DelaWind Is Looking for a New Partner
As Aaron Nathans reported in the News Journal, DelaWind experienced a setback when Amer Industrial Technologies pulled out of the startup firm. Nathans quoted Transformative Technologies CEO Dennis O'Brien as saying the split was due to "management differences on the timing, priorities and structure of the business." Ahmad Amer put it more succinctly: "I don't like financing."
I talked with John Carney last night; he confirmed that the principal sticking point was DelaWind's financial structure, which would be based on debt supported by tax credits. The fundamental value of proposed business is sound; this was just a bad fit. DelaWind is now looking for a new partner. The advantage of building the towers on Delaware River is too compelling to give up.
DelaWind's applications for state financing and federal tax credits have been set aside for now. The Obama administration announced last week that it intends to add $5 billion to the $2.3 billion federal 48c tax credit program, which attracted more credible proposals than could be funded. So if DelaWind can find another partner, it should get another bite at the apple.
As for Amer's comment that this had become a "political issue," I think that business strategy and financial structure, not political objections, were the deciding factors in the split. It's unfortunate that some have tried to make political hay on Carney's involvement. I have a hard time understanding why anyone would object to 600 or more Delaware steelworkers playing a key role in building the country's first offshore wind power project.
As I wrote back in October, John Carney still plans to leave DelaWind in January, while continuing to work with Transformative Technologies. With Carney out of the picture, maybe the partisan critics will stop their sniping and acknowledge the value of creating hundreds of blue collar jobs in a new industry.
I talked with John Carney last night; he confirmed that the principal sticking point was DelaWind's financial structure, which would be based on debt supported by tax credits. The fundamental value of proposed business is sound; this was just a bad fit. DelaWind is now looking for a new partner. The advantage of building the towers on Delaware River is too compelling to give up.
DelaWind's applications for state financing and federal tax credits have been set aside for now. The Obama administration announced last week that it intends to add $5 billion to the $2.3 billion federal 48c tax credit program, which attracted more credible proposals than could be funded. So if DelaWind can find another partner, it should get another bite at the apple.
As for Amer's comment that this had become a "political issue," I think that business strategy and financial structure, not political objections, were the deciding factors in the split. It's unfortunate that some have tried to make political hay on Carney's involvement. I have a hard time understanding why anyone would object to 600 or more Delaware steelworkers playing a key role in building the country's first offshore wind power project.
As I wrote back in October, John Carney still plans to leave DelaWind in January, while continuing to work with Transformative Technologies. With Carney out of the picture, maybe the partisan critics will stop their sniping and acknowledge the value of creating hundreds of blue collar jobs in a new industry.
posted by Tom Noyes at 7:00 AM
2 Comments:
Tom,
This fellow Amer is a very bright guy, and I'm sure he had some very good reasons for pulling out of this nascent DelaWind venture. While the reasons are probably more of a business nature, anything that is dependent upon government grants or subsidies usually becomes political pretty quickly.
I personally would have probably made the same decision myself. After all, at present it is nowhere 100 percent certain that there will even be a wind farm off the coast of Delaware, much less a decision as to who will supply what. Setting up a company to build the steel towers for wind turbines strikes me as a bad case of putting the cart before the horse.
One thing to keep in mind is that the US at present has zero experience in constructing offshore wind farms. As such, Bluewater/NRG probably will (at least initially) be highly dependent upon European companies for various aspects of the project.
The largest of such companies is the Danish company, Vestas. From what I've seen, Vestas doesn't just supply the turbines but also gets involved in the entire structural work, including fabrication of the towers. They have their own facility in the UK that fabricates the towers for their own wind turbines, thus eliminating subcontractors for that function.
Should that type of arrangement wind up being the case, then DelaWind may wind up with no customers.
Finally, for what it's worth, the entire work force of Vestas in the UK is roughly 900 people, and that includes all aspects of their massive presence in wind power, not just the part that builds towers. What I conclude from that is that this 600 potential Delaware jobs figure being bandied about is pure PR fantasy designed to help open up the public trough for the people pushing this thing.
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