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Wind energy movement moving fast in Oregon and California |
Wind demands dwarf supply
Land rushes, turbine shortages and states' needs are lifting wind
energy prices to new heights
Friday, November 09, 2007
TED SICKINGER
The Oregonian
WASCO -- Long lines of wind turbines tower over stubbled wheat fields
and backcountry roads in Sherman County. Hundreds pinwheel lazily in
the breeze, their white propellers like massive Mercedes medallions,
spinning out electrons that pulse down a high-voltage line to nearby
John Day Dam.
Looking east into Gilliam County and north into Washington, turbines
are strung over ridgelines as far as the eye can see.
And there are nowhere near enough of them.
Four months ago, Oregon lawmakers passed landmark legislation
mandating major increases in the use of renewable energy. But
Oregon's needs are puny compared with those of California, where
renewables targets are higher and kick in sooner. Under another set
of mandates, Washington has needs as pressing as Oregon's.
The combination is producing an unintended result: West Coast
utilities and independent power producers are locked in a land rush
to secure the best wind sites and the power they produce. Coupled
with a worldwide shortage of turbines and a falling dollar, the
resulting scarcity is driving up the cost of wind power -- a burden
that electricity ratepayers ultimately will shoulder.
"I spend virtually all my time trying to get projects going, and it's
a very frenzied marketplace right now," said Mark Tallman, director
of renewables acquisition for PacifiCorp, Oregon's second-biggest
utility, based in Portland.
Oregon's largest utility, Portland General Electric, recently
persuaded regulators to let it charge ratepayers for deposits it
needs to place on scarce turbines and wind sites, arguing in part
that in a few years, there might not be any good sites left -- "at any price."
Meanwhile, experts are already questioning whether the West Coast
states' progressively higher mandates will outstrip the region's
potential supply of green power or its ability to move that power
around the electrical grid.
"It's a huge number, and it's hard to see where it's all going to
come from," said Brett Wilcox, a former aluminum company executive
who is developing wind power projects in the Columbia River Gorge.
"We've got to get it now, because it's just not going to be there in
a few years."
Renewables advocates reject any notion of a shortage. They claim
there are adequate projects in the pipeline to meet early targets and
plenty more to tap if big players get moving. If wave, tidal,
geothermal and solar technologies mature, they could be big
contributors as well.
Right now, however, renewables generally mean wind. And the center of
Oregon's wind rush is Sherman County.
"This is the biggest thing that's happened in Sherman County since
they switched from horses to tractors," said Kevin McCullough, a
fourth-generation wheat farmer whose 4,000 acres are crawling with
contractors, crew cab pickups and semi rigs hauling in turbine parts
from the Port of Vancouver.
"Things are never going to be the same, and that's not a bad thing either."
Why here?
The first 16 wind turbines went up in Sherman County in 2001, an
experiment launched by Wilcox as he looked for an economical way to
power his aluminum smelter. The smelter has since been mothballed,
but today there are close to 300 turbines in Sherman County alone,
with several hundred more coming.
In mid-October, PGE energized the first 10 turbines of its Biglow
Canyon wind farm, a 25,000-acre plot where it hopes to generate
enough energy to supply 100,000 homes by 2010.
Next door, the independent Portland-based developer PPM Energy is
mining a mother lode it calls Klondike I, II, III and IIIa.
Coming soon to nearby fields: a massive constellation of turbines
that BP Alternative Energy has christened Golden Hills.
"Pretty soon, we're gonna be pretty much of a pin cushion out here,"
said Steve Burnet, a Sherman County commissioner whose 1,200 acres
soon will bear its own flock of turbines.
It's not hard to figure out why power companies love Sherman County.
Bounded by the Deschutes River on the west, the John Day River to the
east, and the Columbia to the north, much of the county's 823 square
miles is windblown glacial silt -- the kind that swirls into
three-story dust devils as gusts leave the gorge, then blow over the
Columbia plateau.
"If the wind's not blowing, it's thinking about it," said Lee
Kaseberg, a local wheat farmer, to a researcher from Renewables
Northwest Project in 2004.
Officially, the northern reaches of Sherman County only have Class 4,
or "good," wind. It blows harder and steadier in parts of eastern
Oregon and Wyoming, experts say.
But Sherman County has the ingredient that's often missing elsewhere:
transmission.
Thanks to the federally owned hydroelectric dams that dot the
Columbia, the entire basin is festooned with high-voltage lines that
can carry electricity to western Oregon and Washington.
Transmission has become a key factor driving wind development. East
of the John Day Dam up to McNary Dam, the system is heavily congested
and badly in need of an upgrade.
Wind farms in Sherman County, meanwhile, effectively can run an
extension cord right to the substation at John Day. And that's what
they've done, laying a shiny feeder line past Bob's Texas T-Bone
restaurant in Rufus into the hills beyond.
Paul Woodin, a consultant who works with county officials on wind
projects, said the new line can carry 1,200 megawatts of electricity
-- enough to power 300,000 homes.
But a month into use, the line is fully subscribed, Woodin said.
Sherman and neighboring Wasco County are also home to two other
important pieces of Oregon's renewable energy equation: the terminus
substations in the high-voltage system connecting Oregon with
power-hungry California.
California draining
Just as Californians have thronged Oregon's residential real estate
market, the Golden State could bigfoot Oregon's renewables market.
Some experts think it's inevitable.
"That's not even a question in my mind," said Jeff King, an analyst
with the Northwest Power and Conservation Council. "We're already seeing it."
This summer, Pacific Gas & Electric, the massive utility serving
Northern California, announced a deal to buy 85 megawatts of power
from PPM Energy's Klondike III wind farm, about one-third of the
project's output.
PPM also sold the output of its 200-megawatt Big Horn wind farm in
Klickitat County, Wash., to a municipal utility based in Modesto, Calif.
Wind-farm developers are hungrily looking south to sell their output,
PacifiCorp's Tallman said. "That frankly inflates the prices."
Demand could be huge. PG&E sells electricity to six times more
customers than PGE. The California utility's rates also are
two-thirds higher, giving it flexibility to pay higher prices for renewables.
Moreover, while Oregon's renewable standard kicks in gradually --
utilities need 5 percent renewables by 2011, rising to 25 percent in
2025 -- California utilities need to hit the 20 percent mark in the
next three years.
PG&E is meeting 12 percent of its customer demand with renewables
today and has contracts that could get it to 18 percent. But
regulators in California worry that the company's renewables
contracts could fall through as they have in the past.
That's one reason the company is studying a big expansion of its
transmission capacity into the Northwest.
Meanwhile, California is seriously considering increasing its
renewable energy mandate to 33 percent by 2020.
Utilities and independent power producers get cagey when asked how
much renewable power is selling for these days. But King, the analyst
at the Northwest Power and Conservation Council, said he's hearing
prices in the range of $85 to $100 per megawatt hour delivered.
That's 40 percent to 70 percent more than King figures utilities
would pay for natural-gas-fired power, even with a carbon tax.
Compliance mandates drive some of that premium. But it also comes
from a worldwide shortage of turbines, rising prices for everything
from steel rebar to transportation, and the tumbling value of the dollar.
Local giants PGE and PacifiCorp say they're confident they can hit
Oregon's first renewable target: 5 percent in 2011. But things get
dicier in 2015, when the target rises to 15 percent.
PGE needs to add another Biglow Canyon and then some to hit the 2015
target. PacifiCorp, meanwhile, is spread over six states, three of
which have renewable mandates. The company says it plans to build
2,000 megawatts of wind by 2013.
"Our need is great," Tallman said.
That's great news for landowners such as McCullough, who can expect
to harvest between $4,000 and $14,000 a year for every turbine
planted on their land. McCullough is expecting 50 on the land he owns
and leases. And with all the traffic around his normally tranquil
farm these days, he feels like he's living in Portland.
Mind you, that's no complaint. Gesturing to the turbines going up
around him, he couldn't suppress a grin.
"Retirement's pretty much set."
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