Plans advance for first U.S. offshore wind farm

By Jon Hurdle

PHILADELPHIA (Reuters) - A plan for the first U.S. offshore wind farm advanced on Monday when the company that wants to build it announced it has agreed to sell the power generated to a local utility.

Up to 200 megawatts of electricity from about 60 turbines to be built 11 miles off the coast of Delaware will be sold to Delmarva Power in a 25-year contract that officials said will likely make the project the first in the country.

It now requires approval by legislators and a number of state and federal agencies, but officials said the establishment of a market for the power was a crucial step towards construction and operation by 2012 or 2013.

If finally approved, the project will be built by Bluewater Wind Delaware LLC, a unit of the Australian investment firm Babcock & Brown.

"Babcock & Brown believes this contract is a significant step toward developing Delaware's first offshore wind farm, which will almost certainly be the first offshore wind farm in the country," said Hunter Armistad, head of the company's North American energy group.

The farm will be able to generate up to 400 megawatts in addition to the 200 megawatts that will be bought by Delmarva.

The cost is subject to a final decision on generating capacity, said Jim Lanard, a spokesman for Bluewater Wind. A 450 megawatt farm would cost around $1.5 billion, he said.

The project may encourage other states to use offshore wind in an effort to reduce their dependence on fossil fuels, said Laurie Jodziewicz, an expert on offshore power at the American Wind Energy Association, the industry's trade group.