Spanish utility Iberdrola Renewables may soon be taking a large leap forward in terms of its U.S. wind power market share.
The global wind giant is seeking a half a billion dollar chunk of the $3 billion expected to flow from the clean energy portion of the American Recovery and Reinvestment Act.
The money would help the world's No. 1 wind developer bring 850 MW of new wind turbines online in the U.S. this year—a 40 percent jump from its current installed U.S. capacity of roughly 3,030 MW.
And that's only a start: Iberdrola is considering investing as much as $6 billion in the U.S. market over the next four years, and eyeing up to $2 billion in government support, Chairman Ignacio Galán told industry analysts in a conference call today.
The company's effort to snatch up stimulus funds highlights the growing influence of foreign companies in the resource-rich U.S. wind market. It also shows how outside developers are viewing the Obama administration's commitment to clean energy as a can't-miss economic opportunity.
"We couldn't be more pleased with the progression of the regulatory environment," said Ralph Currey, CEO of Iberdrola Renewables U.S. operations. "First thing was the stimulus package that was passed very quickly. The second thing was the grant program and the grant procedures.
"We already have bills in front of the House and bills in front of the Senate that are quite positive for our industry. They address three things: A national portfolio standard, details that have to be resolved in the transmission network, and last but not least and probably the most complex is carbon cap and trade. The thought that these bills are in front of Congress right now, this early in the Obama administration, is quite impressive."
There's no denying that America is sitting on a veritable goldmine of wind power.
The wind power potential across the United States is tremendous—as much as 16 times its total electricity demand, according to a new Harvard-led study recently published in the Proceedings of the National Academy of Sciences. For Iberdrola, U.S. wind power is also more reliable and less prone to seasonal fluctuations than Europe, where the first and last quarters of the year are windier than the middle months, Galán said.
Iberdrola has been tapping that American wind wealth since 2006, along with the nation's green jobs talent. It currently has 34 wind farms operating in 20 states and employs 800 U.S. workers. As of late March, its installed U.S. capacity accounted for nearly a third of the group's total global wind capacity, and over 40 percent of the company's project pipeline is planned for U.S. soil.
Storm Clouds on the Horizon?
Interestingly, Iberdrola's aggressive push into the U.S. market comes as oil tycoon T. Boone Pickens is putting his mammoth, 4,000 MW wind power plan for Pampa, Texas, on hold.
The oil man turned wind advocate intended to begin generating electricity from the wind farm by 2011. It was to be the world's largest, with 2,700 turbines capable of powering more than 1 million homes, and Pickens spent $60 million promoting the project.
Why delay it now? One big reason, Pickens claims, is the credit crunch. That, coupled with falling natural gas prices, is making it hard for his company Mesa Power to get needed capital.
Just as crippling for the project's prospects is the lack of transmission capacity to carry wind from remote Pampa to urban centers where it's needed. Where there is wind on land in America, there is often no grid. And where there is grid, there is not enough utility-strength wind.
Indeed, transmission may be the greatest challenge facing the U.S. wind industry. While it can take just about a year to build a wind farm, it can take around five to deliver the clean power to populated areas.
When the American Wind Energy Association (AWEA) recently graded the government's progress on achieving the U.S. Department of Energy's goal of getting 20 percent power from wind by 2030, transmission infrastructure earned an insufficient C- and dragged down the total score.
Which begs the question: Iberdrola is on the verge of a massive expansion in wind growth, and the U.S. government may even help the company along with an infusion of green stimulus cash, but without adequate transmission, can all that wind even make it to market?
Don Furman, Iberdrola Renewables' senior vice president for development, transmission and policy, has warned the U.S. Congress that
"the U.S. transmission grid is aging and needs upgrading to function reliably and to meet future load requirements."
Already, more than 70,000 MW of wind projects in the Midwest are on hold because of the transmission bottleneck, according to the AWEA. That would be enough to power some 14 million households.
Of course, solutions are available. Dollar-wise, it would take a $60 billion transmission investment to remedy the issue, or $3 billion per year, according to the DOE's 20 percent by 2030 scenario.
The nation already spends about $8 billion annually on transmission infrastructure. When you consider the benefits expected from a 20 percent wind future—a half a million new green jobs and a 25 percent cut in electric sector CO2 emissions—the investment becomes a no-brainer.
Tapping the nation's vast off-shore wind power resource could also help cure its grid woes. Off-shore wind turbines could be installed a few miles from many of America's urban centers and would carry a relatively low cost of transmission.