United States

United States

Utility leaps at low cost wind bids -- Attractive prices double order size

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Wind prices are so low in northern Iowa that a local utility has decided to double its planned purchases of new wind power. Interstate Power and Light, a subsidiary of Alliant Energy, last month awarded a contract to Clipper Windpower Inc to build a 43.5 MW project near Spirit Lake. Three days later it awarded a second contract to FPL Energy to build a similar sized wind project, this time in Hancock County. Interstate had issued a request for proposals in January for up to 15,000 MWh of renewable energy.

The utility, says Alliant's John Ruff, was "pleasantly surprised" at the cost per MWh of wind power quoted in responses the request for proposals. "These were the most competitive bids we could possibly get and we wanted to move quickly while we had those bids in hand." He says there is a very small difference in price between the two projects, but declines to say what the bid prices are.

While Clipper, based in California, is rumoured to have several wind projects in the works, its Iowa wind farm, known as the Diamond Lake project, is the first to be publicly announced -- and not by Clipper but by the power purchaser -- in the company's brief two-year history. Clipper, however, is also on the verge of announcing a 105 MW project much farther along in development, the most likely location of which seems to be in a west coast state. But company owners Jim Dehlsen and his son Brent will not discuss any project until all the pieces are nailed in place, says Clipper's development boss, Dave Olsen.

A willing buyer

That includes having a signed power purchase agreement, which Clipper is now negotiating with Alliant Energy for the power from the Diamond Lake 43.5 MW. Neither are other details settled, such as the wind turbine supplier or size of turbine, although Alliant reports Clipper will use 1.5 MW turbines.

"Our style is not to claim a lot," Olsen says. "We've won the bid and now we get to negotiate a power purchase agreement." Like most projects near the Iowa and Minnesota border, this one must also overcome local transmission constraints to get the output to market, but Olsen says Alliant is a willing buyer ready to work through the uncertainty.

Dehlsen's long history in the US wind power business began when he founded Zond in 1980. He led the company's turbine manufacturing business and developed wind projects until 1997 when Enron Corp bought the company.

FPL too

The second wind power purchase contract signed by Alliant, this time with FPL Energy, is for a project near Garner in Hancock County, Iowa. The site is next to FPL's 42 MW Cerro Gordo wind farm of NEG Micon 750 kW turbines, constructed in 1999.

While Alliant will buy the output from the new 43.5 MW, FPL's Carol Clawson says her company has power purchase agreements with other parties that total 40 MW to 50 MW more, so the project could end up being as large as 90 MW. FPL plans to use Vestas 660 turbines.

Iowa lawmakers passed legislation last year requiring utilities to set up a competitive bidding system to fulfill each company's energy needs. Interstate Power and Light has developed a $1 billion investment plan, called Power Iowa, that includes requests for proposals for new generation, energy efficiency and transmission upgrades. The January solicitation was for renewable resources only.

Through a quirk in early 1990s legislation, utilities in Iowa are not allowed to own wind farms and are limited to buying only their output. Legislators wanted to encourage small developers, particularly farmers, to develop wind projects, Ruff says. Alliant buys, but doesn't own, the output of the Cerro Gordo wind farm and the 30 MW Montfort wind farm from FPL Energy. In addition, it buys 80 MW from Storm Lake, 80 MW from Top of Iowa and 4.5 MW from the Allenton wind farm. With the two new projects, it now buys 6% of all US wind energy, says Alliant.

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