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September 14, 2012Exelon from Wind to Solar
Exelon which is the owner of the biggest portfolio of nuclear power plants in the US has been kicked out of the powerful wind industry association AWEA. The primary reason is that Exelon has opposed the extension of the 30% wind tax credit given to the wind industry. Note wind energy is heavily dependent on this subsidy for its survival and growth and with one of its own member opposing it, AWEA had little choice. Exelon has recently turned anti-wind energy because in 2010, it had snapped up Deere’s wind energy assets for a cheap price taking advantage of similar woes in the wind industry at that point of time. However Exelon is turning more pro-solar as it bought the 230 MW solar power plant from First Solar recently getting a massive subsidy from the federal government.
The reason for this change in heart for Exelon is because wind energy is reducing profits for the company as cheaper wind power is reducing the price of electricity. This in turn is reducing the profits and revenues for the company leading it to lobby against wind power.
Read more about wind power pros and cons.
Exelon uses Green Downturn to Acquire Wind Assets Cheaply
Exelon which is one of the biggest power utilities in the US with more than 30 GW of Power Capacity has managed to enter the Wind Sector at a very opportune time. The purchase price of just $1.2 million/MW looks extremely cheap compared to the more than $2 million/MW paid in 2007 deals. Acquiring 735 MW at a price of $860 million is a bargain with $40 million being paid for 230 MW in advanced development. This Deal is not only very Cheap but will also help Exelon expand its Renewable Energy Portfolio to meet any RPS standard that is implemented in the future. The Deere Wind Energy Division used mostly Suzlon Turbines and its Wind Farms were spread out in 8 states of the US.
Chicago Tribune
The Tribune reported in August that Exelon — the nation’s largest owner of nuclear power plants and historically a climate change evangelist — has been hurt by low-cost wind power, which is cutting into its margins at night when the wind blows, dipping power prices.
Exelon CEO Christopher Crane, who took the helm at Exelon this year from the nuclear power industry, told investors last month that $425 million the company had earmarked for wind investment in 2013 and 2014 will likely flow to other technologies, in particular, solar, if the tax credits are not extended by their expiration date at the end of 2012.
The company’s solar projects have been heavily subsidized by government programs. The Treasury Department approved a $646 million loan guarantee from by the Energy Department to help Exelon build a 230-megawatt solar project under construction in Los Angeles County. The company has said it expects to be fully reimbursed for the initial costs to build the project by 2015.