Southern California Edison said Monday it has agreed to buy up to 909 megawatts of wind power in a 20-year contract with Caithness Energy.
Caithness, based in New York City, has created an affiliate called DCE to handle the project, called Caithness Shepherd's Flat. The project will include 303 wind turbines on 30 square miles in north-central Oregon, which are expected to be installed from 2011 to 2012.
An executive at Southern California Edison, a utility based in Rosemead, Calif., called the project a "crown jewel" in its mix of renewable-energy offerings that also includesolarpower. The utility declined to disclose how much it would pay DCE for the electricity.
Like other utilities in the state, Edison has announced a series of renewable-energy purchase deals over the past year in an effort to meet the state mandate requiring it to get at least 20 percent of its electricity from wind, solar and other renewable sources by 2010.
In June, the utility said it had agreed to buy up 245-megawatt of solar electricity from a power plant to be built and operated by ESolar (see California to Get More Solar Thermal). In March, Edison said it planned to buy 250 megawatts worth of solar panels and place them on 65 million square feet of commercial rooftops in Southern California. Workers installed the first panels last month for the $875 million project (see First Solar Scores SCE Panel Bid).
Other California utilities are also racing to sign renewable-energy contracts. The Pacific Gas and Electric Co., based in San Francisco, last week said it had agreed to buy up to 800 megawatts of solar electricity from two projects being developed by OptiSolar and SunPower (see PG&E to Buy 800MW From Optisolar, SunPower).
With the two deals, PG&E expects to have 24 percent of its electricity offerings from renewable sources by 2013. State law allows utilities to count projects under development to meet the 20 percent quota by 2010, as long as the projects begin delivering power by 2013, according to PG&E spokeswoman Jennifer Zerwer.
In addition to its new agreement with Caithness, Edison said it has signed contracts for enough renewable energy to meet the 20 percent requirement. Renewable energy accounted for 16 percent of the company's electricity in 2007, said the utility.
Wind energy has traditionally been cheaper than solar power because of the development and construction costs. When PG&E announced its 800-megawatt deals last week, however, the utility said the cost of the electricity from the two solar power plants would be "cost-competitive" with wind energy.
It's difficult to gauge the competitiveness, given that the utilities haven't disclosed the financial terms of their power-purchase agreements.
But an increasing global demand for renewable energy - and a resulting turbine shortage - has lifted the cost of wind turbines by 74 percent over the past three years, Bloomberg reported. The world's largest wind-turbine maker, Vestas Wind Systems in Denmark, saw its second-quarter profits rise 27 percent to €65 million ($96 million) from a year ago.
"I would say that solar has become more competitive every day," said Stuart Hemphill, vice president of renewable and alternative power at Edison. "But I wouldn't reach the conclusion [that solar has reached price parity with wind energy]."
Edison is adding more wind energy to its mix to help reduce the need to rely on natural-gas power plants, Hemphill said. Wind farms tend to generate more electricity during off-peak time, while solar power projects could provide more energy during peak hours in the afternoon.
Still, signing power purchase agreements doesn't guarantee success for these projects. Since California established the renewable-energy requirements in 2002, 12 percent of renewable energy contracts signed by publicly owned utilities have been canceled and another 20 percent delayed by the end of 2007, the California Energy Commission reported.
Getting permits can pose a challenge, taking a year or longer, in some cases. Public support for renewable-energy projects can also be difficult to get.
A story in Monday's Chicago Tribune highlighted a fight between land conservationists in the Mojave Desert, a hotbed of solar-energy development, and the Los Angeles Department of Water and Power, which wants to build a transmission line to ferry electricity from geothermal, wind and solar power plants in the desert to its customers.
Building new transmission lines or upgrading existing ones also poses a major obstacle for utilities and power plant developers across the country. Many of existing transmission lines are old and lack the capacity to support the increasing amount of solar and wind energy being delivered by utilities (see Wind Power Waiting for Transmission-Line Boom).
Last week, American Electrical Power and Duke Energy said they had formed a joint venture to build 240 miles of transmission lines in Indiana, where more than 3 gigawatts of wind energy projects are under development (see Duke, AEP to Spend $1B on New Transmission Lines).
For Edison, the Shepherd's Flat project won't require new transmission lines or an upgrade from the existing transmission network, the company said. Caithness already has a permit to build the wind farm in Oregon, Hemphill said. Edison plans to apply for its own permit from the California Public Utilities Commission.