As of the end of December, California had 1704 MW of installed wind capacity. Some of the 585 MW given preliminary approval will be located outside the state, in places including Oregon and Mexico.
Details of the solicitation, announced December 9, were the long-awaited initial outcome of the notoriously-complex Biennial Resource Plan Update (BRPU). The plan had solicited some 1360 MW of power for the state's three investor-owned utilities. Closely watched by independent energy producers, the process had attracted some 200 project offers totalling 16,200 MW of firm capacity. About 30% of the solicitations was set aside for renewable bids. Winning bids will be announced January 10, although they will not become final until May.
In essence, the process for the first time established a large scale market test of the economics of various renewable energy resources. Wind fared well against competing technologies in the results, released by two utilities, Pacific Gas & Electric Co (PG&E) and San Diego Gas & Electric Co (SDG&E). Southern California Edison (SCE) released no results having suspended the process because of "unconventional bidding" techniques by some developers (see below).
The major winner amongst wind companies was Kenetech “uåX˜äŠÊ˜·³Ç of San Francisco, formerly US “uåX˜äŠÊ˜·³Ç Inc, which won approval for 450 MW of wind plant. If installed, the projects would more than double Kenetech's installed capacity. Projects would be built in California, Oregon and Mexico. “uåX˜äŠÊ˜·³Ç was unable to reach other likely sizeable winners -- New World Power Corp, SeaWest Energy Systems, Zond Systems and FloWind -- before going to press.
One hell of a lot
Despite no results from Southern California Edison, the rest of the day's news was good for wind. "It's one hell of a lot [of wind]," comments well-known industry analyst Paul Gipe. "We haven't seen that kind of wind development in years." Jan Smutny-Jones of Independent Energy Producers in Sacramento concurs: "I think overall it was a resounding success." Smutny-Jones points out that many bids came in lower than Identified Deferrable Resource (IDR) costs, the cost to the utility of building its own plant. But Gipe cautions that even if wind projects get final approval, some will not get built if developers are unable to get land and planning permission, if financing falls through, if transmission is too pricey from outside the state, or because a working turbine is not available.
The most that can be said at this point is that between 200 MW and 1000 MW will be installed in California over the next six years, he predicts, although the PUC has the ability to make a number of changes in the complex process. "I think there's a lot of unsettled things in this bidding process," adds Gipe, who also points out that contracts for Standard Offer Four capacity were issued years ago, but some were only recently fulfilled. The BRPU process requires projects to be on line by 1997-99.
Results in detail
SDG&E gave preliminary approval to 65.25 effective megawatts of wind, the equivalent of some 435 MW of installed nameplate capacity, says the utility's Dick Krumveida, manager of power contracts. The "initial ranking" also included 341 effective megawatts of gas-fired co-generation, 94 effective megawatts of geothermal and 1.25 effective megawatts of biomass, he says. The initial rankings were in three so-called IDR groupings with bench mark prices: 100 effective megawatts to be installed by 1997, and 100 MW by 1998 with a benchmark price determined by a generic geothermal cost -- and in each of which 50 effective megawatts was set aside for renewables; and 291 effective megawatts by 1998, based on the cost of a utility planned re-powering, giving about 490 effective megawatts solicited, says Krumveida. Over the next 90 days, additional transmission studies will be need for bids, although not for wind, he adds.
Although wind won some 435 MW of nameplate capacity in SDG&E's initial ranking, Krumveida says it is unclear how the PUC will evaluate rankings and costings. Of the likelihood of wind bids making the final cut, he says: "I would expect there will be wind in the final listing." Once this is issued in May will wind development go ahead? "If developers are willing to go forward at the price bid, yes it will," he concludes.
PG&E awarded initial ranking to wind contracts totalling 22.5 effective megawatts, the equivalent of 150 MW in nameplate capacity by PGE's formula (which is different from SDG&E's). The 22.5 effective megawatts were a set-aside especially for wind, says Steve Schleimer of PG&E's Power Contracts division. Wind did not win in other categories at PG&E, he says.
The final megawatt tally for wind power hinges on SCE's selection of bids once it continues the process. The utility had opened up 50 MW in effective megawatts specifically for wind, the equivalent of 250 MW of nameplate capacity. A total of 490 MW of wind were bid, according to initial reports.
Despite SCE's stop to selections, many wind projects were ranked. If the initial placings become final, Kenetech “uåX˜äŠÊ˜·³Ç could double its production backlog, says the company's Bud Grebey. "We're certainly pleased with the results -- we got the majority of everything we bid," he adds. SDG&E gave preliminary approval to about six Kenetech bids representing 350 MW, the equivalent of 87% of the bids submitted by the company. PG&E included 100 MW of Kenetech projects, representing about 70% of the total bids submitted by Kenetech. "This decision clearly underscores wind power's ability to compete as the least-cost renewable resource for utilities," says Kenetech President Gerald Alderson.
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