Cook Inlet Region Inc. recently lost its key partner in the Fire Island wind project, but the company plans to spend millions to get the wind farm built and generating electricity in Anchorage by the end of 2011.
Citing mismatched business goals as the reason for the split, the Anchorage Native corporation said that it and California-based EnXco, agreed to part ways in October. Until then, EnXco had been the developer of the 54-megawatt wind farm and CIRI’s equity partner in the project.
CIRI said it hopes to sign a deal with another well-known wind farm developer in early December. CIRI can fund the project without an equity partner, if need be, said Ethan Schutt, a CIRI vice president for land and energy.
The parting with EnXco has not caused the project’s timeline to slip, CIRI spokesman Jim Jager said.
He and Schutt pointed out that CIRI spent more than $1 million this fall clearing ground for the turbines and studying the geology of the rugged island.
One reason the company has been aggressive in its timeline is that the wind farm needs to be operating by 2012 to qualify for a federal stimulus grant that would pay roughly one-third of the turbine, transmission line and other construction costs.
CIRI has pegged the cost of building the wind farm at $165 million, but it will be refining those costs in the coming months. Additionally, the state Legislature has committed $25 million to pay for a transmission line linking the wind farm with the Anchorage electrical grid. That money won’t be spent until CIRI convinces Anchorage utilities, such as Chugach Electric Association, to purchase the wind power.
For now, Chugach is studying how to integrate wind power into the electrical grid while minimizing the cost of any upgrades to ratepayers, said Phil Steyer, the utility’s spokesman.
While some have argued in favor of building a much bigger wind farm, Chugach and CIRI say that would make the project more costly and more technically challenging than it is already.
CIRI said it would make more sense to install additional wind turbines in other parts of Southcentral instead having them confined in one area where the wind won’t always blow.
To the chagrin of some lawmakers and renewable-energy advocates, CIRI, the local utilities and the Federal Aviation Administration have wrangled over the technical aspects of the wind farm for years.
The utilities are concerned about upgrades that might be needed to integrate wind power into the grid. So far, the scale of those potential upgrades seems minor to CIRI, but both it and Chugach have hired consultants to study the issue further.
The FAA previously raised big concerns about the wind farm interfering with navigation equipment on the island used for the nearby international airport. To meet the FAA’s concerns, CIRI next summer plans to spend millions of dollars to replace the navigation system on the island with an upgraded system located on the mainland.
CIRI said that it will have good estimates on how much it will cost the utilities to purchase power from Fire Island early next year. It hopes to sign sales agreements with the utilities by June.
How will it impact consumers?
The wind power generated from the proposed 34 turbines on the island will supply roughly 18,000 to 19,000 homes.
The per-kilowatt-hour cost of electricity from Fire Island probably will be slightly higher than today’s cost from Cook Inlet natural gas, the dominant source of electricity for Southcentral homes, but its prices will be less volatile, CIRI said.
At some point, Fire Island wind will drop below natural gas prices, though it’s not clear how soon, CIRI said. Cook Inlet gas production is dwindling and is expected to become more expensive in the future, CIRI said.
Elizabeth Bluemink, The News Tribune – http://www.thenewstribune.com/news/northwest/story/966757.html