GE, FPL expect boom in wind power business next year
By Bloomberg News
Monday, September 27, 2004
U.S. power companies such as FPL Energy Group Inc. that develop windmill farms will probably install a record number of turbines next year after Congress renewed the tax credit needed to make the plants cost effective.
Over a thousand new windmills, typically twenty stories high with three 40-foot blades, will crop up in fields in Oklahoma, ranches in Colorado and off the coast of Massachusetts. U.S. wind power will increase by more than the 1,687 megawatts built in 2003, said Christine Real de Azua, a spokeswoman for the American Wind Energy Association, a trade group in Washington.
``We expect '05 to be a boom year,'' Steve Zwolinski, president of GE Wind, said in an interview. Fairfield, Connecticut-based General Electric Co. bought its wind turbine business from Enron Corp. in 2002 for $328 million and last year was the second-biggest manufacturer in the world after Vestas Wind Systems A/S of Denmark. GE Wind will borrow workers and materials from other General Electric units to meet the surge in demand, he said.
Wind turbine installations will drop to about 500 megawatts this year because the tax credit lapsed, putting projects on hold for nine months. Amid inconsistent support, U.S. wind power lags behind Germany, which gets 6.5 percent of its power from wind. Reliance on natural gas for U.S. power plants has grown as production of the fuel has declined.
Rivaling Hydro
Developers such as FPL Energy, the largest U.S. producer of wind power, and AES Corp., which this month bought a stake in a wind power company, aim to complete as many wind farms as possible before the tax credit expires again in December 2005.
The credits provide producers a tax benefit of 1.8 cents per kilowatt-hour over 10 years, for a total benefit that could reach $1.16 billion, said Jaime Steve, legislative director at the American Wind Energy Association.
With an increasing number of states requiring utilities to buy renewable energy and the possibility of additional federal tax credits, wind turbines may generate 6 percent of U.S. electricity by 2020, as much as hydroelectric dams provide today.
The U.S. Congress on Sept. 23 approved $146 billion in tax cuts in a package that included the renewal of credits for producing power from wind.
California and other states have or are considering laws requiring utilities to get larger portions of their power from wind and other renewable sources. New York's governor George Pataki, backs a plan that would require utilities to have 25 percent renewable power by 2013, up from 19 percent today, most of which is hydroelectric power.
FPL Project
FPL plans to begin construction on a 106.4-megawatt wind farm in Oklahoma as soon as possible after President Bush [related, bio] signs the tax bill into law, said spokesman Steve Stengel. The project is likely to go into service early next year. The electricity will be sold to a unit of American Electric Power Co. under a 20- year contract.
``Discussions for new projects will accelerate,'' FPL's Stengel said in an interview. FPL generates up to 2,746 megawatts from wind in the U.S., enough for about 2.2 million homes.
GE Wind, which has windmill factories in Tehachapi, California and Pensacola, Florida, will make 300 megawatts of turbines this year and can quickly ramp up to 1,000 megawatts, despite damage from recent hurricanes in Florida.
``We had a little roof damage in Pensacola. We're operating normally now,'' GE Wind's Zwolinski said.
Construction delays may come from frozen ground in the Northeast this winter and difficulties delivering parts such as blades, each of which require a flatbed tractor-trailer and police escort, from factories to rural areas.
New Factory
Spain's Gamesa Corporacion Tecnologica SA, the fourth biggest turbine producer after Germany's closely held Enercon, last week said it plans to build a factory in Pennsylvania to meet the surge in demand. The company has a total of 2,000 megawatts in U.S. projects, including a recently signed 600- megawatt contract in Pennsylvania as well as projects in South Dakota, Iowa, Illinois, Minnesota and Wisconsin. Gamesa said it expects the tax credit to be extended further to 2006.
Spain, Germany
Wind energy companies expect the world market to almost double by 2005. Spain ranks third after Germany and the U.S. among the countries that create the most wind energy.
AES, a power-plant developer in 27 countries, this month entered the wind energy industry by purchasing of a stake in closely held US Wind Force, which plans to complete four farms in the Northeast next year for about 300 megawatts, said Dave Magill, director of mergers and acquisitions for Arlington, Virginia-based AES.
``We'll see a tremendous amount of activity over the next 15 months,'' Magill said in an interview. ``We're looking at other opportunities,'' to build more wind generators, both as AES projects and through partnerships, he said. |
