LINCOLN – The state’s largest utility has decided against adding more large-scale wind-energy projects this year as it considers raising retail rates by 11 percent.
The decision by the Nebraska Public Power District doesn’t necessarily mean tough sledding for the state’s overall goal of developing wind farms that export power to other states, officials said.
While the recession has depressed the demand for electricity, lowered the profits from selling excess energy and made it tougher to borrow money, wind developers tend to look at conditions 18 months to 24 months into the future, officials said, and prospects then appear brighter.
“We’ve seen less requests for proposals this year than last year, but it’s still not bad. Last year was crazy busy,” said Frank Costanza of TradeWind Energy, a wind-farm developer based in Lenexa, Kan. “There are still opportunities out there.”
The Nebraska Public Power District announced last week that it had rejected all 34 proposals received from private developers to build more wind farms.
The Columbus, Neb.-based utility asked developers this spring to submit proposals on a site near Madison, Neb., and any other sites the developers had investigated.
The decision comes as the demand for wind energy has softened nationwide because of the economy and as prospects have dimmed for a national renewable energy standard, which would mandate that utilities add more wind power.
NPPD spokesman Mark Becker said it doesn’t make economic sense for the utility to invest in more wind power right now.
The recession has cut the demand to sell power to other utilities, and the price being paid for that excess power – a revenue source for NPPD – has fallen by 40 percent over the past two years, Becker said. In-state demand also has risen less than expected because of lower need by irrigators and ethanol plants, he said.
Also factoring into the decision: NPPD is looking at a $30 million expense next year to shut down and service its Brownville Nuclear Station and Gerald Gentleman coal-fired power plant, and its debt-service payments have risen in recent years.
NPPD will consider a retail rate increase of 11.4 percent later this year.
Despite all that, Becker said NPPD remains on track to achieve its internal goal of generating 10 percent of its power by renewable sources such as wind by 2020.
“We haven’t said we’re not going to do this, but decided ‘Let’s step back a little while,’” he said.
The utility now generates about 1.9 percent of its energy from wind power. By the end of 2012, that figure is expected to rise to 5 percent, Becker said. By then, three wind farms from which NPPD is buying power – Crofton Hills near Crofton, Laredo Ridge near Petersburg and another farm near Broken Bow – will be operating.
Ron Asche, NPPD’s president and CEO, said the utility is continuing to promote the Madison site, but as a wind farm for exporting power to other states.
State Sen. Chris Langemeier of Schuyler, a major promoter of wind energy development in the Nebraska Legislature, said NPPD’s decision to pull back might actually help develop the Madison site because more transmission capability will be available for exporters.
Wind development in Nebraska has lagged behind other states – even though Nebraska’s wind energy potential is among the top five in the United States – because power is cheap here and because of the state’s unique status as the only public power state in the country.
The Legislature passed a bill this spring to allow private companies to build large-scale wind farms as long as the power was being exported to other states and didn’t increase costs for Nebraska ratepayers.
So far, that law has inspired one company, Invenergy, to apply to build a $448 million wind farm near Elgin, in northeast Nebraska. But company officials said in July they had not obtained any commitments to buy power from the wind farm, which is a condition to build an export facility.
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