Edison to Buy Power From Largest U.S. Wind Project
By Greg Chang and Christopher Martin
Dec. 21 (Bloomberg) -- Edison International's Southern California Edison unit, California's second-biggest electric utility, agreed to buy the power produced by a 50-square-mile wind farm, the largest yet planned in the U.S.
Edison will buy 1,500 megawatts of electricity for 20 years from a facility planned by Australia's Allco Finance Group Ltd., the company said in a statement. Wind turbines today cost about $1 million per megawatt, giving the project a potential price tag of $1.5 billion. The companies didn't say how much the wind farm will cost. The first turbines will probably be ready by 2010.
"This is really a monster," said Stuart Solsky, a partner with the New York-based law firm Baker Botts LP, which advises companies on wind power project development and financing. "I have seen projects of 200 or 300 megawatts, and they are considered to be huge."
Wind power is gaining in popularity among utilities as the most cost-competitive form of renewable energy. Wind power developers will install at least 2,700 megawatts of wind turbines this year, setting a record, according to the American Wind Energy Association, a trade group based in Washington.
The facility, to be built in Tehachapi, a rural region northeast of Los Angeles where there have been wind turbines since the 1980s, would produce more than twice as much electricity as the biggest U.S. wind farm today, Rosemead, California-based Edison said. It would provide enough power to serve almost a million homes.
Allco, based in Sydney, is a manager of ships, property and aircraft with total investments of A$1.2 billion as of June 30. the company said it will partner with Oak Creek Energy Systems Inc. to develop wind power facilities in the Tehachapi region.
It expects to build more than 2,500 megawatts in the area, with projects scheduled to start operating between 2007 and 2012.
State, Federal Support
Utilities in California and about two dozen other states are subject to rules requiring them to boost supplies of clean energy such as wind power to curb pollution and fight global warming. Those so-called renewable portfolio standards, along with a federal tax credit and rising costs for power plants that burn coal, gas or oil, have led to a boom in wind power.
Restoration of a federal tax credit that had lapsed in 2004 helped contribute to a surge in construction of wind power facilities in the past two years. Turbine manufacturers report that they have a backlog of orders.
General Electric Co.'s wind turbine unit, the largest U.S. maker of such equipment, has sold all the turbines it can make through the end of next year, the unit's manager Robert Gleitz, said in September.
Southern California Edison said the agreement would more than double the amount of wind power it provides. The supply agreement requires the approval of the California Public Utilities Commission, as does a $1.8 billion transmission line that would be needed to carry the power to customers.
FPL Group Inc.'s 735-megawatt Horse Hollow project near Abilene, Texas, is the nation's biggest wind facility.
The wind power agreement was announced after exchanges closed. Shares of Edison rose 7 cents to $45.87 in composite trading today on the New York Stock Exchange.
To contact the reporter on this story: Greg Chang in San Francisco at gchang1@bloomberg.net