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Mortenson: There’s uncertainty in wind industry

By Bob Geiger
Dolan Media Newswires

Minneapolis — M.A. Mortenson Co., Minneapolis, has declared the wind energy industry “challenging and uncertain” after developing 100 wind farms in the United States and Canada.

Mortenson’s assessment is part of a new 20-page report by the company titled “Facing the Wind,” which cites difficulty negotiating power purchase agreements, a lack of a federal renewable energy standard and undeveloped transmission lines as key issues. Thirty wind energy project owners or developers gave feedback for the report.

Minnesota is ranked No. 7 nationwide in wind energy capacity, with 1,818 megawatts of construction — or the equivalent of 1,212 General Electric 1.5-megawatt turbines.

As of Sept. 30, Minnesota listed 677 megawatts of wind farms under construction — far better than the zero listed by No. 2 wind energy state Iowa.

And there is plenty of real estate left to develop in the windy segments of Minnesota, which form an “L” spanning the state’s borders with Iowa, North Dakota and South Dakota.

Minnesota’s under-construction figure is far higher than in early 2010, when protesters delayed construction of Goodhue Wind, a 78-megawatt wind farm near Red Wing.

READ ABOUT WISCONSIN’S WIND FARMS ON
THE DAILY REPORTER’S PROJECT PROFILE PAGE

That development appears headed for a lengthy contested hearing process this year.

Peter Mastic, president and chief executive of Minneapolis-based National Wind, the company behind the Goodhue project, said Mortenson’s summation of the wind industry as “challenging and uncertain” is accurate.

“I’m less worried about the long-term competitiveness of wind,” he said. “The thing that many people forget is that once you commit to a wind project there is very little cost. If you look at the full life-cycle cost of wind farm versus the full life-cycle cost of a natural gas plant, wind is very competitive.”

Mortenson’s report describes problems including financing, assessing the long-term competitiveness of wind energy, finding locations and dealing with complaints from neighbors as inhibiting development of wind farms.

The low price of natural gas, which led several Minnesota utilities to refurbish old coal-fired power plants to cleaner-burning natural gas, was cited by 70 percent of respondents as diminishing the growth of renewable energy. An additional 9 percent said natural gas will have a significant impact on the development of renewable energy.

One key inhibitor to building new projects mentioned in the Mortenson survey is the lack of a federal renewable energy standard, or RES, which could give evidence to developers and banks financing renewable energy projects that the industry is viable.

In 2007, Minnesota lawmakers passed RES legislation that required electric utilities to generate 25 percent of their electricity from renewable resources by 2025. Xcel Energy, the state’s largest utility, must generate 30 percent of its power from renewable sources by 2020 under that law.

A Jan. 7 compliance report issued by the Minnesota Office of Energy Security said Xcel Energy has sufficient renewable generation or renewable energy credits to meet the 2010 requirement of 15 percent renewable energy.

Other state utilities will not need to file until the end of 2012, when they are required to generate 12 percent of their power from renewable energy sources.

According to the American Wind Energy Association, the amount of wind energy installed nationwide plunged 71 percent in the first nine months of 2010, compared with the same period in 2009.

Even so, conditions seem to be improving.

One key factor was the $18 billion, one-year extension of tax credits for renewable energy projects passed Dec. 17 by Congress. That vote gave industry executives until the end of 2011 to finish projects and receive a 30 percent investment tax credit.

“It’s been a very challenged industry, but there are some indications that things might get a little bit better,” said Jeff Wright, the former president of Minneapolis-based Midwest Wind Energy Finance.

Wright, principal and founder of GreenWright Partners, a Minneapolis renewable energy consultancy, expects that financing and development of energy projects should be by-products of increased demand for electricity since the recession.

Cameron Snyder, a spokesman for Mortenson Construction, said his company maintains a sense of optimism despite a lackluster 2010.

“Our business is growing,” said Snyder, noting that Mortenson plans to open a new office in Toronto on Jan. 19.

Unknowns at this time are the long-term impact of groups objecting to wind farms. Those groups have focused primarily on the effects of low-frequency noise, shadow flicker from spinning turbine blades and electric emissions related in underground wiring.

One comment

  1. Thank you Bob Geiger for reporting on industrial wind in MN. If it wasen’t for you and reporters like Arundhati we would never have a chance to let the public know what is actually happening to people that are being run over by the public private partnership between big wind and big goverment. We have been lied to by the MN Office of Energy Security and we have been lied to by National Wind. The Rochester paper went so far as to rmove comments we made in order to control the flow of information. They are a big wind supporter rather than a neutral fact finder like F&C.

    I’ll leave you with one example of National Wind’s effort to lie to the people of Goodhue County. In the October 14, 2009 Zumbrota News Record, Senior Wind Developer Chuck Burdick wrote that National Wind could prove LWECS do not contribute to stray voltage by taking a pre-construction baseline measurement and a post-construction measurement. On October 4, 2010 the Goodhue County Board passed an updated Ordinance which includes requirements for pre and post stray voltage testing for WECS (Section 6). December 30, 2010 National Wind’s equity partner AWA Goodhue asked Judge Sheehy to not considered this simple safety measure which is included in the Goodhue County Ordinance.

    One final point. There is a reason Peter is not concerned with the long-term competitiveness of wind. Industrial wind turbines generate 30 to 40 percent of their revenue stream with subsidies. Despite this extravagant tax support, Xcel requested a 37.5% rate increase August 2, 2010. Minnesota has created a bubble that can not be sustained. Wholesale rates for Wind in Minnesota are 200-350% higher than for base load coal or nuclear.

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