N.C. wind farm can’t close a deal to sell power
The developer of the largest wind farm ever proposed in North Carolina says the project has stalled because no utility wants to buy the power the project would produce.
Iberdrola Renewables, having put more than three years into a 31-square-mile wind farm near the coast, this week began notifying property owners and public officials in Pasquotank and Perquimans counties that the project is on hold indefinitely. If built, the Desert Wind Energy Project near Elizabeth City would have ranked among the largest wind farms in the country.
Iberdrola has developed more than 40 wind farms in this country, but the Spanish company has been unable to find a buyer for the power output of Desert Wind. The $600 million undertaking was to include 150 turbines, enough to supply power to as many as 70,000 homes.
“It’s very unlikely we’ll start construction this year,” said Iberdrola spokesman Paul Copleman. “We’re just not going to move forward until we have a power purchase agreement.”
Until recently, the Desert Wind project appeared destined to break the hex that has long stymied wind farms from sprouting across North Carolina’s blustery coastline and wind-rich mountains. A proposal this year to build an 80-megawatt wind farm with 49 turbines near a coastal wild bird refuge is tied up amid a public outcry that its whirling blades will kill night-flying geese and swans. Earlier proposals to build industrial-scale wind turbines also mobilized opponents
The Desert Wind project began in early 2009, with millions of dollars invested since then in wind studies, environmental impact statements and engineering analyses of roads, soils and transmission systems. The N.C. Utilities Commission approved the project in May in a proceeding remarkable for the absence of public protests. Iberdrola has signed real-estate agreements with some 40 property owners who would be paid an annual fee of $6,000 or more in exchange for their farms hosting turbines standing 500 feet tall at the upper tip of the blade
But months of talks with neighboring power companies have failed to yield a contract. Iberdrola will not be able to finance the project until it can show institutional lenders a long-term contract with guaranteed cash flow. Progress Energy in Raleigh, one of Desert Wind’s potential customers, ended talks with Iberdrola after the parties couldn’t agree.
“Generally, their price was higher than other prospective wind projects,” said Progress spokesman Mike Hughes.
Companies such as Progress are shutting down old coal-burning power plants and building ones fueled with natural gas, considered the cleanest fossil fuel.
Copleman said slack energy demand in the wake of the recession, coupled with historically low natural gas prices, are creating a competitive disadvantage for wind farms nationwide. Electric utilities in North Carolina and elsewhere pay a premium for wind power under state energy policies that require a certain commitment to clean energy.
Hopes for the project
Iberdrola is keeping the Desert Wind project alive in case circumstances change, Copleman said. However, experts expect natural gas in shale rock to supply the country with cheap fuel for decades.
Farmers who signed contracts with Iberdrola hope the prospects for wind energy improve.
“When the economy picks up and if natural gas prices go up, they’re going to be looking for some type of green power,” said Horace Pritchard, a farmer with more than 1,200 acres in both counties who was hoping to host up to 10 turbines on his land.
Pritchard believes Desert Wind could take five years to begin construction. Others aren’t so sure anymore.
“I’d be disappointed because it was going to be good for our economy and would help the farmers out,” said Leon Brickhouse, who owns more than 1,000 acres in Pasquotank County and had agreed to host five turbines. “They’re offering a reasonable amount of rent for that turbine, with a 25-year guarantee and an option for another 25 years.”
Iberdrola had hoped to begin construction this year to quality for a 30 percent federal incentive payable in a lump sum. The company could still qualify for another form of the incentive paid out over a 10 years if the project is completed by the end of 2012. Both incentives are scheduled to expire, and it’s not clear if Congress will extend them.