The wind farm purchase comes more than 18 months after the fall of Kenetech Windpower. Approval to buy the Altamont Pass plant was granted to ESI Energy Inc by a US Bankruptcy Court judge on December 10. Also involved are NEG Micon, which is investing $1.6 million in the deal, and EcoWind Ltd, owned by Nichimen Corp of Japan, a large trading company. EcoWind is based at Nichimen's London offices.
ESI, part of the utility Florida Power & Light, was given the go-ahead to buy the Kenetech wind plant and an operating, maintenance and transmission company in the Altamont Pass for almost $36 million by Judge Leslie Tchaikovsky at a packed court hearing in Oakland, California. NEG Micon's public announcement of the deal, however, is described as "premature" by ESI. The news made headlines in the Danish press within hours of the court hearing. "Nothing is final," says ESI's Stacey Shaw. "We have no contractual agreement with anyone. The deal has not been inked."
Nonetheless, ESI is expected to repower the project in a joint venture with NEG Micon. Over the next two years, the companies intend to replace more than 750 wind turbines with about 100, 750 kW NEG Micon units. The site, to the east of San Francisco, is valuable because it has a known wind resource and wind farm infrastructure. It consists of 1500 wind turbines, most of them the old Kenetech Model 56-100. "I look forward to the rekindling of hope for the repowering of the oldest and most bruised wind resource area in the world," comments Randall Tinkerman of Wind Power Management, who has watched the Kenetech bankruptcy proceedings closely.
The purchase comes on the eve of the deregulation of California's electricity market. Over the next four years, the fiercest battle for market share will be by using "green power" to attract residential customers. Only after that, when some of the costs of the transition have been absorbed, will the price of electricity become the main selling point.
According to the purchase proposal approved by the court, the sale of the wind plant to ESI is to close by January 31. The cash price of $36 million includes more than $2 million in reserves for working capital, debt service, retrofit, and for non-repairable and missing wind turbines.
The interest of NEG Micon and Nichimen was so strong, both parties were also backing a competing bid submitted by Energy Unlimited (EUI). The winning bid even had to be $3 million higher than EUI's original bid. "The investment is supporting the strategy of NEG Micon on the North American continent, where the re-powering of older wind power plants with modern technology is a significant market for sale of wind turbine generators in the years to come," stated NEG Micon's president, Jens-Erik Kristensen, in an announcement directed at the Copenhagen stock exchange. "Operation of wind power plants and its related transmission of energy will be a growing business area in the future."
ESI has already made aggressive steps into the US wind market in recent months in an apparent bid to compete with Enron Corp of Houston as America's electricity markets are becoming deregulated. It is developing a 24.9 MW wind plant in Oregon and may also have won a competitive bid in Texas to develop a large wind plant, perhaps as much as 75 MW (Windpower Monthly, December 1997).