FPL Group expects more than $10 billion of power-related assets to be put up for sale as generators continue to look for ways to improve their balance sheets, Lewis Hay, FPL’s CEO, told a gathering of investment professionals last Tuesday in an appearance before the Morgan Stanley global electricity and energy conference in New York. If the rumblings of investment bankers are to be believed, another $5 billion to $10 billion worth of power plant property could also be waiting in the wings for companies looking to scoop up assets in a market that appears to remain firmly on the side of buyers.

“As the credit agencies have put more and more pressure on the less well capitalized companies, we’re seeing just an increasing number of plants available for sale and we expect this trend to continue,” Hay told the conference.

“If you look at just what’s been announced out there in the market, we see over $10 billion worth of assets coming on to the market,” the FPL official said. “And then if you listen to some of our friendly investment bankers who whisper what else is coming along the way, there’s at least another $5 billion to $10 billion coming on to the market,” he added.

“We’ve already seen prices come down,” Hay noted. “Frankly, prices have only come down, at this point, to what we think are ‘fair prices’,” the executive went on to say. “We’re not going to create a lot of value by buying at those prices, nor would [FPL] likely destroy much value, but I think with the supply and demand balance being where it is right at the moment, there’s a good chance that you’ll see some attractively priced assets over the next year or so.”

FPL believes that because of that outlook, maintaining the utility’s “strong financial position” will enable the company to capitalize on some of those opportunities if they do materialize.

Meanwhile, Hay also used his appearance before the conference to tout the role of wind power at FPL Energy, the company’s generation unit. “To me, one of the features that really differentiates FPL Energy from the rest of the merchant energy, or IPP, players is our wind business.”

Wind power represents 29% of FPL Energy’s portfolio. As of the start of this year, the company had 24 wind farms in Iowa, Kansas, Texas, Minnesota, Wisconsin, Washington, Oregon and California.

While FPL is not seeing a lot of development opportunities over the next few years for fossil-fueled power plants, Hay said that “there’s plenty of opportunity for wind generation, as many states have passed rules requiring the utilities in those states to sell a certain percentage of power generated from renewable sources.” When it comes to renewable energy options, Hay argued that wind power is “about the only meaningful game in town.”

The FPL executive said that wind power is also very profitable. “The capital costs each year have been coming down,” Hay said. “At this point, we’re below $1,000 per kilowatt of capacity and when you factor in that there’s no fuel costs and you get the production tax credits on top of that, wind is very profitable.”

Hay said that wind can compete, “even at today’s low gas prices.” In addition, the utility executive predicted that if the energy industry sees any increase in fuel prices or more stringent environmental requirements, “wind will become even that much more competitive.”

Those with a vested interest in the development of wind power continue to wait for Congress to renew a federal wind production tax credit (PTC) that expired Dec. 31. According to the American Wind Energy Association, the PTC provides a 1.7 cent per kWh credit and is an important factor in financing new wind power installations.

Hay noted that all of the plants the company has built so far are already grandfathered under the PTC. He said that renewal of the PTC in Congress will likely need to “ride on the coattails” of a larger piece of legislation. “The issue really in our minds isn’t — will the PTCs get extended? The question really is when?” the FPL official went on to say.

“Once the production tax credits get extended, we believe we can add between 500 and 1,000 MWs per year of additional wind-generating assets to our portfolio, which will further help to drive our earnings growth,” Hay said.

A spokesperson for Public Service Co. of New Mexico recently cited Congress’ allowing the PTC to lapse without renewal as a key sticking point as the utility mulls the possible development of an approximately 200 MW wind farm in the eastern part of New Mexico.

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