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Nevada utility controls its destiny -- Owning not buying wind

Nevada utility NV Energy is making its first serious moves towards developing and owning its own wind generation rather than buying it from independent power producers. It has taken a half share in the large China Mountain Project, which straddles a combination of federal state and private land on the Nevada and Idaho border. It has been under development by NV Energy's new partner, RES Americas, for over five years. The first phase could top 200 MW, with expansion potential beyond.

Five years of measured wind speed data made the project especially attractive to NV Energy, which can be confident of robust and proven resource assessments. The utility's motive for acquiring a development and ownership interest in China Mountain lies in its desire for greater control over its renewable energy supply beyond simply contracting for power, says NV Energy's Todd Eagleston. He previously developed wind farms for RES Americas and FPL Energy.

"What we realised here is that we need to take more than one path and also to get some amount of control over our destiny and not be 100% subject to the market and the performance of a developer. We may have a contract with a developer, but at the end of the day, it's not completely transparent what they are doing," says Eagleston.

That does not mean, however, that developers and independent power producers (IPPs) should exit the wind business and leave it to utilities, he says. Despite the dearth of investors looking to offset their tax bills by owning part or all of a wind farm to gain access to wind's federal production tax credit (PTC), Eagleston sees both utilities and IPPs playing useful roles in the wind sector.

"We do hope to see a healthy IPP segment that can work with us to meet a substantial portion of our needs. We think that's healthy; it keeps costs lower. We want to see a competitive market continue and we have no intention of monopolising the renewables space in our control area. So it concerns us quite a bit to see the current challenges in financing wind projects," says Eagleston.

Like many other utilities, NV Energy's profits are such that it still has a large tax bill to pay, giving it a strong appetite for wind's tax credit. Eagleston is not sure tax credits could bankroll all of NV Energy's renewable energy goals, but it can help quite a bit, he says.

Nevada's green energy mandate requires that utilities source 15% of their energy from renewables by 2015. China Mountain is not likely to be fully constructed until 2011. There are currently no wind plant in Nevada.

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