The Buffalo Gap project is in the Abilene-Sweetwater corridor, west of Dallas-Fort Worth, one of the fastest growing wind generation areas in the world.
Texas is tops in Wind Power
The leadership role of the State of Texas in wind power is being reinforced with
the 524 megawatt Buffalo Gap Wind Farm project, which will be among the largest
wind farms in the United States.
By Paul MacDonald
It may seem a bit ironic, but the State of Texas—home to some of the largest energy
companies in the United States and considered by many to be the home of the oil
and gas industry in the U.S.—has now become a leader in alternative energy.
The state has been far and away the leader in terms of installed wind power in
the U.S. in recent years (see sidebar story page on 8). In fact, the world’s largest
wind farm has been proposed for the Texas Panhandle, on a site northeast of Amarillo.
Mesa Power, owned by T. Boone Pickens, wants to build as many as 2,000 turbines
on a wind farm that would spread across nearly 200,000 acres.
And just as many traditional energy companies, such as BP and Chevron, have entered
into the alternative energy area; the industry has also seen many power companies
directly make the move into wind and solar power.
AES Corporation is one of those independent power producers which has made some
significant investments in alternative energy, including in Texas, in recent years.
While it is based in Arlington, Virginia, AES is truly a global operation, with
some 121 power generation plants in 28 countries around the world. Its facilities
have the capacity to generate approximately 43,000 megawatts—and the company itself
generated revenue of $11.6 billion in 2006.
And AES intends to roll out its wind energy strategy on an international basis.
"This expansion is consistent with AES’s long-term goal to be a major wind energy
producer, and is part of our plan to more than triple our wind-generated megawatts
globally by 2011," says Willam Luraschi, AES executive vice-president and president
of alternative energy. "As one of the cleanest, lowest cost renewables, wind generation
will be an area of continuing focus and priority for AES."
One of the largest energy ventures the company has been involved with in recent
years has been the Buffalo Gap project in Texas. When completed, the 524 megawatt
(MW) project will be among the largest wind farms in the United States. The company
is currently wrapping up construction on phase three of Buffalo Gap, a 170 MW expansion.
Ned Hall, president of AES Renewable Generation, explains that AES became involved
with the Buffalo Gap project—the company’s first wind generation project—through
the purchase of California-based SeaWest Wind Power Inc.
It was truly a strategic acquisition, says Hall. "When we decided to enter the wind
business, we recognized that AES already had core competencies that covered 90 percent
of the skills that we needed to be successful—but that last 10 percent is really
unique to wind power." These include the specific skills on how to efficiently build
and operate wind power generation facilities.
AES, with its dozens of power generation facilities, certainly had core competencies
in traditional power plant development. By acquiring SeaWest, they were able to
bring a company into the fold that had been involved in wind power since the early
1980s. SeaWest had a number of wind power projects in operation, and more in the
pipeline, including Buffalo Gap.
Hall says that AES has been very active in wind power acquisitions in the last
several years, making 11 different transactions in the wind power area. "But SeaWest
was probably the most pronounced in terms of the impact it has had on our efforts
in wind power."
When AES acquired SeaWest, Buffalo Gap was envisioned as a modest sized wind power
project, at 120 MW, made up of 120 Vestas V80 turbines. But that was quickly followed
by a second phase, which went commercial in 2007, involving an additional 233 MW
using GE turbines.
The third phase of Buffalo Gap, 170 MW employing Siemens turbines, is now under
construction. "And we’re still not done," says Hall. "We’ll expand the site further,
as conditions warrant."
Buffalo Gap has been expanded, and will expand in future, as transmission capacity
grows, he adds.
"One of the reasons we find Texas attractive is its commitment to renewable energy
as demonstrated by the willingness to invest in transmission capacity to support
the growth of renewable energy throughout the state," says Hall.
"We believe that Buffalo Gap is going to be a good long-term growth opportunity
going forward because it is one of the areas in Texas that has been identified for
further transmission system upgrades."
Buffalo Gap is in the Abilene-Sweetwater corridor, west of Dallas-Fort Worth, which
Hall says is one of the fastest growing wind generation areas in the world. Essentially,
it’s a very attractive wind resource area in what is a very wind resource-rich state.
All
of this makes for an appealing package. Hall notes that AES has an additional 1,000
MW of wind power planned for Texas, in addition to what is already in place with
Buffalo Gap. Texas is also at the top of the list for wind projects for many other
companies.
While the state may be considered "wind power friendly," Hall explains that each
project still has an approval process to go through. "We do complete and extensive
environmental studies for all of our sites," he says. "There is a very well defined
process that you go through in Texas, and we went through a review that involved
the county governments. We did a lot of interfacing to explain what we are going
to do."
A key constituency with any wind farm project is the landowners. "We spent
a lot of time meeting with them and putting in place a process that keeps them informed
and honors their commitments and concerns. That’s important, because these landowners
will be continuing on with what they were doing before with the land, after the
wind farm is built."
As part of the process, some areas at Buffalo Gap were identified
as nesting areas for bird species, and the siting of turbines and construction was
managed to minimize any impact. AES also identified any potential historic sites,
anything that might have any archeological significance. Hall says that the company
has Mike Azeka, one of the leading experts in the area of wind environment and permitting,
on staff to help it work through the approvals process.
"We also work with external consultants, too," he adds. "Typically, you have to
map the wetlands on your site. In just about every jurisdiction you go to in the
U.S., there will be local consulting companies that have strong expertise on the
local flora and fauna. So it is a combination of our internal experts and leaders
working with the right external consultants to get approvals for the right location."
Hall says that with the environmental issues addressed, Buffalo Gap has proven to
be an "excellent" site for construction of wind power generation facilities. "We
have an excellent relationship with the contractors in the area and we have been
able to source the resources to get the phases built on schedule and on budget."
With such a huge project, AES had all the components lined up well in advance. Hall
notes that AES, which is working towards being a global wind power player, enjoys
a strong relationship with a variety of turbine supplies, including GE, Siemens,
Mitsubishi Heavy Industries and Vestas.
They recently signed a multi-year contract with Vestas for delivery of 52 units
of the V90-3.0 MW wind turbine.
The contract includes delivery, installation and commissioning of the turbines,
as well as a five-year service and maintenance agreement.
"What works with those companies is that they—along with AES—have global strategies,
and are focused on growing globally."
The company’s construction approach with wind farms—in terms of the role it takes—is
site specific, Hall explains. "We don’t have a one-size-fits-all approach.
It depends on the location, the project and what is going on in the market. But
we’ll have a site manager in charge of construction and a team of about 10 people
who will supervise the construction on behalf of AES."
The company might act as general contractor on a project or, as in the case of the
Buffalo Gap project, hire a general contractor. D. H. Blattner and Sons and Renewable
Energy Systems (RES) were the general contractors on Buffalo Gap.In terms of construction,
phases one, two and three have been separate construction projects, but AES has
tried to achieve, where possible, somewhat of a continuous construction flow with
Buffalo Gap.
With the tremendous growth—and interest—in wind power, companies involved in building
wind farms, such as AES, have developed their own processes for managing a large
number of projects—and identifying which projects get an early green light. "We
don’t have unlimited resources, so like other companies, the proposals are put forward
and then prioritized based on what is best for our stakeholders, which in the case
of an investment decision are primarily the shareholders.
"We start off by analyzing the business opportunity, and we tend to emphasize places
where AES already has a presence, with people in place that can support our business
development, construction management and operating efforts," explains Hall.
The company has a significant presence in North America and the UK, so initial efforts
have been directed at those two countries. But, Hall emphasizes, they are also looking
at new markets, such as France. "We also focus on the markets where there is government
or legislative support to promote renewable energy," he adds.
Hall believes the future for wind power is very bright. "Wind power is high growth—it’s
growing at 20 to 30 percent a year in almost all the markets where there is an opportunity,
and there are new markets opening, both in the U.S. and internationally."
The State of Texas—home to some of the largest energy companies in the United States and considered by many to be the home of the
oil and gas industry in the U.S.—has now become a leader in alternative energy, with projects such as the Buffalo Gap wind farm (above).
There seems to be general agreement that wind power could generate 10 to 20 percent
of the electrical power required in industrial countries. "Globally, we are at significantly
less than one percent wind generation today," notes Hall. "So there is a huge growth
opportunity around the world in wind generation. It’s going to take us a long time
to get to that 10 to 20 percent.
"And that fits the strategy of AES very well, to be a global wind power company."
The company’s history as a traditional power producer also fits quite well with
the move into wind power, Hall believes. All power projects, regardless of whether
they involve a dam, a coal power plant or wind turbines, have some common elements.
They involve identifying the right location, working with local communities and
government to move projects forward, and securing the necessary resources to get
the job done.
"AES has significant experience in managing large and complex construction projects,
and in ultimately operating these projects," adds Hall.
"We are very focused as a company on being a top decile operator in all our businesses,
and creating real value and opportunity. That is a strength we try to bring the
wind business as well."
Going forward, Hall says one of the main challenges the wind power industry faces
is, simply, people. That involves identifying, attracting, hiring, and training
people to support the growth in wind power.
"It really does all depend on having high quality, talented people to drive the
development, construction management and operation of these wind facilities."
n addition to hiring people to handle the growth on the wind power side, AES is
working to best utilize the 30,000 people it already employs, giving them opportunities
to be part of the company’s plans to grow significantly in wind.
The other big challenge, with the pace of growth, is obtaining the turbines and
associated equipment to build and operate wind farms. These resources are in short
supply. But Hall says it looks as if that issue is in the process of being resolved,
with ongoing expansion efforts on the part of existing suppliers, and new suppliers
coming on stream, such as from China, Korea and Brazil.
"The shortage of materials has definitely been a constraint on the industry, but
that issue is in the process of being resolved."
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