Wind Turbine demand increases cost in NW
Date posted: 2007-09-04
Source: Oregonian
The shortage is affecting developers nationwide, but the pinch is particularly acute in windy Western states such as Oregon, Washington and California, which have ambitious plans to increase wind-power production.
This year alone, Oregon developers are on track to more than double the wind power generated by wind farms in the Columbia River Gorge. Boom-time construction is expected to continue through 2008 -- longer if, as expected, Congress extends a federal tax credit set to expire at the end of that year.
If developers haven't secured their turbines -- each costing about $2 million -- they face at least a two-year wait, energy consultants and power planners say.
So far, large developers haven't had to delay projects in the Northwest, according to Renewable Northwest Project, an industry trade group that tracks wind development in the region. Instead, they've pulled out the checkbook and locked up large numbers of turbines in anticipation of a sustained construction boom.
Some small developers have put projects on hold, finding turbine makers either sold out or uninterested in filling relatively paltry orders.
The biggest effect shows up in the price. Developers and utilities in the Northwest won't disclose how much they're paying for turbines. But a study by the U.S. Department of Energy found that average turbine costs in the country, measured per megawatt, rose 17 percent in 2006. The study projects prices to rise another 14 percent this year and perhaps further in the next couple of years.
That means a 1.5 megawatt turbine -- a popular size in the Northwest -- cost a developer $2.5 million this year compared with the average cost of $2.2 million last year. The price includes all turbine components and installation.
GE's name is on half the turbines pumping out electricity from U.S. wind farms, said Ed Lowe, general manager of market development for the renewables business within GE Energy. The company has increased production fivefold since buying Enron Wind from the bankrupt parent in 2002 and expects continued growth, Lowe said.
But GE is sold out of turbines until 2009. "We absolutely are increasing capacity so we can meet demand," Lowe said.
Lowe said a long-term extension of the federal tax credit for wind developers would give the turbine industry the certainty it needs to ramp up production.
Big independent developers have been the most aggressive in buying turbines. Portland-based PPM Energy, owned by Spanish energy giant Iberdrola, announced huge deals this year with India's Suzlon Wind Energy Corp. and Japan's Mitsubishi Power Systems America to buy a combined 700 turbines.
Suzlon called its 400-turbine contract with PPM Energy "one of the largest in the history of U.S. wind power."
Given its turbine stockpile, PPM Energy has increased by 50 percent the amount of new projects it plans to bring online by 2010.
The picture isn't as bright for the smaller operators. Those hoping to develop projects of 10 megawatts or less -- so-called community wind projects -- are having trouble securing the turbines.
Paul Woodin, the principal of Western Wind Power in Goldendale, Wash., said he lined up financing more than a year ago for a couple of his small-scale projects in the Columbia River Gorge. He's had no luck getting a turbine deal.
"The big players bought up everything available," he said. "There was nothing left."
Recently, he's seen signs of easing. Where once GE Energy and Vestas dominated the U.S. market, other manufacturers, domestic and foreign, have begun to appear. More turbine, tower and blade manufacturers also are expanding production in the United States.
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