United States

United States

UTILITY SELECTS UNTRIED TECHNOLOGY FOR BIGGEST CONTRACT EVER

Northern States Power (NSP), utility of Minnesota, has selected Zond Systems Inc of California to supply 100 MW of wind energy. This is the largest single wind contract anywhere. The choice is surprising because Zond's bid was with an untried wind turbine, an 800 kW machine. Reaction from the industry questions the selection criteria for the bids and the overall assumption is that cost of energy has been the most heavily-weighted criterion. Zond is reluctant to reveal details while the project is still being negotiated with NSP.

An American utility, Northern States Power (NSP) of Minnesota, has selected Zond Systems Inc of California to supply 100 MW of wind energy. It is the largest single wind contract anywhere. Zond, based in Tehachapi, unexpectedly beat four other US finalists -- Kenetech Corp, New World Power Corp, FloWind and SeaWest. The selection was by an independent bid evaluator in Massachusetts.

Startling to observers is that Zond bid with an as yet untried wind turbine, an 800 kW machine. Kenetech, which supplied 25 MW for Phase 1 of NSP's wind development programme, reportedly also bid with a so-called "paper machine." The other turbines proposed by finalists were machines from wind companies Enercon and Tacke from Germany and FloWind's own AWT model.

Construction is to begin this autumn on Buffalo Ridge in the southwest of the state. As Phase II of the utility's 425 MW of wind by 2002, Zond's share should be on line before November 1, 1996, says NSP. The five finalists had been selected from a total of 17 initial proposals. "We really don't know why we were chosen -- we don't know if we were the cheapest or what," says Zond's Ken Karas. "But it's the biggest single bid in the wind industry and we intend to build a showcase project."

Reaction to the result was rapid within the industry. Wind sources say the choice for such a sizeable plant is a blow to Kenetech, as it is the one company that has already built wind for NSP. "It's one project by one company and it's not Kenetech," comments one observer. Some also wonder if NSP might have shied away from New World, which was seen to have a strong bid, because of the copyright infringement lawsuit filed against it and Enercon by Kenetech.

NSP's Glynis Hinschberger comments that a number of criteria were considered -- including price, production and financing -- but she does not say what was decisive for the Zond bid. Evaluation of bids, though, included specifications regarding the ability of the machine to operate. Explaining how this could be achieved for "paper machines" she says another machine's performance could be examined: "The [selected] design must be close enough to meet that ability to perform." Two of Zond's new Z-40 500 kW turbine are currently operating.

Other reactions from industry members ranged from describing NSP's decision as bold to saying it is foolhardy and must be overly based upon cost of energy alone. Wind turbine reliability, indeed, only made up a small proportion of the evaluation rating used by NSP while cost of energy was the most heavily-weighted criterion.

The Minnesota site has an average wind speed of 16.1 mph. Zond says it can deliver power for three cents a kilowatt hour averaged over the 30 year term of the power purchase agreement, according to NSP. A tax recently enacted by the Minnesota legislature, assessing property taxes on owners of wind farms, is included in Zond's price, says NSP.

Zond's Bob Gates deflects a question about the new Zond turbine by saying that Zond has only been chosen to negotiate a power purchase agreement with NSP. "It is our view that there are challenges ahead," he says. "We basically think it's premature to talk about details of the project until we've finished negotiating the power purchase agreement with NSP."

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