September 18, 2007
Texas
Texas
AES Corp said on Tuesday it will add 170 megawatts of wind power at its Buffalo Gap wind farm near Abilene, Texas, making it the third-largest wind facility in the United States.
The power company also said it signed a 7-year purchase power agreement with Direct Energy, a unit of Centrica Plc, to sell all the electricity generated from the expansion at its Buffalo Gap 3 facility. Financial terms of the expansion and sales contract were not disclosed.
About 1,000 megawatts of AES’s U.S. generating capacity of 13,000 MW comes from wind.
The new expansion is part of a wind-farm gold rush fueled by environmental concerns. So far, 26 states have adopted standards requiring utilities to use renewable power sources, and federal legislation appears likely.
AES currently has 4,000 megawatts of wind power in its development pipeline, including the Buffalo Gap project.
“Our ultimate goal is to establish a presence in these markets and build-out (development) projects,” said Ned Hall, head of its Renewable Generation unit, adding that the company preferred to develop its own projects rather than buy ones built by others.
Acquisitions still remain attractive in the wind energy sector, and AES said it will buy as well as develop projects. AES has purchased 186 megawatts of wind power so far this year, while bringing 233 megawatts online through its own development.
“We are still satisfied with the returns from being an early entrant in the market,” said Hall. “If you get to the markets early, you can still pay a premium and get a decent return.”
A shortage of wind turbines has not dampened AES’ growth in the sector.
“We’ve been able to get machines for every project we’ve developed so far,” said Hall.
AES has relationships with the major suppliers, including General Electric Co (GE.N: Quote, Profile , Research), Siemens AG (SIEGn.DE: Quote, Profile , Research), and Vestas Wind Systems AS (VWS.CO: Quote, Profile , Research) of Denmark. It secured 74 wind turbine generators from Siemens for Buffalo Gap.
Joshua Magee, senior analyst at Emerging Energy Research, said AES is a prime example of a company that has significant wind development, financing capabilities, energy experience and the size to grow their wind business.
The global turbine supply crunch, which has boosted prices about 40 percent in three years, should ease in 2009, Magee said, as manufacturers add more turbines production capacity.
But until turbines become more plentiful, the shortage will drive consolidation in the industry.
“The challenge to small developers is securing machines from the supplier … people who have difficulty getting machines will sell their projects to people who have machines,” Hall said.
Smaller developers often have an advantage in the early phases of wind farm development because the projects require a great amount of land, sometimes up to 10,000 acres for a 100-megawatt project.
Local developers who have relationships with landowners and communities can start projects then later join up with a larger developer with the financial muscle to buy machines and secure financing, said Hall.
“My view is that there’s always a role for the smaller developers because it is so land intensive and so locally intensive in terms of permitting,” Hall said.
Sep 18, 2007
By Lisa Lee
URL to article: https://www.wind-watch.org/news/2007/09/18/aes-plans-expansion-at-its-texas-wind-farm/