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Michael McDonald

Michael McDonald

Michael is an assistant professor of finance and a frequent consultant to companies regarding capital structure decisions and investments. He holds a PhD in finance…

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The $5 Billion Vote Of Confidence In Wind Power

The $5 Billion Vote Of Confidence In Wind Power

Philip Anschutz has an audacious plan to build the country’s largest wind farm and he is backing the plan with $5 billion of his own money. The plan would create the country’s biggest wind farm deep in Wyoming, part of which would be built on the billionaire’s 312,170 acre ranch.

Under Anschutz’s plan, the wind power generated in Wyoming would be run along a dedicated purpose-built set of transmission wires south to Las Vegas. From there it would connect to the California electric grid.

The scale of the project is massive and ambitious, even for a billionaire to accomplish. The plan would see 1,000 wind turbines installed on the Anschutz ranch, capable of generating 3,000 megawatts of electricity. The project is still in the infancy stages, but given current wind turbine capabilities and the amount of wind blowing in Wyoming, the project could amount to enough electricity to meet the needs of 1 million homes. Related: Can A Carbon Tax Save Canada’s Oil Sands?

Unfortunately, such a massive project has run into fierce opposition almost from the moment it was started years ago. The property that the wind farm would sit on is ideal for a wind farm. It features some of the few Class 7 wind areas in the country (wind energy is rated by class from one to seven). For comparison, in Iowa, where numerous wind farms are located, the National Renewable Energy Laboratory says that the winds are Class 3.

Yet despite the economic rationale for the wind farm, Anschutz has faced problems with getting his project approved.

The wind farm project is under the Power Company of Wyoming (PCW), which is an Anschutz-controlled entity. With the wind power being generated in Wyoming and most of the jobs being created there as well, California and Nevada have had little incentive to cooperate with the plan. Related: Good News For Coal Exporters From The Unlikeliest Of Sources

All states want to create jobs within their own borders, and the PCW project is so big that it threatens to displace other green energy projects in other states. But state-level hurdles are not the only issues here.

Anschutz ranch, where the project will be built, is owned partially by Philip Anschutz and partially by the federal government, a legacy of historical railroad agreements. As a result, Anschutz has to get federal approval for his wind farm, which has proved very difficult.

Not only that, but siting high-voltage transmission lines across such a large distance is infamously difficult. Adding to the complexity are concerns over the sage grouse, a bird that is somewhat of a cross between a turkey and a pigeon. Its habitat across the Western United States has been threatened by mining and other human activities. Related: Here’s How To Play Low Oil Prices

Unfortunately for the PCW project, the sage grouse habitat was listed as covering a large portion of the property where the wind farm was to be built. As a result, the Anschutz team has spent years tracking the bird’s habitat in an effort to show that building wind turbines on the land will not harm the animal.

The five-year study of the grouse is now complete, and PCW is hoping to begin work on the actual construction of the project soon. There are still a number of approvals to be gained before the company can actually break ground.

Still, if Anschutz and PCW can eventually get the farm built, it will usher in a new era of wind power and likely have a significant dampening effect on power prices in California as green energy supplies jump dramatically. At this point, it’s too early for investors to position themselves to make money off of the effects of the project, but this is definitely a deal worth watching for the future.

By Michael McDonald for Oilprice.com

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