QUICK NEWS, 12-20: CHINA COMING FOR U.S. WIND; NEW ILLINOIS WIND; FEDS APPROVE POWER LINE PAY PLAN; CALIF TO R-A-M NEW ENERGY

CHINA COMING FOR U.S. WIND
China’s Push Into Wind Worries U.S. Industry
Tom Zeller, Jr., and Keith Bradsher, December 16, 2010 (NY Times)

"…Goldwind and other Chinese-owned companies plan a big push into the American wind power market in coming months…[P]roponents say the Chinese manufacturers should be welcomed as an engine for creating more green jobs and speeding the adoption of renewable energy in this country…[O]thers see a threat to workers and profits in the still-embryonic American wind industry…[so] Goldwind is putting a distinctly American face on its efforts…[and] highlighting plans to do more than simply import low-cost equipment from China…

"…[T]he Chinese industry is coming to a world leader in wind energy capacity…[The U.S. capacity is] roughly 41 gigawatts…Only China itself, which recently passed American output, generates more wind power — 43 gigawatts…spread over a population more than four times…the [U.S.] population…[T]he tepid United States economy, rock-bottom natural gas prices and lingering questions about federal wind energy policy have stalled the American wind industry, which currently represents only about 85,000 jobs…[D]im market prospects [might] await…the Chinese companies…[but] they have big backing from China’s government in the form of low-interest loans and other blandishments [and can be patient]…"

The intention is to increase the percent of locally sourced equipment as the market expands. (click to enlarge)

"…[T]he United States wind energy industry is by no means an all-American business. After G.E., the current market leaders in this country are Vestas of Denmark, Siemens of Germany, Mitsubishi of Japan and Suzlon of India. None of the governments of those countries, though, are suspected of unfairly favoring their home industries and discriminating against foreign competitors…[while] the Obama administration is investigating whether the Chinese may have violated World Trade Organization rules in subsidizing its clean-energy industry.

"…[Goldwind] is the fledgling American arm of a state-owned Chinese company that has emerged as the world’s fifth-largest turbine maker: the Xinjiang Goldwind Science and Technology Company…[which] raised nearly $1 billion in an initial public stock offering in Hong Kong in October — on top of a $6 billion low-interest loan agreement in May from the government-owned China Development Bank…Goldwind… set up a sales office in Chicago…[and hired] Americans already experienced in the wind energy field…"

Don't miss the asterisked items at the bottom of the list. (click to enlarge)

"…[L]ate last year…a Chinese energy conglomerate, A-Power Energy Generation Systems, joined an American investment firm and a Texas developer, Cielo Wind Power, to announce plans for a $1.5 billion wind farm, using 240 to 300 turbines, in West Texas…Critics argued that the project — which was eligible for about $450 million in federal stimulus funding set aside by the Obama administration for renewable energy projects — would support thousands of manufacturing jobs in China, while creating only a few hundred less valuable construction and maintenance jobs in the United States…[They] brokered a deal…with the United Steelworkers union…to ensure that major components for the planned Texas wind farm — including the towers, some enclosures for the turbine and the giant turbine blades — would be supplied from the United States…[and it would use] as much as 50,000 tons of steel from American mills…[China-made] turbines…sell for an average of $600,000 a megawatt, compared with $800,000 or more for Western models made from Chinese parts, and even higher prices for European and American machines. Yet, Western banks have been leery of lending wind farms money to buy the Chinese equipment because of concerns about its reliability…But with the American wind industry in the doldrums, there are few other big investments pending…

"Proponents of the Chinese push say the availability of inexpensive turbines from China — and ample customer financing from its state-owned banks — could help put wind energy back on a growth track by making it more affordable for American utilities and developers… [M]uch of the manufacturing for American wind energy is [already] done offshore…Even G.E. now buys gearboxes from China…[A]bout 50 percent of a typical wind turbine being erected today in the United States is imported…But with the Chinese market starting to level off even though Chinese factory capacity keeps surging, Goldwind and other Chinese companies will still have a powerful financial incentive to avoid idling new assembly lines in China. And labor is much cheaper in China — $300 a month for blue-collar workers and $500 a month for engineers. Workers and engineers in the United States could expect to make at least 10 times as much…Nonetheless, Goldwind’s team [and some U.S. observers see] room for American jobs…"


NEW ILLINOIS WIND
Developers to Build Two New Wind Projects in Illinois
December 17, 2010 (Illinois Wind Energy Association)

"Two new wind farms will be built in Illinois over the coming year thanks to a renewable energy procurement event completed…by the Illinois Power Agency (IPA). These new projects will create hundreds of jobs in construction and maintenance during the next 18 months, as well as provide valuable new landowner payments and property taxes to their host communities for years to come.

"The competitive energy procurement awarded 20-year power purchase agreements (PPAs) to several renewable energy facilities in Illinois and surrounding states, including the two new wind farms in Illinois…under Illinois' Renewable Energy Standard (RES) law, which requires the state's electric utilities to procure five percent of their power from renewables this year, and 25 percent by 2025…"

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"Under the [two new] contracts…Chicago-based Invenergy LLC commits to construct its proposed Bishop Hill II Wind Farm…while the partnership of Goldwind USA and Mainstream Renewable Power will build the Shady Oaks project…All projects will be operational and delivering power to Illinois utilities ComEd and Ameren by June 2012…

"Illinois ratepayers are protected under the new contracts. By law, the Agency must hold competitive solicitations for renewable energy and select only the lowest-cost sources. The law also states that renewables cannot cause electric rates to increase more than one-half of one percent, ensuring Illinois consumers and businesses are protected from rate spikes."

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"The IPA awarded contracts to a total of twelve wind and solar projects in Illinois and surrounding states, though most of the contracts went to existing facilities currently selling power without a PPA.

"The solicitation was the first of its type under the Illinois RES. Previous procurements have only sought renewable energy credits (or RECs) but IWEA and other renewable energy advocates urged the Agency to seek full PPAs for power and RECs in the 2010 procurement. In the current economic climate, wind developers almost always need a signed PPA in order to secure financing for a new project…IWEA strongly urges the IPA to hold more bundled procurement events in the future, as bundled PPAs are the best way to facilitate more wind development and job-creation."


FEDS APPROVE POWER LINE PAY PLAN
U.S. Backs Plan to Divvy Up Power-Line Costs
Naureen S. Malik, December 16, 2010 (Wall Street Journal)

"Federal regulators Thursday cleared a plan to spread the costs of new interstate, high-voltage power lines to utility rate payers in several Midwestern and Western U.S. states, even if the electricity bypasses most of those customers.

"The approval by the Federal Energy Regulatory Commission, or FERC, comes as power companies, states and the federal government wrestle with the challenge of upgrading the nation's aging power grid and connecting solar and wind generation with distant urban centers."

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"Divvying up the costs of new lines has proven contentious, with some state regulators arguing residents shouldn't have to shoulder additional costs if a new power line bypasses them or is planned hundreds of miles away. That opposition has sunk or stalled several projects…

"The plan approved by FERC calls for the costs of new interstate transmission lines to be divided among 13 states from Montana to Ohio. The share paid by rate payers in each state would vary, depending on the amount of generation capacity in the state…The more power plants a state has, the greater the cost its consumers would shoulder. Michigan, in particular, has opposed the plan, contending the cost of new power lines would outweigh the benefits to its residents."

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"This Midwest cost-sharing strategy could serve as a template for how transmission costs will be shared in other regions. FERC is in the process of developing nationwide rules that are expected to be released in spring of 2011…[It] was developed by the Midwest Independent Transmission System Operator, or MISO, which operates the region's power grid and market. The agency had been tying the cost of a project to the area where it would run. But that approach drew opposition as more wind projects clustered in rural areas…[S]everal transmission projects have been stalled, including the Brookings line to move power from wind farms in South Dakota to Minnesota…

"The elimination of barriers to developing new transmission lines should help advance [proposed] projects…[and] help jump-start wind-power development in places such as Buffalo Ridge, an elevated strip of prairie stretching from South Dakota into Minnesota and Iowa…[T]ransmission developers for each project still need to win approval for the actual paths of the lines, which can be thorny."


CALIF TO R-A-M NEW ENERGY
California approves reverse auction renewable energy market
December 16, 2010 (Reuters)

"The California Public Utilities Commission…approved a unique reverse auction market [RAM] to let renewable energy developers bid on small-scale projects under a program that would generate up to 1,000 megawatts for the state’s three big investor-owned utilities and further spur the solar industry…

"The [auction] idea is to avoid problems with so-called feed-in-tariffs [FiTs] that set rates artificially high for renewable energy production. In Spain, for example, high rates spurred a solar building boom that was followed by a crash when a cap on renewable energy production was reached and rates fell."

The Gap (click to enlarge)

"Under the [auction] plan approved by California regulators, the onus would be on developers to calculate the cost of their projects and then offer a bid high enough to generate a profit yet low enough to beat out competitors. The 1,000 megawatts to be developed [enough to power about 750,000 homes] would be split between Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric…

"Dubbed a reverse action mechanism [RAM] by the utilities commission, the program applies to renewable energy projects that generate up to 20 megawatts of electricity. The hope is to encourage development of small-scale solar power plants that can be built relatively fast and plugged into the grid without major – and expensive – transmission upgrades…"

The R-A-M may fill The Gap without creating the market bubble the FiT is thought to risk. (click to enlarge)

"Developers must complete their projects within 18 months and deploy commercially proven technology…

"Adam Browning, executive director of The Vote Solar Initiative, a non-profit San Francisco advocacy group, said the new program fills a gap in California’s renewable energy program…[because while California] offers incentives for homeowners and businesses to install solar systems that generate up to 1.5 megawatts and utilities have signed contracts with developers to build big projects that will produce hundreds of megawatts each. Lost in the middle were [projects [between 1.5 megawatts and 20 megawatts]…"