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United States

Strong trend in really big wind projects -- United States moves into boom year

Wind plant construction in the United States is three months into a record year that could top 2000 MW of new capacity for the first time. But with wind's federal production tax credit (PTC) set to expire in nine months, boom in 2005 will once again turn to bust in 2006 unless Congress extends the credit in good time. History has taught the wind industry not to bank on that happening.

The low part of the boom-bust cycle played out again in 2004 after Congress allowed the PTC to lapse December 31, 2003 and failed to reintroduce it until September 2004. With just 15 months of development time between extension and expiration, the industry is responding with what Jeffrey Chester, a lawyer specialising in wind power deals, describes as "another frenzy in the marketplace." In mid-August, new installed capacity for 2004 was just 17 MW, but by the end of December another 381 MW had been added to at least partially salvage a miserable year.

If there is a characteristic of the projects completed in 2004 and due for construction in 2005, it is their size (tables). In 2004, Clipper Wind began and completed its 160 MW Buena Vista project in Iowa for MidAmerican Energy and Cielo Windpower completed 60 MW of its 80 MW Caprock Wind project in New Mexico. The trend in large projects continues in 2005. Zilkha Renewable Energy and PPM Atlantic Renewable Energy expect to open the 240 MW Flat Rock Phase 1 project in New York, a state which is requiring that 25% of its electricity supply come from renewables by 2013. Invenergy LLC's Forward Wind Power project will add 200 MW in Wisconsin this year and the company will begin construction by mid-2005 on a 150 MW facility near Judith Gap in south-central Montana. MidAmerican Energy and Enxco plan to build the 150 MW Century Wind Project near Blairsburg in north-central Iowa, while in Texas, FPL Energy expects to complete a 114 MW facility near Abilene in addition to its 106.5 MW Weatherford project already under construction in Oklahoma. Both projects use GE Energy 1.5 MW turbines.

Meantime in the Northwest, Zilkha Renewable Energy is developing the Wild Horse Wind Power project in Washington, a 220 MW wind farm on Whisky Dick Mountain in Kittitas County. Zilkha's Michael Skelly says they are moving forward with permitting, but the project may not be completed this year. The nearby 180 MW Kittitas Valley project is on hold until Wild Horse is completed. Also delayed until 2006 is Enxco's 200 MW Fenton Wind Power project. The company's Ian Krygowski says the delay is to allow for completion of power purchase agreements.

Utilities call for more

Another key indicator of the strength of the US wind market, along with the hectic activity, is the utility demand for renewables, especially wind power. More than 500 utilities in 34 states offer customers green power at a premium and more than 1500 MW of wind power is already serving that market. Several utilities have released new solicitations for more green power to meet customer demand, including calls for up to 200 MW of wind for Idaho Power, 100 MW of renewable energy to serve Alliant Energy's customers in Iowa and Minnesota and 80 MW of renewables for Oklahoma Gas and Electric Co.

Several new wind farms are expected to come online as the result of requests for proposals launched by utilities in 2004. Puget Sound Energy says it will buy 550 MW of wind, including power from a 150 MW project being built in western Washington by RES America Development, from Zilkha's 220 MW Whiskey Dick project and from a 180 MW project by Enxco in central Washington. And Colorado's Xcel Energy is negotiating with three companies, chosen in a 2004 solicitation, for 400 MW of wind power to be completed by year's end.

New entrants

This year will see several wind companies gaining first-time toeholds in the US industry by opening their own manufacturing facilities or buying established wind development companies. Spain's Gamesa is to start making wind turbine blades in Pennsylvania, having eyed up the state's market potential after it passed a law last year for 8% renewables by 2020. And British-owned wind turbine maker Nordic Windpower promises to assemble wind turbines at a facility in northern Nevada if partner Energy Nevada LLC succeeds in getting plans for a 50-100 MW wind farm off the ground (Windpower Monthly, January 2005).

On the project development side, international power plant developer AES Corp announced in October it was investing in US Wind Force (Windpower Monthly, November 2004) and three months later bought veteran West Coast wind project developer SeaWest Holdings (Windpower Monthly, February 2005). PPM Energy, already the nation's second largest wind developer after FPL, also increased its reach at the start of the year when it acquired Atlantic Renewable Energy and its 500 MW development pipeline (Windpower Monthly, February 2005).

For this year, PPM has three projects with a combined capacity of 320 MW scheduled for completion. It may develop more if it can slip them under the PTC wire. "We're very focused on bringing new wind projects online in 2005," says PPM's Jan Johnson. The developer's three confirmed projects include one for 100 MW near Trimont, Minnesota, a 75 MW expansion of the Klondike II Wind Project near Wasco, Oregon, and the 150 MW Elk River Wind Power Project in Kansas, all using GE Energy 1.5 MW turbines.

The politicians

With another PTC deadline looming, all eyes are on what the new Congress, which convened in mid-January, can accomplish this year. While an extension to the PTC is on the political agenda, how and when it may happen is not clear (page 23). The American Wind Energy Association's Jon Chase is looking to a new energy bill as a likely route for the PTC, although that path has been blocked by Congressional infighting for four years running. "They've been close in the past two Congresses and because it hasn't passed, they are motivated to do it now," says Chase of the chances for a US energy policy.

The US wind industry has long sought national legislation mandating a minimum standard for the percentage of renewables power in America's electricity portfolio and facilitated by a US market in green electricity credits. But with the Bush administration and Congressional Republicans, which control both the Senate and House, opposed to the idea, the chances of passing such a standard is low, Chase says.

State governments, however, are taking up the challenge. Last year saw New Mexico, Maryland, Hawaii, Rhode Island, New York, Colorado, and Pennsylvania, and the District of Columbia enact some type of standard requiring utilities or government to provide a portion of their power from renewable resources, bringing the total number of states mandating renewables to 19 jurisdictions.

The trend is expected to continue. Illinois governor Rod Blagojevich said in his state-of-the-state speech last month that he will submit a proposal requiring utilities to supply 8% of their power needs from renewables by 2012, with three-quarters to come from wind. Apparently encouraged by the success of the 54 MW Crescent Ridge project by Illinois Wind Energy and Eurus in his state, the governor said he wants 3000 MW of wind by 2012 and will direct the state's Finance Authority to look at ways to provide financing for wind power projects.

In North Dakota, the state House of Representatives is considering a bill to create a state renewable energy commission with a trust fund to underwrite feasibility studies, research, venture capital investments, grants and loans to foster renewable energy development.

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