A Mighty Wind

The results of Xcel's wind-power program are still in the air.

The drive for wind power in Colorado got an unexpected boost this month after Xcel Energy announced it was seeking 30 percent hikes in electricity rates because of higher prices for natural gas. (This week, Xcel stated it would seek only a 19 percent increase.) For the first time, the 29,000 socially conscious consumers who get their power from wind farms -- and pay a surcharge every month for the privilege -- will actually end up paying less for electricity than the rest of Xcel's 1.3 million customers in the state.

When that news hit the front page two weeks ago, new customers began to sign up for the Windsource program in surprising numbers -- as many in one day as the program usually gets in two months. Nationally, renewable-energy advocates hailed the development as a possible turning point in the long struggle to get utilities to invest substantially in wind.

But don't expect Xcel to shut down any of its conventional coal-fired power plants in the near future. Colorado still lags behind several other states, notably California and Texas, in harnessing its wind resources. Despite last year's passage of Amendment 37, which requires the state's major utilities to obtain 10 percent of their power from renewable sources by 2015, acquisition of more wind power hasn't exactly been a breeze, with much finger-pointing among utility officials, wind developers and lawmakers over the political, economic and technical obstacles involved.

Xcel spokesman Mark Stutz insists that the company is bullish on wind power. "When the wind is blowing, it's the greatest thing in the world," he says. "With the production tax credit in place, it's the cheapest form of electricity generation there is. The problem is the wind doesn't blow all the time -- and a lot of the time, it doesn't blow when we're having our hottest, peak-demand days."

In 2001, Xcel had to be pushed into the wind business by the Colorado Public Utilities Commission. The company had sought to build another natural-gas plant to meet a growing demand for electricity -- based on stunningly erroneous projections that natural-gas prices would rise at the rate of inflation over the next two decades. Instead, the PUC decided that wind farms would be more economical. Xcel now gets 220 megawatts of electricity for its Colorado customers from wind farms on the eastern prairie, less than 5 percent of its total power generation in the state.

Last fall, Xcel issued a request for proposals for up to 500 megawatts of additional wind power. It entered into negotiations with companies offering roughly 400 megawatts, only to have one company withdraw and another downsize its bid because of "transmission constraints." Xcel ultimately signed with two companies for a total of 129 megawatts but ended up with only 60 after one of the two, Prairie Wind Energy of Lamar, discovered that it couldn't obtain wind turbines at an affordable price.

"Wind's got problems right now," says Stutz. "Turbines are hard to secure, steel is very scarce, and transportation costs are high. We're still confident we'll reach our goals under Amendment 37 and beyond. We like to think we're ahead of most of the rest of the nation in wind development, but it's not always quick enough for the locals."

Xcel is now seeking to add another 750 megawatts of wind power over the next decade. But the intermittent nature of wind power remains a stumbling block in building a reliable wind portfolio; it takes roughly 500 turbines operating on 2,500 acres to generate as much electricity as one 750-megawatt coal plant. Last week the company announced a pilot program with the Golden-based National Renewable Energy Laboratory to study how wind could produce hydrogen in off-peak hours, which could then be stored and used to generate electricity during peak demand times.

The greatest obstacles to developing wind power are not technical but political, advocates charge, and involve foot-dragging by utilities and uncertainty over the production tax credit that helps lower the cost of the power to the consumer. Congress let the credit lapse last year but revived it in this year's energy bill, signed by President George W. Bush in August.

"There's lots of wind developers and lots of windy land," says Ron Lehr, an attorney and former PUC chairman who now represents renewable-energy interests, including the Colorado Renewable Energy Society. "But getting the deal done is the problem."

Lehr acknowledges that "modest costs" are involved in integrating wind into a traditional power grid, but he insists those costs are greatly overshadowed by the savings that stem from using an inexhaustible and clean source of power. "Whenever the wind is blowing, the highest-cost natural-gas generator that's online is being turned down or turned off," he says.

Although Xcel has stepped up its commitment to wind power in several states in recent years, Lehr says, results in Colorado have been mixed. "I've seen them acquire fairly large amounts of wind in Minnesota," he adds. "I've heard their executives say that wind is going to be an important part of their portfolio. It's encouraging to hear those things.

"But it's discouraging to see them delay going out for a 500-megawatt bid, then come back with 129 megawatts, then 60 -- while the natural-gas price becomes astronomical. Had they bought the wind, they'd have a stable price for the life of the contract. That would make our bills a little more stable."

 
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