The way the wind blows: Small wind developments see rise in power purchase agreements 

After years of stagnant growth, wind power development is picking up in Idaho – particularly along a 150-mile corridor from the Glenns Ferry area to American Falls.

Idaho Power in recent months signed a power purchase agreement with three small wind farms planned west of Hagerman by Boise-based Exergy Development Group, and the utilities commission is currently accepting comments on another Idaho Power purchase agreement for a wind project proposed northwest of Glenns Ferry by Meridian-based Idaho Winds.

In addition to those projects, Idaho Wind Energy has partnered with South Dakota-based Quin Wind on a wind farm south of Hagerman, and Boise-based Windland Energy has partnered with Houston-based Shell Wind Energy on large projects at Cotterel Mountain, southeast of Burley, and outside American Falls in Power County.

Gene Fadness, a spokesman for the Idaho Public Utilities Commission, attributed part of the upswing in wind projects to regulatory changes that have made it less risky for utilities to buy power from small renewable generators.

“We’ve seen them pick up again after a near-three year period in which the size of projects that could qualify for the PURPA rate was lowered from 10 megawatts to 100 kilowatts,” Fadness said, referring to the Public Utility Regulatory Policies Act – a federal rule that requires regulated utilities to buy power from qualifying renewable energy generators at the rate it would cost them to generate the power themselves or purchase from another source.

While PURPA projects can have a generating capacity higher than 10MW, they can’t sell more than 10MW at the PURPA rate. Rule changes gave small projects more wiggle room by eliminating a penalty assessed to wind generators who produce less than 90 percent of the 10MW limit or produce more than 110 percent of their projected output.

As part of the changes, the PUC also agreed to decrease the rate wind developers are paid to reflect the cost utilities bear in bringing that energy onto their systems, and now requires wind developers to provide mechanical guarantees and pay a portion of the expense of wind forecasting.  

“From our end of it, we think a big difference has been the resolution of all these issues related to intermittency,” Fadness said.

Idaho Winds President Rick Koebbe, whose $40 million 21MW Sawtooth Wind Project near Glenns Ferry signed a 20-year power purchase agreement with Idaho Power this fall, said the regulatory changes have definitely made wind projects more feasible, but he doesn’t expect it to last.

“The power rate has increased to 7.1 cents a kilowatt hour, and it was 5.4 cents two years ago… projects just aren’t feasible at 5.4 cents,” he said, adding “it’s only a matter of time” before rates go back down and projects feel the pinch again.

“The last time power rates were high enough, like they are now, was 10 years ago,” he said. “That’s why you’re seeing a few of these contracts being signed by Idaho Power.”

If all goes according to plan, Koebbe said construction could begin on the Sawtooth Wind Project as early as next summer, but there are still a few hurdles to overcome.

“The whole financial crisis that occurred over the past year also impacted the wind industry, and we’re working on financing just like everybody else,” he said.

Combine that with transmission constraints, and developing wind in Idaho “is not simple,” he added.

“The reason that we’re all down in that [south-central Idaho] area is that there are transmission lines and there’s a little bit of transmission capacity left,” he said. “Over in eastern Idaho – Idaho Falls, Pocatello – that’s where the real wind is, but you can’t build there because there’s not the transmission capacity over there.

“You have this problem that ideally you want to place wind projects close to the load centers, but as you get closer to the load centers there’s always transmission constraints,” he added.

Further east, in the Hagerman area, a larger cluster of wind projects is developing, including the $40 million Idaho Wind Energy-Quin Wind farm. Rob Thompson, of Quin Wind, said the project is “getting ready for construction right now,” and is slated for completion in May 2010.  

While Idaho Wind Energy has yet to sign a power purchase agreement, three projects to the west of Hagerman have, and when completed in fall 2010 would bring a total of 64.5MW onto the grid.

Being developed by Boise-based Exergy, the projects include the 22.5MW Camp Reed project, the 21MW Payne’s Ferry project and the 21MW Yahoo Creek project.

But far larger than any developments planned by Idaho Winds, Idaho Wind Energy or Exergy would be Windland’s Cotterel Mountain Site southeast of Burley.

Slated for 200MW on a 15-mile long mountain ridge, the project would cost between $300 million and $400 million to build, require 100 turbines and employ about 200 workers during construction.

Mike Heckler, director of marketing and development for Windland, said because of the Cotterel Mountain project’s size it won’t be eligible for a PURPA contract, but the company filed with Idaho Power for a purchase agreement in May and is still awaiting a decision.

“We haven’t had real good progress building projects in Idaho, but we hope that changes,” Heckler said. The company has been in the wind business since 1982, where it built a total of 76MW in California before relocating to Boise.

“The industry hasn’t been appreciated in the same way here – this state has no renewable portfolio standard, for instance,” he said.  

Idaho does have a few incentives, including a sales tax exemption on renewable energy generating equipment. But lacking a renewable portfolio standard to mandate a certain amount of green energy on the grid, utilities and developers haven’t seen much reason to pursue large-scale development.

According to estimates from the Idaho Office of Energy Resources, as of July 14, 2009 the state had about 148MW of operating projects – nearly all less than 21MW, with the exception of the Wolverine Creek project in eastern Idaho, which has a capacity of 64.5MW.  Meanwhile, more than 1,400MW were in advanced planning.

“It was a quality of life decision that caused the relocation,” Heckler said.  
 
Permitting at the Cotterel Mountain Site has been completed, and it could be producing power by 2011.

Windland’s other project, near American Falls, isn’t as far along but would also bring a substantial amount of wind power onto the grid. Slated for 100MW on 8,000 acres of private land, the Power County Site is expected to go before the county planning and zoning board in Feb. 2010.

Heckler said both sites have excellent potential and would prove to be a major boon to the local economies.

“Both Cotterel Mountain and our Power County Site are at the north end of the Deep Creek Mountain Range and both of those are areas where you’ve got a ridge exposed to the predominately western and southwestern direction wind flows,” he said.

“You get a very significant infusion of assessed value with these projects,” he added. “We don’t require new kindergartens or more sheriffs’ deputies.”

Despite some of the challenges faced by wind development, the relative boom in projects is good news for small communities in south-central Idaho. With the College of Southern Idaho in Twin Falls and Idaho State University in Pocatello both
offering training programs in wind technology, local officials are excited to see the growth of a new industry that could take advantage of regional talent.
 
“There’s defiantly been an upswing and I suspect we’ll see more of those types of projects in the future,” said Micah Austin, assistant to the Jerome city administrator.  “This is an exciting time to live and work in Jerome city and Jerome County, especially because we have so many people looking at the area and interested in its potential for renewable energy. It’ll generate the kind of jobs that we are starting to see more and more of here in the county.”

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