Alternative energy has always gotten lots of buzz lately, and with the climate debate ongoing in Congress and in town hall meetings, and some form of renewable energy legislation possible, it is no wonder that wind farm issues are getting plenty of press attention. Here is a synopsis of some wind farm stories that are in the news.First, the approval of a wind farm in Minnesota has drawn the ire of two electric consumer groups who have sued the Wisconsin regulators who approved the farm for allegedly following the wrong approval process.
The Wisconsin Power & Light received approval in July from the Public Service Commission to construct a $497 million wind farm in Freeborn County, Minnesota. The Associated Press reports that the farm could cost customers $9 in additional charges to their electric bill per month. On Friday, August 28, 2009 the Wisconsin Industrial Energy Group, along with Citizens Utility Board filed suit against the Public Service Commission (PSC) in Madison, Wisconsin. The suit alleges PSC “performed a much less stringent review than state law requires.” To read the Associated Press story in the Star Tribune click here.
In other news, Kevin Kingsbury of the Wall Street Journal reports that Duke Energy is looking to construct it ninth wind farm in the United States. The farm would be its fourth in Wyoming. The project is called “Top of the World” and will cover 17,000 acres of private and public land held by Duke Energy. The goal is for the farm to be operational by 2011. Additionally, Duke Energy would like to see enough electricity produced that could cover the needs of 50,000 to 60,000 homes annually.
PacifiCorp would purchase the electricity generated by the farms, as well as “associated renewable energy credits as part of a 20-year power purchase agreement.” 66 turbines will come from General Electric, Co., but this only represents half the turbines needed for the project. Duke Energy is engaged in negotiations for the remaining turbines. Duke Energy delivers electricity to “approximately 4 million U.S. customers.” To read the Kingsbury story click here.
As the Wall Street Journal’s Russell Gold reports, investors are looking to wind farm technology for opportunities as well. Both Morgan Stanley and Citigroup Inc. have decided to take advantage of a new, federal program that pays cash grants to help offset the costs of renewable energy investments. To that end, both “have invested $100 million each to finance separate wind farms this month[.]”
Gold reports that this is likely not the end in investment activity in the alternative energy arena:
Bankers say this is the beginning of an active pipeline of new wind-farm financing, as well as investment in large solar installations and geothermal facilities. Project developers and Wall Street appear to be viewing the federal cash grant program as such a good deal, industry experts say, it may grow much larger than its Washington creators expected.Under its current set-up, the program provides a cash rebate for 30% of “the cost of building a renewable-energy facility.” The funding is awarded 60 days following application approval. To help offset any taxes, the investors can use “valuable accelerated depreciation deductions[.]” The program was part of the administration's American Recovery and Reinvestment Act and runs through the end of 2010. During that period the Department of Energy and the Department of the Treasury estimate $3 billion will be spent on the program.
Still, the program has its detractors. ‘“We are concerned that this may evolve into a cash-for-clunkers version 2.0,’ says a spokesman for Rep. Darrell Issa.” Yet, there is no spending cap for the renewable energy program, unlike the cash-for-clunkers program, and it could be a boon for investors. “Several bankers interviewed said they expected deals to provide an annual return of anywhere from 9% to 15%.” Since the wind industry is viewed as “more mature” many of the projects will go towards investments in this technology.
With the stimulus bill passed and future legislation coming that will deal with renewable energy sources, it appears as though the wind farm industry can expect more headlines. To read the Gold article in the Wall Street Journal click here.
Posted: 08/31/09
