Dire predictions abound for U.S. wind power development if a federal production tax credit dies as scheduled at the end of this year, but projects already in the works appear to retain solid investment appeal. Sempra Energy sure seems to think so. The sprawling California energy company said it is jumping in with BP on a couple of big wind projects – one in Kansas and one in Pennsylvania – and the companies said they’ll invest more than a $1 billion in the plants.
Sempra said its Sempra U.S. Gas & Power business was taking a one-half equity stake in the 419-megawatt (MW) capacity Flat Ridge 2 plant BP is building 43 miles southwest of Wichita in south-central Kansas, and the 144-MW Mehoopany plant that’s going in 20 miles northwest of Scranton, Pa. A couple of months ago we reported that BP had struck a $750 million deal with GE for 350 wind turbines for the two plants. Now it looks like Sempra will share in that cost and the additional cost of building out the plants.
Sempra Energy consists of San Diego Gas & Electric (one of California’s three giant utilities), as well as Southern California Gas, Sempra International and the U.S. Gas & Power unit. The company’s wind deal with BP fits with a trend in the energy sector, which has also seen Warren Buffett’s MidAmerican Energy Holdings buy into a couple of big solar-power projects.
“Through strategic partnerships with world-class companies like BP, Sempra U.S. Gas & Power continues to grow a highly successful wind business while extending its position as a leading solar energy developer,” said Jeffrey W. Martin, president and CEO of Sempra U.S. Gas & Power. “This is an exciting time for our company. Over the next 12 months we expect to more than double the size of our operating wind and solar generation portfolios, resulting in significantly improved recurring cash flows from long-term contracted assets.”
BP’s Wind Energy division will operate the wind farms when they go into service, the companies said.