Alabama Power inked a 20 year agreement to purchase wind power from Oaklahoma, which the Alabama State Public Service Commission recently approved. Under the deal Alabama Power's customers will receive 202 megawatts of power and the associated renewable energy credits from the Chisholm View Wind Project in Oklahoma.
Our hats go off to Alabama Power because they have been seeking renewable energy since 2009 and deserve credit. The significance of the deal is that it will allow construction to begin on the 300-MW Chisholm View project. Oops we forgot to mention that and commercial operations of the wind farm should cimmence in December 2012. The Chisholm Project will be Oklahoma’s largest wind farm. We wondered though why it took so long to find the renewable energy and ink the deal and whether this was typical.
Why did it take so long?
The delay in procuring this renewable energy can be attributed to several things. Most notably getting the wind power to Alabama. That required negotiations with Entergy another utility and the Southwest Power Pool for firm transmission rights across their territories. Both Entergy and SPP own the transmission lines and have to be satisified with the deal before anything serious progress could be made. Put yourself in the Chishlolm View Wind Project's shoes. Would you order wind turbines or start constructing the project without the transmission rights? T. Boone Pickens made that colossal mistake and ended up canceling a huge wind project because he could not get the power to markets for lack of adequate transmission.
This is the typical situation for many renewable energy projects. Sure they can be built but why do that if you can't get your power to people who need it. It's like growing a crop and then finding out that you can't use the highway or afford to pay the tolls to use the highway to get the fruit to hungary customers,
What is also interesting about this deal is that Alabama doesn't have a renewable portfolio standard. As a result Alabama Power is not under pressure to find renewables to meet a standard or quote. Nevertheless, Alabama Power will sell the environmental credits to other parties outside of the state and credit these to Alabama Power’s ratepayers. In its September 9th approval of the contract, the Alabama PSC staff concluded that the agreement provided “an opportunity to procure rights to a cost-effective renewable energy resource that can be expected to yield positive net benefits to customers over its term.”