Watch out windfarms; the Utilities may be coming to buy you

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A very well-researched piece in today's Wall Street Journal - Change in the air - about how U.S. Utility Firms (i.e. electricity providers) are now seeking to buy windfarms outright, rather than just the electricity that comes from them via power purchase agreements.

The reasons for this are;

i) ownership costs much the same as buying from independent producers

ii) utility companies have more insight and control over managing the contribution of intermittent wind and other sources on their grids

iii) the cost of buying in windpower electricity from independents is rising

You could also add to this that with many of the best windy sites taken onshore and planning hurdles seemingly rising rather than falling, this is a surefire way of locking in wind power into your portfolio at a fixed price for a long time. 

The arguments against are;

i) it's a transfer of risk from the Independents through the Utility to the end electricity customer which will lead to higher unit prices

ii) regulators see an emerging vertical integration structure, that can drive prices only one way, up

It makes me wonder about how many ways we could now divide the wind sector. Turbine manufacturers, component suppliers, developers, owners and now, Utility players?

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