utilities and wind power

Ownership

Wind power’s growth continues at a rapid rate – record setting years in 2005, 2006, and 2007 are expected to be exceeded again in 2008.  But most wind projects continue to be owned and operated by wind developers and other entities.  In 2007-08, about 15% of the new wind power projects brought on-line were owned and operated by electric utilities.

This trend could increase at some point in the future, but for now, the 15% figure seems to be fairly steady.  Most wind projects that serve electric utilities continue to be owned and operated by wind developers and others who sell the wind energy to utilities under Power Purchase Agreements (PPA).  Most wind energy delivered to utilities continue to be delivered under long-term PPAs.

Some utilities are pursuing ownership/operation options at this time, but they continue to be in the minority.  Some advantages to utilities include the ability to take advantage of the federal Production Tax Credit (PTC) (usually, but not always investor-owned utilities), the ability to have more operational control over their assets including wind projects, and the ability to “rate-base” wind energy assets to earn a return on these projects (again, for investor-owned utilities).   But main utilities continue to prefer the PPA model, preferring for wind developers to take on the risk associated with wind project construction and wind output projections.

This area will continue to generate interest and scrutiny both in the coming years, the AWEA Utility Working Group will continue to explore many of the pros and cons of the "ownership option" for utilities click here and see the links on the right for more information on recent presentations on this topic at AWEA events.

For any questions, contact Jeff Anthony, the AWEA Manager for Utility Programs at janthony@awea.org