Wind power in demand.
Cathy Procto-Denver Buisness Journal
Pinned between a negotiated contract, the high price of steel and the scarcity of wind-power turbines, five landowners in southeastern Colorado have had to cancel their contract with Xcel Energy Inc. to supply about 69 megawatts of electricity by the end of the year.
"There are so few turbines out there right now that they demand a premium. We've been unable to secure equipment at a price that would make it work economically," said Chris Rundell, spokesman for Prairie Wind Energy, the private company formed by the landowners to build a wind farm on 7,000 acres they own.
Turbines that convert wind into electricity were going for about $1.4 million last fall. Since then they've jumped to about $1.65 million, making the project too expensive to continue under the contract with Xcel, Rundell said. The group, which already has the necessary permits for the wind farm, needed 46 turbines to generate the agreed-upon 69 megawatts of power for Xcel.
Xcel (NYSE: XEL) is based in Minneapolis. It is Colorado's largest utility, serving about 1.3 million customers.
"It's disappointing for us," said Xcel spokesman Mark Stutz. But not surprising, he said.
"Given what we've seen in the wind power industry, we've known for some time that turbines are scarce, steel is scarce and securing turbines is very difficult for any wind developer in the U.S. unless they already have them in stock or in supply."
Rundell said the group has submitted another bid to generate wind power for Xcel under the utility's larger "least-cost resource" request for proposals to generate a total of about 2,500 megawatts of power. Xcel has received bids for 80 projects capable of generating 16,000 megawatts of power.
Xcel is seeking about 750 megawatts of wind power through the least-cost bidding process. It has received bids for about 4,570 megawatts of wind power. The utility hasn't announced which projects have made the initial cut.
One megawatt of power from a conventional power generator, which relies on coal or natural gas, can supply power to about 1,000 people. Wind-generated power, which relies on the strength of the wind, is generally considered capable of supplying one-third to one-half that amount of power.
Xcel has about 222 megawatts of wind-generated power on its system in Colorado.
Although the Prairie Wind contract has been terminated, another wind farm in northeastern Colorado near Peetz is under construction and expected to be online by the end of the year. That farm is capable of generating 60 megawatts of wind power, Stutz said.
© 2005 American City Business Journals Inc