Wind may blow away power price volatility.

Byline: SCOTT MABEN The Register-Guard

What's the next new energy investment for the Eugene Water & Electric Board?

The answer is blowing on the Oregon-Washington border southwest of Walla Walla.

EWEB is in final negotiations for a piece of the power to be generated from the world's largest single wind farm, recently built on ridges and agricultural hilltops near the Columbia River.

Under the first phase of the Stateline Wind Generating Project, 264 megawatts of electricity will come on line Jan. 1. When fully operational, more than 450 wind turbines will produce up to 300 megawatts of power - enough to serve the energy needs of 70,000 homes.

EWEB hopes to sign a 25-year contract with PacifiCorp Power Marketing, a subsidiary of Scottish Power, to buy 20 megawatts of capacity for 2002-03, then 25 megawatts for the rest of the contract.

In terms of actual power delivered, that would translate into 6.5 average megawatts initially and 8 average megawatts in the long run. That represents between 2 percent and 2.5 percent of EWEB's total annual load.

EWEB and PPM have reached a tentative agreement and are expected to sign a contract by mid-January, said Jim Maloney, EWEB energy resource projects manager.

The wind plant is being built by FPL Energy, a subsidiary of Florida Power & Light Group and the largest producer of wind power in the country. PacifiCorp Power Marketing purchased the entire energy output from FPL to market to customers in the West.

Seattle City Light, the municipal utility for Seattle, recently signed a 20-year supply deal with PacifiCorp to begin buying 50 megawatts of Stateline power in January. The order would double to 100 megawatts in August, climb to 150 megawatts in January 2004 and potentially hit 175 megawatts in August 2004.

It's the largest public utility wind power contract ever in the United States, PacifiCorp said.

The Bonneville Power Administration also has signed on for some of the wind power. The federal agency will buy 90 megawatts to supply power to 18,000 homes in the Northwest for the next 25 years.

Stateline was built under a federal tax credit for wind plants that reduces the price of power from the project by 1.7 cents per kilowatt hour, making it competitive with natural-gas fired combustion turbine plants.

EWEB hasn't settled on a price for the wind power, but in the first year it probably would be less than 5 cents per kilowatt hour, Maloney said. Over 20 years, the price would be about 6 cents a kilowatt hour, he said.

Power sold on the open market over that same time period is projected at about 5.4 cents a kilowatt hour.

"So we will pay a slight premium, but it's the direction the energy system needs to move in," Maloney said.

In the long run, wind power is a good investment, Maloney said. In 2000, when the market was erratic and prices soared, EWEB's stake in the Foot Creek Rim wind project in Wyoming saved the utility more than $1.5 million, he said.

EWEB also is working with another wind developer that is planning an 80-megawatt project near Ellensburg, Wash. Called Swauk Ridge, the plant is expected to go online in the first quarter of 2004.

"Then we'll get the final price and decide if we fish or cut bait," Maloney said. "We're optimistic that the price will be competitive. We don't think today's low energy prices are indicative of the future. Electricity is a boom and bust commodity, and there are no signs on the horizon that volatility will get any less at this point."

EWEB and other utilities increasingly are looking to wind power and other renewable energy sources as a hedge against exposure to extreme price volatility.

"Wind isn't subject to the vagaries of rainfall or snowpack," Maloney said.

EWEB has set a goal of shifting 1 percent to 2 percent of its electricity load to new renewable energy every year.

Wind energy is the fastest-growing source of power in the world, according to the U.S. Department of Energy, and there is as much wind to be harvested in Oregon as there is hydroelectric power, energy experts say.

"We've been trying to get commercial wind developed in Oregon since this agency was founded in 1975, and it's finally happening," said Dave Stewart-Smith, energy resources administrator for the Oregon Office of Energy.

"Wind has to compete with the next cheapest resource in order to meet load growth," Stewart-Smith said. "It's close enough to compete with gas that people are willing to pay a premium for green power."

In addition to the Stateline project, wind farms are being built near Wasco in Sherman County and Condon in Gilliam County. A 25-megawatt project has been operating near Stateline for about four years, and another company has applied to build a 100-megawatt plant in the same area.

Other developers have expressed interest in north-central Oregon as well as along the southern Oregon Coast.

In the late '70s and early '80s, an experimental 5-megawatt wind farm near Bandon experienced reliability problems stemming from corrosion of the turbines, Maloney said.

The Stateline project will use state-of-the-art wind turbines, each measuring 242 feet tall, including the blades. Each blade is 77 feet long, and the diameter of their rotating pathway is 154 feet.

Electronic control systems point turbines into the wind and adjust the pitch of the blades to make the best use of wind at any speed. The turbines can generate power at wind speeds of 7 to 56 mph. At higher speeds, the turbines automatically shut down - a feature that allows them to withstand hurricane-force winds.

They also rotate slowly enough to avoid killing birds and bats.

Located principally on private farmland, the project will provide income to farmers while leaving lands available for crops.