FPL Group Cuts Wind Power Plans: Sign of a Larger Trend?

By Jennifer Kho

FPL Group (FPL), which owns utility Florida Power and Light Co., said Monday it would build less wind-power capacity than previously expected as part of a 25 percent cut in its planned 2009 capital expenditures.

Citing "the slowing economy," the company said it now plans to spend $5.3 billion on capital expenditures. Part of that budget will go toward adding 1.1 gigawatt of new wind-power generation, which is a drop from the 1.5 gigawatts previously expected.

FPL is still on track to install a total of 1.3 gigawatts of new wind capacity this year, Reuters reported.

The announcement comes at a time of economic uncertainty, when companies are struggling to create forecasts and are wondering whether investment in greentech will dip (see Funding Roundup: How Poor Do Investors Feel? and Renewable Tax-Credit Investment Heading Up or Down?).

Gamesa (GCTAF.PK), a Spanish wind-turbine manufacturer, last week said it had temporarily halted production and would wait for customers to confirm their purchase plans before providing sales or production guidance for next year. Meanwhile, Solaria (SEYMF.PK) went ahead and built its solar parks after its customers backed out and now hopes it will be able to find new buyers for the projects (see Solaria Has a Solar Park Deal for You).

And a number of executives, including BP (BP) CEO Reyad Fezzani, have said that financing for renewable-energy projects has dried up – although some hope that funding from utilities could help refresh the market (see Energy Financing Gone With the Wind and Renewable Tax-Credit Investment Heading Up or Down?).

Tyler Tringas, a wind analyst at New Energy Finance, said clients have been calling to ask if this FPL news is the forerunner of a major decrease in wind.

While future U.S. outlooks are important, the news isn't a major decrease in terms of megawatts, he said, adding that he has been reassuring clients that the news isn't a sign of a trend.

"I don't see that this is going to be indicative of all developers; I don't think we're going to see a 25 percent cut from everyone," he said. "I don't think this is a forerunner of doom for installations in the U.S. There are quite a number of other players willing to step up and take the place of FPL."

Companies such as MidAmerican Energy Co. in Iowa, Westar Energy in Kansas and the California utilities are becoming more active in wind, for example.

FPL is trying to show it is being cautious, Tringas said, to counterbalance the fact that it had a "terrible" third quarter - the worst in 35 years - in terms of its wind resource.

"Honestly, I would have been surprised if the biggest player in the industry had just kept trucking along," he said. "FPL has huge exposure to wind, obviously, so [the fact that] they would try to cut that back is not really surprising. We might be seeing more different players fielding the bulk of that growth [in wind]."

Ron Pernick, a principal with Clean Edge, said that while he expects to see more of this in the short term, he is still bullish on clean energy in the long term.

"Companies are cutting investments across the board, so it's not just about renewables," he said. "I think there's no doubt that there's significant uncertainty in the marketplace, that credit is tight and that that's impacting the decision-making processes of quite a number of organizations. Renewables don't exist in a vacuum and aren't separated from the vagaries of the market."

The markets don't have clarity, he said, adding that he believes they will be on firmer ground after the election next week. 

Still, while there may be a tightening of capital for these projects, the projects in the field have not been decimated in any way, he added. 

"You have a clear investment and [return based on] the cost of electricity," he said. "Mid- and long-term, clean energy has a number of very favorable foundations that in fact has [prompted] more people to start looking at these opportunities," he said.

The FPL news came out as part of the company's third-quarter earnings, which missed expectations.

The company's net income grew 45.2 percent to $774 million, or $1.92 per share, from $533 million, or $1.33 per share, in the year-ago quarter. Excluding one-time items, the per-share earnings came to $1.25 per share. Analysts expected $1.35 per share, according to Bloomberg.

Shares of the company fell 5.8 percent to $40.68 per share Monday.

Comments

[wheels14:]

It is hard to build wind farms, or anything else, when you can't get financing.

2008 Oct 28 11:43 AM

[NOWHEREMAN:]

Wow, someone is finally looking through the window at the landscape.

WE NEED CHANGE. We need to vote for Barak Hussein Obama. He will change the landscape.

2008 Oct 29 09:28 AM

[Road Runner:]

Big projects can't get financing because the big banks are hoarding money so they can buy other weaker banks. Talk about selfishness and greed. These jerks don't give a damn about anybody but themselves.

2008 Oct 29 10:15 AM

[HALFTRACK:]

YA :BARRAK OBAMA SURE WILL CHANGE THE ENTIRE USA SYSTEM WITH HIS GLOBAL POVERTY ACT BILL S-2433 ITWILL COST ALL CITIZENS ABOUT $2500.00 TO IMPLIMENT THIS MONSTROSITY AND IT FORCES THE USA TO ADOPT THE UN MILLENNIUM DEVELOPMENT GOAL WHICH IS A LITTLE MORE THAN A FRONTAL ASSAULT ON AMERICAN SOVEREIGNTY: ALLONG WITH THIS $845 BILLION PKG., ITS PROVISIONS INCLUDE "CONSOLIDATING ALL INTERNATIONAL AGENCIES UNDER THE UN REGULATION BY THE UN OF ALL CORPORATE ENVIRONMENTAL ISSUES ! LICENSE FEES CHARGED TO AMERICAN BUSINESSES BY THE UN TO USE AIR ,WATER,AND NATURAL RESOURCES,A RESTRUCTURING THAT WOULD GIVE UN APPROVED NON GOVERNMENTAL ORGANIZATIONS HUGE INFLUENCE: IT ALSO AUTHORIZES A STANDING ARMY AND REGISTRATION OF ALL ARMS "AS THIS HAS ALREADY PASSED THE HOUSE " AS PER THOMAS SCHATZ PRESIDENT CCAGW !!!!!!!

2008 Oct 29 10:38 AM

[Road Runner:]

ted, Have you taken your psychotic medicine today?

2008 Oct 29 11:08 AM

[Paul Killinger:]

While you guys are laughing, please recall you heard it from Ted first. Incidentally, this also coincides nicely with the "End of Days" predicted by the Mayan calendar scheduled to take place in Dec. 2012.

2008 Oct 29 11:40 AM

[Paul Killinger:]

It is fair to say you have NO IDEA what we're in for.

2008 Oct 29 11:42 AM

[Paul Killinger:]

You'll be begging to get ol' George (or even Jimmy Carter) back before it's over.

2008 Oct 29 11:49 AM

[TXDESERTFOX:]

DFDP Newsletter XXV, No. 5 reports: currently 94 GW of windpower installed operates at 20% capacity and because of unreliability, cannot replace a single watt of permanent generating capacity. Approximately 45 144-ft turbine blades have cracked in the Midwest's violent changes in wind direction (WSJ 4/8/08).

2008 Oct 29 12:15 PM

[dunk01:]

Let's hear more about wind rather than just hear wind.

2008 Oct 29 12:26 PM

[fran:]

financing is not the issue for FPL.. listen to or read recent two earnings calls.

2008 Oct 29 04:02 PM

[Joshua Lacey:]

This past year the exorbitant cost of fuel has seriously damaged our economy.From filling up the car to paying more for every consumer product whose cost of production and shipping was passed on to us there was little left over.We spend less because we have less, this results in even more job losses. OPEC has us over a barrel literally.WE reduce our use cut production by 1.5 million barrels a day & will cut more they say. .Our country needs to invest in reducing our dependence on foreign oil. The 168 Billion they paid out in the last stimulus pkg that did nothing at all for our economy would have gone a long way toward getting us started on the road to energy impendence. Utilizing renewable energy sources would not only provide clean low cost fuel it would create an estimated 1million plus jobs. I just read Jeff Wilson’s new book The Manhattan Project of 2009. I highly recommend this book for anyone interested in seeing America become more energy independent.

2008 Oct 29 07:50 PM

[satch63:]

Wind Power is a great concept but as noted it needs a full time back up system.

As price of fossil fuel goes down alternative energy goes away with the wind. Anyone promising to make us fossil fuel independent in any numbe rof years is smoking something!

2008 Oct 29 07:52 PM

[notsosmart:]

beans,beans,everybody eat beans.

2008 Oct 29 08:55 PM