Enron wins pact to supply power from wind turbines

DALLAS -- The search for cheap, renewable sources of energy -- although slowed by the pressures of electricity generation -- may advance significantly with an Enron Corp. project to generate power from wind.

Enron's wind-power subsidiary agreed to build 150 propellered wind turbines to supply MidAmerican Energy Co., Iowa's largest electric utility, with a peak of 112.5 megawatts of electricity, enough for about 50,000 homes. Standing on masts about 15 stories tall, the turbines' 25-ton fiberglass and epoxy rotors will have about the same wing span as a Boeing 747.

The Iowa project, in the northwestern part of the state, will cost about $100 million and is expected to go into operation by the end of 1998. Because the winds do not always blow strongly, MidAmerican, which serves 642,000 electric customers, anticipates receiving an average of about 45 megawatts, under a 20-year contract. Enron, which is based in Houston and is the nation's largest independent natural gas company, said Wednesday that this project and others would provide power at rates competitive with fossil fuels. "Enron believes that renewables are going to play a more significant part in the United States' and the world's energy picture," said Kenneth C. Karas, chief executive of Zond Corp., the wind-power subsidiary of Enron. "The cost of some of the renewables, wind in particular but also solar, has declined and will continue to decline." In a deregulating, cost-cutting industry, some companies have pruned their renewable energy programs. But Enron, an advocate of deregulation, says that as renewable power becomes more economical, providing it will be a competitive advantage. Some smog-bound regions want nonpolluting energy, and some customers have said that they would pay a premium for it. "As customer choice arrives, that will be good for renewables," said Randall Swisher, executive director of the American Wind Energy Association. MidAmerican Energy, he said, has spent 14 years fighting a 1983 state law requiring the state's utilities to generate a portion of their power from alternative sources. But having persuaded federal regulators that the state could not mandate the purchase at relatively high costs, the company was still left with an obligation to seek new sources. Enron's bid was selected from the 18 bids Mid- American received late last year. The cost of generating wind power has fallen sharply from about 12 cents a kilowatt-hour a decade ago. The new project will provide power for 4 cents to 4.5 cents a kilowatt-hour, Karas said, before tax benefits worth about a penny a kilowatt-hour over the long run. The wind turbines will therefore be more efficient than most nuclear, coal and oil-fired plants, but not as efficient as the latest, which use natural gas. The largest operating wind project currently is owned by Zond and is near Bakersfield, Calif. It was completed in 1991 and uses 342 turbines to generate 77 megawatts, Karas said. His company expects to break ground on a 107-megawatt project in Minnesota in May. Enron is rapidly moving into the electricity business, with a $2.1 billion acquisition of Portland General Corp. pending. Daniel Barcelo, an analyst at Paine Webber, said that although renewables, including solar power, accounted for only a small portion of Enron's revenues, the company's investments helped secure its future in case the markets for these energy sources became larger. "They have mastered electricity; they have mastered natural gas, and this is another arrow in their quiver," Barcelo said. Providing alternative energy can be risky. Technology and management problems, analysts have said, have forced one of Zond's major competitors, the wind subsidiary of Kenetech Corp., to seek bankruptcy protection. Karas said, however, that slightly smaller versions of Zond's new wind turbines are operating in Vermont, Texas, Northern Ireland and China.

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