California Utility Signs Record 1,500-MW Wind Power Contract

January 4, 2007

Southern California Edison (SCE) agreed in late December to buy all the power produced by 1,500 megawatts (MW) of new wind power. SCE's contract with Alta Windpower Development LLC is the largest wind energy contract ever signed by a U.S. utility. The wind power project is a joint venture of Australia's Allco Finance Group, Ltd. and Oak Creek Energy Systems, Inc., which developed one of California's first wind power facilities back in 1982. The companies plan to build the Alta Wind Energy Center, the world's largest wind power facility, in the Tehachapi Wind Resource Area, located about 100 miles north of Los Angeles. According to Allco, the facility will be built over the next 5 to 10 years in increments of about 100 MW. According to Oak Creek Energy, those incremental additions will be timed to match the availability of new power transmission from the proposed 4,500-MW Tehachapi Transmission Project, which is scheduled to seek approval from the board of the California grid operator early this year. See the press releases from Edison International (the parent company of SCE), Allco (PDF 206 KB), and Oak Creek Energy (PDF 63 KB). Download Adobe Reader.

SCE also signed a contract with Chateau Energy, Inc. for 15 MW of biomass power to be generated at a new facility in the Mesquite Lake area of Imperial County. The new contracts are the latest results of a renewable power solicitation initiated by SCE in 2005, which had previously resulted in contracts for 204 MW of geothermal power, 19.2 MW of biomass power, and 31.8 MW of wind power. The latest contracts must be approved by the California Public Utilities Commission. It's important to note that while power purchase agreements are often key to the development of a renewable energy project, they don't guarantee that the project will be built. In fact, a study produced last year for the California Energy Commission (CEC) found that a minimum of 20 to 30 percent of all contracts should be expected to fail when large solicitations are conducted over multiple years. See the CEC report (PDF 851 KB). Download Adobe Reader.