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United States

Firm overcomes legislative mess - Tehachapi plant to begin construction

California may be in the doldrums following the failed push to improve its green energy law, but one company is still doing well.

This Terra Gen project is 12 miles SSE of Tehachapi
This Terra Gen project is 12 miles SSE of Tehachapi

Wind developer Terra-Gen Power, an affiliate of ArcLight Capital Partners, starts construction this quarter on phase one of its massive 1.5GW Alta wind portfolio in the Tehachapi Pass, north of Los Angeles.

Turbines, towers and blades have been in storage near the site since last autumn, awaiting finalisation of permits to allow construction to begin on the first 150MW phase using GE units. Ed Taylor, the project manager for Terra-Gen, says the company plans to build multiple separate phases over the coming years to feed into the project's eventual capacity of 1.5GW. California utility Southern California Edison signed a power purchase agreement (PPA) for the full 1.5GW. Several smaller PPAs will be tied to the overall master agreement, says Taylor.

Terra-Gen bought the PPA from the Allco Finance Group when the Australia-based company sought credit in 2008.

The 1.5GW portfolio is in one of the US's best wind sites and the largest single PPA for wind. "With that in place it's pretty easy to raise capital," says Taylor. "It's not easy anytime these days, but with that we have an asset that can be put into the portfolio." Last year, Terra-Gen secured a $115 million loan from a syndication of banks to reach the $140 million pre-construction cost of the first 100 turbines.

Taylor is confident that the full project will be built because major transmission upgrades designed to unlock vast new potential wind power from the mountain pass are nearing completion in the region. The company also has priority positions in the state's transmission interconnection queue system.

Not all other wind developers in California will be so lucky. An effort last autumn to raise the law requiring utilities to source power from renewables from 20% to 33% was vetoed by Governor Arnold Schwarzenegger (Windpower Monthly, December 2009) because of arguments over using out-of-state renewables.

Wind developers fear that without this increase there will be few PPAs awarded by utilities to support new wind projects. "We're very fortunate that we've got ours in place that will take us through 2012, 2013," says Taylor, but he remains upbeat about business for other developers. "There are a lot of developers out there that will find a way to get this done and there's just too big an opportunity for wind generation for people to give up."

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