock drops off sharply just beyond the West Coast –- making it too deep to anchor the turbines with current technology.

This means it's comparatively cheaper to build on land even with "Outstanding" to "Superb" wind resources just offshore, as rated by the U.S. Department of Energy.
Green Inc. also cites economics:

A second difficulty is power prices. Electricity in California, while expensive relative to the middle of the country, is still cheaper than in most of New England. This makes offshore wind projects less economical. (Electricity in Washington and Oregon is cheaper still.)

Bluewater Wind's Peter Mandlestam mentions another engineering challenge: the threat of earthquakes. Lower energy prices, engineering challenges and abundant land based wind resources combine to make offshore wind less attractive. The only proposed offshore wind power project on the West Coast is in British Columbia.

John Kerry and Lindsey Graham on Climate Change

The pairing of names on an op-ed in yesterday’s New York Times bode well for the prospects for action on global warming. John Kerry and Lindsey Graham say they “agree that climate change is real and threatens our economy and national security,” and that Congress can and should act:

However, we refuse to accept the argument that the United States cannot lead the world in addressing global climate change. We are also convinced that we have found both a framework for climate legislation to pass Congress and the blueprint for a clean-energy future that will revitalize our economy, protect current jobs and create new ones, safeguard our national security and reduce pollution.

Having a high profile conservative join with John Kerry signals that the Senate math may be more favorable than we imagined. The Democratic majority of 60 includes four who represent coal states (West Virginia and Pennsylvania) and others representing states like Alaska and Louisiana. Having Republicans in play makes it easier to bargain for the necessary votes to forestall a filibuster. This may have made it easier to include a standard of 20 percent reduction in greenhouse gas emission in the Kerry-Boxer bill introduced two weeks ago, instead of the 17 percent in Waxman-Markey.
They make the point that the U.S. needs to develop new industries to meet our energy needs, and not wait for China and India to take an insurmountable lead. A sure way to cede energy leadership is to keep investing in 19th century technologies while our rivals take the lead in 21st century technologies. They also propose that we protect our interests by imposing an import tax on countries that avoid greenhouse gas emission standards.
But Kerry and Graham also recognize the potential for disruption for consumers and business that a large shift in the energy economy will create. They propose “the establishment of a floor and a ceiling for the cost of emission allowances” to ensure that volatility in the market for emission allowances doesn’t create too much havoc. This feature is already part of Kerry-Boxer.
Taken with the high profile defections from the U.S. Chamber of Commerce, cracks in the solid wall in GOP opposition in the Senate and the House make the prospect of meaningful action much brighter.

Barack Obama and the Nobel Peace Prize

The announcement that Barack Obama had been awarded the Nobel Peace Prize sent his more vociferous opponents into paroxysms of furor not seen since Chicago lost its bid to host the Olympics a week ago. Media Matters has the rundown on right wing rage over the award. Glenn Beck opined that Obama should turn it down because of his “arrogance,” and said that the Prize should be given to—wait for it—“the Tea Party goers and the 9-12 Project.”
Perhaps the award was aspirational, but the announcement has yielded unexpected agreement on one front. Rush Limbaugh said today, “we all agree with the Taliban and Iran” in deriding the honor. One can almost see them sitting around a campfire together strumming their guitars and singing songs about creating a more divided world.
John McCain may be a bit of a grouch at times, but he sounded gracious in congratulating Obama:

Oh, I’m sure that the president is very honored to receive this award. And Nobel Committee, I can’t divine all their intentions, but I think part of their decision-making was expectations. And I’m sure the president understands that he now has even more to live up to. But as Americans, we’re proud when our president receives an award of that prestigious category.

As a lifelong Democrat, I’m in no hurry to see the loyal opposition disentangle itself from the discordant voices of the far right. The nuttier they sound, the easier it is for our side. But as a citizen, I welcome the day when the GOP can shake off the crazy and mean-spirited talk and we can get back to merely disagreeing.
Update: Not wanting to be left behind, Delaware Politics ran a post from Christine O'Donnell calling the world's most prestigious honor "the Nobel Peace Bribe."

Mike Castle and the Nutcases

Mike Castle's announcement that he is running for the Senate is the political story of the moment, and I suppose I have to weigh in on the subject or risk suspension of my license to blog.
Castle is portrayed as a moderate, which means he doesn't belong to the nutcase wing of the party. Castle gained notoriety when he was confronted at a now infamous town hall meeting by a woman waving her birth certificate in a plastic bag yelling about Barack Obama. Another speaker at the meeting insisted that the swine flu virus was engineered in "a small bioweapons plant outside of Fort Dix," and that a big vaccine company was "caught sending AIDS-infected vaccines to Africa." For a while, I and many others were wondering whether the experience, replayed endlessly on YouTube, would dissuade him from considering another campaign.
Castle incurred the wrath of the climate change deniers when he was one of eight Republicans who voted for the Waxman-Markey bill to reduce greenhouse gas emissions. Mark Kirk of Illinois, who is also running for the Senate, was another GOP yes vote.
Mike Castle's career dates back to the time when the state's greatest environmentalist, Russ Peterson, served as governor as a Republican. But Peterson was not elected for a second term after being challenged in a bitter primary in 1972, and eventually switched parties in the wake of the Gingrich uprising of 1994. Today the GOP eagerly continues to purge the party of environmentalists.
Christine O'Donnell declined to back down from challenging Castle. She has run in each of the last two elections as a social conservative, and is decidedly retrograde when it comes to energy and the environment. In last year's campaign, she offered the startling assertion that offshore drilling reduces pollution.
It's hard to see O'Donnell offering a serious challenge. Castle has a comfortable war chest, while she's still in debt from last year. Still O'Donnell might be a rallying point for the nuts who can't stand that a Republican would actually consider acting on global warming and refuse to question Obama's citizenship.

Energy and the Environment in Maryland and Delaware

I'm back from my two day mini lecture tour through Maryland and Delaware. On Saturday afternoon, I gave a talk on the economics of renewable energy with Scott Donnelly from the Eastern Shore Sierra Club at the Maryland Sierra Club's jamboree. It may seem strange that any outdoor types would want to spend any part of a Saturday afternoon indoors going through a PowerPoint presentation, but our talk drew an attentive and engaged audience, which included Allison Chin, the Sierra Club's national president (shown here with Scott and me).
Scott is among the local Sierra Club members who are quickly getting themselves up to speed on the economic, environmental and regulatory issues involved in bringing offshore wind power to Maryland. We shared our pride in being members of the organization founded by John Muir, whose vision led to the creation of the first national parks.
Sunday was Coast Day in Lewes, where I got an update on Bluewater Wind's efforts to line up more customers for the Delaware wind power project and learned that I live 142 feet above sea level, thanks to Google Earth and DNREC's coastal programs office.
That night, I led a town hall discussion at the monthly gathering of Dining with Progressives on the topic of energy economics. I had just started to describe Senate Bill 106, which created energy efficiency resource standards for Delaware, when someone asked, Isn't that (DNREC secretary) Collin O'Mara outside? Sure enough it was, and I stepped out to ask if he would take few moments to say hello to the group. Collin graciously added to an already long day by talking with the group about energy policy and environmental regulation before rejoining his wife and friends.
The key message of my weekend talks was that opponents of progress (whether wind power or climate change) will exaggerate the costs and dismiss the benefits. We saw it in the fight to bring wind power to Delaware, and we're seeing it again in the national debate on climate change.

TommyWonk on Tour

On Saturday afternoon, I will giving a talk as part of the Maryland Sierra Club's biannual jamboree near Annapolis. The topic will be the economics of renewable energy. Joining me will be Scott Donnelly from the Eastern Shore Sierra Club, who advocating for Maryland to get plugged into offshore wind power.
As I wrote last month, Maryland is early in the process of developing offshore wind. The Maryland Energy Administration has asked developers to express their interest and suggest how the procurement process might be organized.
From there, I will be heading to Lewes, where the University of Delaware is hosting Coast Day on Sunday at the Hugh R. Sharp Campus in Lewes. There will be exhibitions, lectures (including one by professor and wind power hero Jeremy Firestone) and a crab cake cookoff.
Sunday evening, I will be leading a discussion at a gathering of Dining with Progressives at Fish On restaurant just outside Lewes. The topic will be economics, energy and the environment. If you want to join the gathering, you can e-mail organizer Joanne Cabry at prog2009@aol.com.

Progress on Climate Change in Washington

Yesterday, John Kerry and Barbara Boxer introduced the American Jobs and American Power Act, while the Environmental Protection Agency announced proposed rules for regulating greenhouse gas emissions from the country's largest factories and power plants.
The question of global warming is dividing the business community, a subject I write about in my latest piece in the Guardian:

The split in the business community has made headlines recently, as the US chamber of commerce has been rocked by defections from corporations taking exception with the organisation's hard line against climate change legislation. In the course of a week, three energy companies – Pacific Gas & Electric, PNM Resources and Exelon – announced they were leaving the venerable business lobby.
Business leaders are particularly embarrassed by the call from a chamber of commerce vice-president for a "Scopes monkey trial of the 21st century" to try the question of climate change. Utility executives, who need at least a passing acquaintance with science to do their jobs, don't like looking like yahoos by belonging to an organisation that takes an explicitly anti-scientific stance.

The importance of cultivating alliances in the business community cannot be exaggerated. The fight to protect our climate is not just about some polar bears above the Arctic Circle. It's also about replacing 19th century energy technology with 21st century technology, and U.S. business leaders are eager to seize the opportunity.