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Texas hurricane, more trouble for Kenetech

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Winds of hurricane force hit Kenetech's new $40 million Texas project last month, forcing the plant off-line for almost a week. Four towers will have to be replaced among the 20 wind turbines that were left with "some damage" in the January 17 storm, says Bill McCann of the Lower Colorado River Authority (LCRA), which buys most of the power from the plant.

Towers were knocked over in two cases -- catastrophic failures -- while the other two to be replaced were buckled, he said on January 26. Left undamaged, however, were the substation, transmission lines, electrical distribution and 70% of the turbines. The utility had just received a damage report from Kenetech, eight days after winds of 100-130 mph with gusts peaking at 163.5 mph swept through Guadaloupe Pass. The plant was apparently coming on line slowly a week afterwards, producing at first 1 MW then 3 MW of power in its first two days of operation following the winter winds.

LCRA's official reaction seems to be sympathetic to the damage. "This is a wind park that took the worst Mother Nature had to offer and it's making electricity," said McCann afterwards. "I don't think you could say that of a coal plant -- that it would be making electricity a week afterwards." Others in the industry seemed somewhat sympathetic too, although some raised questions about the wisdom of installing projects in areas of extreme winds. Guadalupe Pass is notorious for high winds, although it is not clear that such high gusts have been measured before. Kenetech, which has been buffeted by widespread technical and financial troubles in recent months, afterwards seemed to be keeping a low profile. Kenetech CEO Dick Saunders was failed to respond to requests for comment.

Others saw the event as further proof that global warming is an increasing problem -- and that clean power is needed more than ever. "We're getting all these global climate events and people are getting real worried," says Michael Osborne of the Texas Renewable Energy Industries Association. "It was a monster wind, a monster wind." Roofs were ripped off buildings in a wide swathe from Fort Worth, near Dallas, in central Texas to the area just north of the wind project in west Texas.

At a second wind plant in the region developed by Zond Systems, winds of 117 mph were clocked, according to Zond's Hap Boyd. The Zond wind farm is east of Alpine near the Mexico border and not that far from the Kenetech site. Average winds were probably 60-70 mph that day, he says. Even so, no damage was reported at the Zond project.

Kenetech's 112-turbine project, in the Delaware Mountains on top of the mile-high pass on Six Bar Ranch near the Guadalupe Mountains National Park, was inaugurated last autumn. It was financed by LG&E Energy Corp and Quixx Corp and managed by Kenetech and the two investors. Almost exactly two years ago, LCRA and Kenetech announced an agreement to develop 250 MW of wind in Texas.

Survival strategy

In California, Kenetech's rationalisation of its business continues. Kenetech's December lay-offs totalled 193, confirms Richard Saunders, according to local newspaper reports. He adds that 140 of them were in Livermore, 31 in San Francisco and the remainder elsewhere. The company had already laid off 115 people, or 12% of its 925 employees in September.

One former employee, a test technician, told the Tri-Valley Herald in mid December that he was given only a week's severance pay in the pre-Xmas layoffs as he had worked there less than two years. Geoff Wik also told the local paper that employees were offered one week's severance pay for every year worked.

Meanwhile the troubled wind company is still pursuing attempts to get a piece of the wind development in Minnesota. Kenetech is now formally appealing in court the decision announced last June by Northern States Power (NSP), a Minneapolis-based utility, to have Zond Systems build the next 100 MW of wind development on Buffalo Ridge. On January 2, Kenetech formally filed a lawsuit challenging the Minnesota Environmental Quality Board's approval the Phase II of the Buffalo Ridge development. Kenetech contends that its property and business rights are being infringed by the upcoming installation of Z-46 turbines. Kenetech questions the integrity of the Zond machine and NSP's rights -- in an increasingly unregulated market -- to use eminent domain to obtain wind rights for the project when, in some cases, those rights are held by Kenetech. Kenetech argues that its own attempts to build a wind plant are rendered meaningless and that NSP gets a special benefit. Observers of the debacle say it could delay the next phase of development by as much as nine months.

Brighter abroad

The news is brighter for Kenetech overseas In December the Inter-American Development Bank's (IDB) board approved $18.7 million in financing for a $26 million wind project in Costa Rica. The 20 MW wind farm is being developed by Merrill International of Massachusetts and will be operated by Kenetech Corp, which will also supply the wind turbines. The project would be the first wind plant on a commercial scale in Latin America. The IDB loan has not yet been negotiated nor disbursed, so the deal is not yet final, the bank's project director John Binkley told Dow Jones. The remaining $7.3 million would come in equity from project owner Plantas Eolicas SA, owned 65% by Charter Oak Energy, a unit of Northeast Utilities, and 35% by Grupo Zeta, a Costa Rican company.

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