FPL enters the deal with a wind portfolio at 3200 MW -- 10% of its overall generation. Constellation's entire mix of renewables is 4.6%. None of it wind. But, at least in the short run, few if any changes for FPL's wind business are expected, according to the would-be company and industry observers alike.
"We've said publicly that in the next two years we expect to add 1250 to 1500 MW of wind to our portfolio," says FPL's Steve Stengel. "The announced merger doesn't change that at all. We still believe very strongly in wind and it makes a lot of sense for our shareholders and for our customers. We've got a very good pipeline of wind projects and we're moving forward." Stengel says senior vice president Mike O'Sullivan also remains in charge of the wind business.
The new company will keep the Constellation Energy name and with a combined 45,000 MW of generation along the East Coast will become the largest electricity producer in the most energy-thirsty of countries.
"Wind power is an area of distinction for FPL," says Godfrey Chua of Emerging Energy Research (EER), a Massachusetts-based research and advisory company. "It is hard to envision the merger resulting in a pullback."
Attractive for wind
Randy Swisher of the American Wind Energy Association also sees no lessening of overall intent. "Constellation has flirted with the wind industry and as a combination they'll be leading players in the market," Swisher says. "It's very, very interesting." Swisher even sees potential for the merger to provide at least one distinct advantage for the industry at large. "One positive aspect is that the market for wind is improved by having a relatively large market to sell into," he says. "If you have thousands of small utilities, there's a limited ability to absorb wind energy. But large concerns have that ability. A market with larger players and larger control areas is more attractive to the wind industry."
Swisher does not fear the power of a giant in a wind business constrained by a shortage of turbines -- demand for them is exceeding supply. "The shortage that we're experiencing is unfortunate but the market will respond," Swisher says. "To control prices you have to be in a monopoly buyer position. And with more and more players getting involved, I don't see that happening. There's too much competition. Somebody like FPL has some leverage, but not control."
Chua concurs. "I don't envision the merger having much of an impact in terms of wind turbine prices or supply," he says. "FPL is the largest buyer of wind turbines in North America -- it already has strong relationships and holds significant influence over suppliers."
The combined company will maintain dual headquarters in Juno Beach, Florida, and Baltimore, Maryland. The merger is subject to regulatory hurdles that could take a year or more to complete.