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PPM Exec Urges Wind Industry to Prepare for Eventual Lower Gas Prices

While wind power currently has the ability to compete "very effectively" against natural gas given the sky high prices for gas, the wind power sector must start preparing for the day when gas prices come back to Earth, a top official with PPM Energy said last Monday.

Terry Hudgens, CEO of PPM, made his comments at the opening day of "WINDPOWER 2005," the annual conference and exhibition of the U.S. wind energy industry, in Denver, CO.

Noting that natural gas is now priced at "seven or eight dollars an Mcf," Hudgens said that that translates into about six or seven cents a kilowatt hour "and wind can compete very effectively in that environment."

With liquefied natural gas (LNG) "coming in, where's the future going to be? I believe it's probably going to be lower gas prices for some periods of time. We need to make sure we can compete in that environment."

Hudgens said that "we need to see wind moving up the agenda when it comes to policymaking in terms of seeing strong consideration when it comes to energy policy, energy security, economic development, economic interest, balance of payment, those things. Right now, we're just still picking up the scraps off the table."

For his part, Thomas Carbone, president of Vestas Americas, believes that politicians, "both at the local, state and federal level, are really starting to see that wind power is good politics. That it is an opportunity for them to sort of merge energy-environmental policy with some very sustainable local economic development initiatives."

Meanwhile, Andreas Nauen, president of Siemens wind power division, said that "if you look out into 2009, 2010, this market will surely double," referring to wind power on a global basis. Several drivers will boost wind energy, he noted, including the Kyoto Protocol, which he believes will cause certain countries to move to adopt wind as part of their energy portfolios.

In the U.S., the wind power industry is pushing federal lawmakers to put in place a more permanent production tax credit (PTC) as a way in which to provide stability to the sector. The current PTC for facilities that generate electricity from renewable energy sources expires at the end of this year.

Mike O'Sullivan, senior vice president of development at FPL Energy, noted that the pending PTC expiration is the third one that the industry has faced since 2001. "Every two-year extension really is a one-year extension," he said. "Everyone sits on their hands for the first year and loses that first year. So let's just call it what it is -- it's a one-year extension disguised as a two-year extension."

Rebecca Watson, assistant secretary at the Department of the Interior, said that the wind power industry "has an opportunity to sell their business story. They need to tell a story. They need to tell a new story."

There may be a perception in Washington, DC, about wind power that is "dated," she added. "Maybe it's a little bit of the flower child syndrome and now it's a business, it's different, and that story needs to be told to the policymakers -- both in the administration...and up on the Hill."

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