How long can BigWind operate in the RED? As long as taxpayers give them handouts…

According to the Energy Information Administration, last year’s average wholesale electricity price in the PJM grid was around $42 per MWh. In bold, below, you plainly see why BigWind is not profitable without our taxpayer handouts (even though they received $67/MWh)…even in windy areas like Illinois. This also explains why electricity rates have skyrocketed, all over the world, where BigWind has a strong presence – and – why electricity rates are now rising in USA states which have a larger wind presence.  And, who is buying Big Sky? Everpower, the company wanting to build multiple wind sites in central Ohio. An important question to ask is this, what will these areas do if these turbines become ABANDONED? How will this affect their farmers, as the turbines dilapidate? How will it affect the local tax rate?  How will it affect neighboring property values? How will it affect future economic growth?….

Suzlon Energy Ltd., the Indian wind- turbine maker in default on $209 million of bonds, may take over one of Illinois’ biggest wind farms if it’s unable to collect a loan it made for the project.

That would stymie two years of efforts by the cash-strapped manufacturer to recover money it needs to pay its own creditors….

Most wind farms sign 20-year power sale agreements with a utility to lock in prices and secure revenue streams. Big Sky doesn’t have one and sells its output on the spot market in the 13-state PJM Interconnection LLC grid, Edison Mission spokesman Douglas McFarlan said in a Feb. 18 e-mail.

The average 24-hour price near Big Sky last year was about $35 a megawatt-hour, according to data compiled by Bloomberg. Including tax credits and a government clean-energy cash grant, Big Sky may have earned an average of $67 a megawatt-hour last year, BNEF’s Grace estimated.

The project probably needs to earn $80 a megawatt-hour on average over its lifetime to meet a 10 percent hurdle rate, or the minimum acceptable rate of return for an investor, she said….
via Business: Washington Post Business Page, Business News.

Advertisements

Is Everpower trying to ‘pull the wool’ over a county’s eyes?

Ohio does not require money in escrow to protect our citizens from a company going bankrupt. Our bonds aren’t even big enough to pay for the cranes which will dismantle the machines, but this county was SMART. Why is Everpower requesting this? Could it be that they plan to leave this area after a short time? Because these foreign companies are given accelerated depreciation and then tax subsidies for the 1st 10 years of production, some companies ‘leave Dodge’ at approximately year 7. Remember, the gearbox warranties typically expire at year 5 and some studies show an actual turbine life of only 10-15 years….Everpower appears to be making exit plans….

When the Big Sky wind farm started a few years ago in Bureau County, it set aside money in escrow, in case the company abandoned the project and the county needed to take down the turbines.

That money was required by the county. The account contains nearly $1.8 million.

Now, the wind farm’s prospective owner wants to do away with the escrow account and go, instead, with a letter of credit, which is a bank-guaranteed promise to pay….

Ever Power has 114 turbines, about evenly split between Bureau and Lee counties, many of which surround the Bureau County village of Ohio.

Deb Anderson, who lives in that area, has long called for more regulation of wind turbines, including tough decommissioning standards.

“A letter of credit is only as good as the paper it’s written on,” Anderson said. “The way the banking industry is right now, what’s to say the bank won’t go belly up?”

Besides, she said, the nearly $1.8 million is nowhere near the amount of money that would be needed to take down the turbines.

Former Franklin Grove Village President Bob Logan, who has researched wind energy issues, agreed.

“Cash escrow means you have the money on hand,” Logan said. “If the [wind] companies go bankrupt, as many of them do, the letters of credit are worthless. Cash escrow is definitely better than a line of credit.”…

via Firm wants requirement loosened in Princeton | SaukValley.com.

Illinois wind project foreclosure has similarities to Buckeye Wind in Ohio

 The 240 MW Big Sky project (Illinois) is in trouble as Edison Mission is unable to repay the loan on the wind development made by the turbine manufacturer, Suzlon.  This is an important story about another wind project in the PJM grid system which also serves Ohio

Big Sky does not have a long term power purchase agreement and sells on the spot market where it has been unable, despite grants and subsidies, to earn a sufficient return.  Please note the red highlights below. There are similarities here between Big Sky and Everpower’s Buckeye and Scioto Ridge projects.  Right now, we understand that Everpower does not have a long term power purchase agreement, does not have federal subsidies, probably does not have an investor and the spot market apparently can’t provide an attractive return in the PJM system.    For these and other reasons, we believe Jason Dagger provided mulitple (delayed) start date options for Buckeye Wind in the Springfield News Sun article yesterday.  

And, finally, please add “ouch!” in your head as you read the prices stated below that are necessary to meet the minimum acceptable rate of return for the investors. That is a HUGE electricity rate increase for consumers!!!

Suzlon Energy Ltd. (SUEL), the Indian wind-turbine maker in default on $209 million of bonds, may take over one of Illinois’ biggest wind farms if it’s unable to collect a loan it made for the project….

The plant doesn’t have a long-term buyer for its power and sells at spot prices into the regional U.S. electricity market. It may not earn a minimum acceptable rate of return at current wholesale electricity prices, said Amy Grace, a New York-based wind analyst for Bloomberg New Energy Finance….

Most wind farms sign 20-year power sale agreements with a utility to lock in prices and secure revenue streams. Big Sky doesn’t have one and sells its output on the spot market in the 13-state PJM Interconnection LLC grid, Edison Mission spokesman Douglas McFarlan said in a Feb. 18 e-mail.

 

The average 24-hour price near Big Sky last year was about $35 a megawatt-hour, according to data compiled by Bloomberg. Including tax credits and a government clean-energy cash grant, Big Sky may have earned an average of $67 a megawatt-hour last year, BNEF’s Grace estimated.

 The project probably needs to earn $80 a megawatt-hour on average over its lifetime to meet a 10 percent hurdle rate, or the minimum acceptable rate of return for an investor, she said…

via Suzlon Considers Foreclosure on Illinois Wind Farm – Bloomberg.