Western Wind Energy Powers California

Wind is not only the cleanest source of energy available to humanity, it is also the world’s fastest growing source of electrical power. But the United States has been slow to adopt. A Canadian company is changing that, though – one wind farm at a time.

Western Wind Energy Corp (WNDEF.PK) is North America’s largest publicly traded pure wind energy producer, currently providing 34 megawatts of wind turbine-generated electricity to the California electrical grid. Right now, it is the only publicly traded company in North America deriving its income exclusively from the sale of electricity generated from wind power.

With the announcement on February 14^th of the successful acquisition of a 100 MW wind and solar energy site near Barstow, California, Western Wind has an additional 1,300 MW in its pipeline of expansion sites throughout the state.

The company now has over $1 billion of power sales agreements totaling 155 megawatts from the sale of wind energy electrical generation to two separate utilities.

In the United States during 2007, 5,244 megawatts of generating power was installed by the wind energy industry, breaking all previous records and growing the U.S. national wind generating capacity by 45%.

The new wind projects account for about 30 percent of the entire new power-producing capacity added nationally in 2007, and will power the equivalent of 1.5 million American households annually.

American wind farms will generate an estimated 48 billion kilowatt-hours of wind energy in 2008, just over one percent of U.S. electricity supply, powering the equivalent of over 4.5 million homes.

California is, as might be expected, a leader among states for installed megawatts of wind generated electricity with 2,439 MW of installed capacity, second only to Texas.

Nancy Rader, executive director of the California Wind Energy Association said, “I think that wind could realistically provide 20% of the state’s electricity needs 13 years from now – up from less than 2% today, which would be about 20,000 MW of capacity.”

Western Wind Energy is perfectly positioned to capture a big piece of that evolving capacity for one simple reason: the management team has 24 years of continuous wind installation operating experience – more than any other company within the industry.

The secret to creating profitable wind installations is in the siting of the turbines. Meteorologist Rich Simon, a consultant to Western Wind, has chosen the locations of over 40,000 turbines, or 10,000 MW of generating capacity around the world. He is one of the industry’s few “go-to” guys, responsible for siting 10% of the world’s turbine capacity since 1977.

As wind resource areas vary, so does the cost of generation. A wind farm operating in a 15 mph yearly average wind speed may have total costs of 6.8 cents per kilowatt-hour. That same wind farm, operation in a 20 mph yearly average wind speed, may have total costs of only 4.9 cents per kilowatt-hour.

Like most major forms of electricity generation, wind power is capital intensive. In economic terms, wind power has an extremely low marginal cost and a high proportion of up-front costs. The energy consumption for producing, installing, operating and eventually decommissioning a wind turbine is typically earned back within three months of operation.

At a robust wind location in the state of California, for each one megawatt installed, or US$2 million capital invested, $400,000 is generated annually in energy sales with a further $80,000 in annual federal tax credits (Production Tax Credit or PTC).

The Senate Finance Committee last month included an extension of the expiring tax credits for wind, solar, and other renewable energy technologies as part of its economic stimulus package now working its way through Congress.

Western Wind is not content to remain a “wind-only” company, and recently announced a cooperative agreement with Solon America Corporation to develop 5 to 40 megawatts of photovoltaic – solar energy projects in California and an additional 5 – 40 megawatts of photovoltaic – solar energy projects in Ontario, Canada.

Solon America is the subsidiary of $1.2 billion German solar energy equipment manufacturer Solon A.G.

The company was founded in 1998 by CEO Jeff Ciachurski, who has negotiated more than 200MW of off-take agreements and raised over $50 million to acquire real estate and develop the company's projects.

His objective?

“To grow Western Wind Energy into a mid-size wind developer and operator with a market capitalization of between US $1 billion and US $4 billion.”

Given the company’s success to date, that doesn’t come across as just a lot of wind.

Disclosure: none

Comments

[vboring:]

more importantly, California (along with several other states) has a wind energy mandate, so the wind energy capacity will be installed. and once it is installed it is considered "must-run" capacity by the system operator, so all wind energy that is produced must be bought.

the biggest risk is in interest rates. since virtually all wind energy costs are up front, a small change in interest rates has a large impact on project economics.

the second biggest risk is transmission costs. wind variability causes all sorts of technical problems for the system. some states are beginning to allow these costs to be passed back to the wind generator. in Washington state, these costs represent up to 10% of the market price of the power. considering that California has more electrical congestion than we do, their costs will likely be higher.

2008 Feb 27 02:44 PM

[gopokes:]

This company is a lone prospector caught up in the gold rush to build wind capacity. The winners in this race will be the companies that can find and buy turbines and rights to sites, and get those sites operating before tax credits are set to expire. That means big utilities and marketers with lots of capital and CREDIT. Between the land grab and the undersupply of turbines to meet demand, combined with sharply increasing commodity prices that are driving up turbine costs even further, this company has no chance as an independent, unless the 24 years of experience includes making turbines appear out of thin air.

Depending on how good their existing turbine supply and site pipeline is, they might be an acquisition target, though.

2008 Feb 27 11:34 PM

[archer_id:]

When is this country going to awaken to the fact that solar farms inn the desert will solve the energy crisis as well as the economic drain caused by foreign oil?

2008 Feb 29 08:14 PM

[UncleFred:]

Distributive Solar Energy Generation is the best way to proceed. Think of every rooftop of homes, office buildings, factories, warehouses, retail stores etc. being covered with solar panels, and the local power company integrating the power generated into the grid. No long transmission lines, fewer power generating stations, and less disruption by hurricanes, tornadoes, etc. Of course, the power company would still have to provide power at night, but that cuts their generation needs by about half.

Solar is also the single most environmentally friendly way to generate electricity. Even wind power, taken to an extreme needed to make a meaningful difference in power generation, could disrupt wind patterns and adversely affect the environment, while solar would have the net effect of cooling the environment by directly converting solar energy, which would otherwise heat the atmosphere, into kinetic energy to run electric motors, etc.

2008 Mar 02 02:42 PM