海角大神

On Michigan鈥檚 鈥榯humb,鈥� a broad peninsula whose gusts make it one of the best places in the US to site a wind farm, Noble Environmental Power has erected 30 huge wind turbines 鈥� 16 more will finish the job.

But the project was hit by a financial gale last month when key underwriter Lehman Brothers went bankrupt. With Lehman out, Noble was forced to sell in a hurry. Three more Lehman-financed wind-power projects in New York are also in doubt, according to published reports.

America鈥檚 credit crisis is shaking up not only smaller alternative energy sectors like solar and geothermal, but also the largest renewable electricity sector 鈥� wind power.

As a result, wind generation may grow far more slowly in the United States next year, experts say. Financing for wind projects is likely to shift more to deep-pocketed utilities and other companies far from Wall Street 鈥� including big foreign companies searching for a foothold in the United States.

Until this fall, plowing billions into new wind farms from North Dakota to Texas to California had been the epitome of renewable-energy investing for hedge funds and big banks. But even though the US may still be the 鈥�Saudi Arabia of wind power,鈥� tapping that resource will be far tougher.

鈥淲e all know that with the impact of the credit crisis on the economy, there鈥檚 no way that this sector will not also be hurt,鈥� Randall Swisher, executive director of the American Wind Energy Association told reporters during a teleconference call last week. With the cost of capital rising and access to credit more difficult, 鈥渆ventually that鈥檚 going to have an impact on our members鈥� ability to do business,鈥� he says.

Wind power used to have the breeze at its back. This year it is the second-fastest growing source of electricity generation after natural gas. It鈥檚 also winding up a banner year of building about 7,500 megawatts of new generating capacity 鈥� about 50 percent more than 2007. And wind energy seemed set to soar, buoyed by recent renewal of a vital production tax credit (PTC) from Congress.

As recently as this summer, the cost of power from new wind farm was 8.4 cents per kilowatt hour, cheaper than power from a new gas-fired power plant (9 cents) or a new nuclear plant (9.8 cents). Only coal, at about 6 cents for kilowatt hour, was cheaper, according to Emerging Energy Research, a Cambridge, Mass.-based market research firm.

But prospects for banner growth in 2009 have ebbed. Falling prices for natural gas, transmission bottlenecks, and other costs have undermined wind power. Rising steel costs alone have pushed up the price of building one megawatt of wind power about 30 percent.

鈥淵ou鈥檝e got fuel costs declining, so the competitive advantage for wind over regular generation is narrowing,鈥� says Jamieson Bender, an associate partner with Ducker Worldwide, a Troy, Mich.-based market research firm. 鈥淭hat means the payback [from wind] isn鈥檛 quick enough for some utilities.鈥�

This year saw 262 wind projects announced while 66 projects were canceled or postponed 鈥� on a par with 2006, according to Ventyx, an Atlanta-based energy consulting company. New projects are likely to dip and cancellations rise in 2009, Mr. Bender and others say.

The critical short-term challenge facing wind power developers is financing. But with Wall Street plunging, the tax credit associated with wind power has lost some of its allure. Wind farms were financed symbiotically with investors who used the wind-production tax credits of 2.1 cents per kilowatt hour to offset profits elsewhere. The need to offset profits has dipped worldwide.

Until this fall, more than a dozen large investment groups actively financed wind power development. Only about half remain active, says Ethan Zindler, head of North American research for New Energy Finance, a London-based market research firm.

Lehman Brothers, one of five top wind-power lenders on Wall Street, is no more. Wachovia and AIG, have been sold and sidelined, respectively. JP Morgan and GE Energy Financial are question marks, Mr. Zindler says.

The industry was unsettled by news reports earlier this month that GE might pull back from wind-power financing. An official statement by GE to the Monitor seemed to rebut that. 鈥淕E has been 鈥� and will remain 鈥� a significant investor in renewable energy,鈥� the statement read. Yet it also affirmed that a 鈥渃ore issue is the industrywide difficulty of committing to new investments in a period of high uncertainty about borrowing costs.鈥�

Through a spokesman, JP Morgan managing director John Eber said: 鈥淲e definitely are still actively investing in wind and will continue to do so through the remainder of the year, as we did last year.鈥�

鈥淚t鈥檚 not that Wall Street is losing faith in wind power 鈥� Wall Street just doesn鈥檛 have as much money to play with anymore,鈥� says New Energy Finance鈥檚 Zindler. 鈥淲e鈥檙e going to see in the next six months a disruption in the way wind projects are financed.鈥�

Who will get hit, and how hard? Industry experts say the impact will be felt most by 鈥渕erchant power鈥� 鈥� smaller, independent power developers who have been a key force behind wind鈥檚 recent growth. Many have relied on selling 鈥渢ax-equity investing鈥� deals 鈥� the term used to describe how Wall Street trades cash in return for valuable tax credits to offset profits. Profits are down, and roughly two-thirds (about $5 billion) of wind investment in the US received tax-equity investment from outside investors, Zindler estimates.

Until credit markets smooth out, tax-equity investment in wind power is likely to suffer.

But despite the doom and gloom, longer-term trends continue to push wind ahead.

Some 30 states now have renewable portfolio standards (RPS) that require utilities to purchase renewable power. Regulated utilities with a strong cash flow will continue to build wind farms, observers say.

鈥淭here are still strong drivers pushing in wind鈥檚 favor including the nation鈥檚 push toward energy independence and reducing carbon emissions,鈥� says Keith Hays, a global wind industry analyst with Emerging Energy Research. 鈥淏oth presidential campaigns are pushing hard on both of these issues.鈥�

That鈥檚 good news for Cape Wind, the mammoth and controversial 130-turbine wind-energy project off of Cape Cod, Mass., whose cost has been pegged at around $900 million. A Cape Wind spokesman said last month that the bankruptcy of Lehman Brothers, which was to help provide financing, should have no major impact.