When you’re talking wind, you’re talking big money.
The Texas Public Utilities Commission issued an interim order on renewable energy zones Tuesday, and it included summaries of how much developers have invested in Panhandle projects.
The reports are not completely up to date, and some developers had the PUC seal their reports to protect their business dealings from competitors. However, spending by companies that gave a dollar figure totaled $13.4 million for development in the past or near future with millions more dollars vaguely reported.
Airtricity reported the most spending at $8 million. The German energy company E.ON announced Wednesday it plans to buy the North American spinoff of the Ireland-based Airtricity for $1.4 billion.
But the development spending looks like pocket change when compared to the $4.2 billion actually reported as what the companies plan to spend to build the wind farms.
Again, several sidestepped making their spending public by filing sealed commitment reports or omitting any numbers, especially the ones with the largest plans like Shell WindEnergy, Babcock & Brown and Mesa Power.
They are not required to reveal those details, said PUC spokesman Terry Hadley.
There are financial reports by 14 companies, but five give no indication of what they plan to spend. Some of the financial commitment reports go halfway, like Eurus Energy America stating it has a “financing facility letter” for $400 million from Mizuho Corporate Bank or Airtricity saying it has “over $2 billion projected to be expended under certain conditions.”
The PUC’s interim order also had provisions that could impact those financial plans for companies like Shell and Mesa. The order puts a cap on the size of wind projects by each developer at 1,000 megawatts, at least for the purposes of a study of transmission options.
“That’s not a hard cap,” Hadley said.
Shell plans a 3,000-megawatt project and Mesa is shooting for 4,000 megawatts.
A report by the Electric Reliability Council of Texas says there will have to be some controls on the size of projects because transmission lines can only move so much power. And where lines from the wind farms in West Texas meet the lines in ERCOT, which oversees the electric grid that covers most of Texas, too much electrical traffic can cause system failures because of congestion.
But Mesa is “cautiously optimistic” the limit won’t apply to it, said vice president Mike Boswell.
Mesa’s thinking also applies to a requirement in the interim order that developers in some areas must get federal regulators to approve them to sell power to ERCOT utilities. That’s because the wind farms of developers like Mesa and Airtricity would be in the Southwest Power Pool, a different grid that connects several states. ERCOT only covers the bulk of Texas. Federal officials typically have jurisdiction over transmission across state lines or from one grid to another by utilities that get their money for transmission lines from ratepayers.
“We don’t believe, and our attorneys don’t believe, that will necessarily apply to Mesa,” Boswell said. “We’re planning on using a private, non-rate-based transmission line. Everybody else is thinking about putting in and transmitting on a CREZ-blessed line that would be paid for by ratepayers in ERCOT.”
A CREZ is a Competitive Renewable Energy Zone, created by the PUC to speed development of wind energy.
The interim order also consolidated CREZs. There are now two in the Panhandle. CREZ 2A stretches from the New Mexico border at Deaf Smith and Oldham counties toward the east to include multiple counties, including all of Briscoe County.
CREZ 4 goes from the central Panhandle in northern Carson County northeast to Hemphill County.
By Kevin Welch
7 October 2007
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