O&M, Project Development, Wind Power

Wind Power Market Strong, Bankable and Global

The wind industry is a global franchise with companies doing business far outside of their home countries. A few announcements this week highlight this trend.

Global Wind Financing

First Wind announced that it received almost $100 million to construct a wind farm in Penobscot County, Maine.  The 60-MW wind power plant is being financed with an $81 million construction loan and a $17 million line of credit from Cleveland, OH-based KeyBank and Germany bank Norddeutsche Landesbank Girozentrale.  The two banks served as the joint lead arrangers for the financing. 

JPM Capital Corp. has a tax equity financing agreement on the project with a subsidiary of First Wind. 

On the other side of the country, Duke Energy has announced that the company has secured $200 million against its 200-MW Top of the World Wind power project in Casper, Wyoming. Duke Energy Generation Services (DEGS), a business unit of Duke Energy, will use the funds to finance continued investments in renewable power. 

(DEGS) secured roughly $231 million in the form of an 18-year term loan worth approximately $193 million, and nearly $38 million in letters of credit arranged by Japan-based Bank of Tokyo-Mitsubishi UFJ, along with Spain-based BBVA and Caja Madrid and French company Société Générale.

Global Project Development

In addition to international banks financing U.S. projects, U.S. and European companies continue to develop projects outside of their borders.  While not the case in the U.S., other countries have made serious commitments to wind power through national renewable portfolio standards and other policies that support renewables.  Project development, and the money and economic growth it drives, will go where policy is the strongest.

US-headquartered GE announced that it is supplying wind turbines for four Brazillian projects with a combined capacity of 400 MW.

Developers making commitments to GE are Renova Energia S.A., (163 MW, 102 units) Dobreve Energia S.A. (60 MW, 38 units), Contour Global (150 MW, 100 units) and Bioenergy. (28.8 MW, 18 units). Projects are located in the states of Bahia and Rio Grande do Norte.

Traditionally, Brazil has relied heavily on hydropower for its electricity supply. The recent wind auctions reinforce the country’s commitment to make wind power a mainstream source of energy as it continues to expand its renewable energy portfolio.

Brazil is a leading wind market in Latin America with 31.6 GW of capacity expected to be installed by 2025, according to a recent study from IHS Emerging Energy Research (EER). The study also highlights Brazil’s market scale and proactive renewable energy policies as key elements in creating a steady growth in wind power development for the country.

GE employs more than 6,000 people Brazil and recently announced plans to invest $500 million to expand its operations in the country, including $200 million for new wind turbine and aeroderivative product developments.

Spanish companies Gamesa and Eolia Renovables de Inversiones are doing business in Mexico.  The companies announced that they would develop up to 324 MW of wind power in two separate projects in the country.

The deal calls for construction of the wind farms, including turbine supply, transport, assembly, erection and start-up, and operation and maintenance services during the turbine warranty period. Gamesa will supply a total of 162 of its turbines to equip the Eoliatec del Istmo (164 MW) and Eoliatec del Pacífico (160 MW) projects in the state of Oaxaca.

Mexico offers significant growth potential in the medium and long term, say experts. At the end of 2009, the country had 582 MW of installed wind assets, while forecasts from EER indicate that Mexico will have 7,000 MW of installed wind capacity by 2025. Mexico’s President, Felipe Calderon, highlighted in his speech to the United Nations Climate Change Conference (COP 16) the growth potential of the country, which could generate up to 71,000 MW of wind energy.

Announcements like GE’s and Gamesa’s could be troubling for the U.S. wind market, which has been stalled for almost a full year, with installations in Q2 and Q3 of 2010 down 70% over previous years. Without national policy to promote renewable energy in the U.S, wind farm development will march on….elsewhere.