NRG Energy sees offshore wind revenue by 2014

NEW YORK — NRG Energy paid about $10 million for Bluewater Wind, an energy company that holds the only power purchase agreement for an offshore wind farm in the United States, according to an analyst estimate issued Tuesday.

While the purchase price isn't particularly big, the project carries apparent front-runner status for the U.S.'s first offshore wind farm — a pet topic of the Obama administration as well as a lucrative target for the financial community to tap into federal tax credits and loan guarantees.

NRG declined to release the purchase price for Bluewater Wind after announcing the deal on Monday with its former owner, Australia's Babcock & Brown.

The Princeton, N.J., merchant power company and utility operator said Bluewater's 450 megawatt offshore wind project planned off the coast of Delaware could start producing billable electricity by late 2013 or early 2014.

During a conference call to tout the merger, NRG officials said they hope to become first movers in the U.S. field of offshore wind energy, drawing from a wealth of expertise in Europe, home of more than 30 offshore wind projects.

"We do think that there is a real advantage to being early in a space like this rather that coming sort of into it too late when there is too many people trying to carve up the pie," NRG Executive Vice President Andrew Murphy said.

NRG was drawn to the offshore wind project as it moves to reduce its carbon footprint.

"We'd been coming to a conclusion before we approached Bluewater that offshore wind for the East Coast, especially the Northeast really makes sense, because it's one of the few renewable resources that you can really build with scale and make a big enough scale to actually make them economic," he said.

Murphy said the proximity of offshore wind resources to big population centers in the Northeast makes sense as well.

Analysts at Tudor Pickering Holt said the deal delivered a "nice green headline" to NRG, but the Bluewater acquisition amounts to a neutral right now for NRG shares, since any payoff is still years away.

NRG will take on Bluewater's employees, buys development pipeline, and 25-year power purchase agreement with a unit of Pepco Holdings Inc. for the offshore Delaware project, analysts noted.

Bluewater Wind Founder Peter Mandelstam said investment banker Credit Suisse drew interest in the firm from 87 interested parties, including groups in the Middle East, groups in Central Asia, groups in the Far East, in Europe and the United States.

"It was a good marriage that Credit Suisse brokers," he said.