Arguably the western US could be northern Europe's North Sea. It has vast expanses of land with excellent wind resource, and the economies of scale are compelling.
These mega-projects have the advantage of being built in phases as was Terra-Gen Power's vast 1.55GW Alta project in California's Mojave Desert. The world's largest, Alta started coming online in 2010 – and it is not yet complete.
Phases for mega-projects make sense because of project financing and offtake agreements. According to Brad Seaman, business development manager with Brightman Energy, a risk profile for $50-75 million in tax equity is especially appealing for banks. As much as $200 million might be needed for a 200MW project, a common size for a US onshore project.
Brightman has bought and is developing — in two phases — 370MW of the Mariah project in the Texas Panhandle. Construction has started on both Mariah North and Mariah South, likely to be merchant plants. Conceived by Scandia Wind Southwest, the Mariah project was originally to be 2.2GW-10GW in up to three phases. It now looks as if 600-800MW will built in the nearer term.
Even non-traditional tax equity players limit what they will risk on one project, said James Scott, CEO of Scatec Energy, which sold the two phases of Mariah to Brightman and which is currently in negotiations to sell it a third. For example, GE Energy Financial Services prefers to invest up to $100 million.
Power purchase agreements (PPAs), or the synthetic offtake agreements now so common in Texas, tend to be limited in size too. PPAs are usually 300MW or less because load growth is limited, and because of the size of conventional plants being retired. Financial hedges for merchant plants are likewise restricted in size because of the risk profile sought by investors.
However transmission is an issue, even in Texas where the wind-friendly CREZ lines are booked. Jim Swafford of Scandia Wind Southwest, a joint venture between Alpha Wind Energy Aps of Denmark and XIT Options Inc, said: "With the infrastructure we have, we are limited." When Mariah was first announced, Havgul Nordic of Norway was a partner.
The scale of Mariah might now seem unlikely, but Scatec's Scott recalls that it was born in the same period oil mogul Boone Pickens was proposing the 4GW Pampa wind farm, also in the Panhandle. Pickens' plan became advanced enough that his Mesa Power had to announce in 2010 that it was halving its $2 billion order for GE turbines because the project was on hold. Mesa's plans have since run out of steam.
Successful mega-project developers usually build a phase or two, then see if there is an appetite for more so that they can leverage their knowledge of the site and wind resource. According to Amy Grace of Bloomberg New Energy Finance, developers of larger projects are getting what they can in the ground before the Production Tax Credit expires, and then they will return and re-examine their prospects.
America's most advanced mega-project is the first 1.5GW phase of the 3GW Chokecherry & Sierra Madre project in Wyoming. The project, by Power Company of Wyoming, part of the ultra-deep-pockets Anschutz Corp, was given a boost on 30 April when the TransWest Express transmission project cleared a major regulatory hurdle. Federal agencies published the final environmental impact statement for the 3GW line.
Construction of the wind farm's first phase could start in 2016, said spokeswoman Kara Choquette, if two final government consenting hurdles are cleared by year-end as expected. Completion might be in 2017-2019. And the second and final phase, if all goes as planned, could be online in 2022-2023.
But like with the offshore sector, the larger the project the bigger the potential obstacles and delays. It was in November 2006 that a rights-of-way application was initially filed with the Bureau of Land Management for site resource monitoring for Chokecherry & Sierra Madre. "[The wind project's] moving forward, but not as fast as we would hope," said Choquette.