Iberdrola U.S. Planning to Spend $6 Billion Expanding Wind Power by 2013

The unit of the Valencia, Spain-based company will add 3,000 megawatts of power capacity within three years, Frank Burkhartsmeyer, vice president of strategic planning for Iberdrola U.S., told the World Energy Congress in Montreal yesterday. The unit has added 2,000 megawatts in the past two years, he added.

Iberdrola benefits from a gigawatt of transmission rights that enable it to reach large markets, particularly in western states. Current government policy is the best ever, he said, with economic stimulus grants, 29 states requiring renewable energy from their suppliers and six states setting renewable energy goals for their suppliers.

Iberdrola has received $867 million in U.S. Treasury renewable-energy funding. The Treasury provides money equal to as much as 30 percent of the eligible costs of renewable-energy projects once they start commercial operations. The grants are in lieu of investment tax credits.

U.S. Portfolio

Iberdrola operates a U.S. portfolio of slightly more than 4 gigawatts. Burkhartsmeyer said the parent company, Spain's largest wind-power operator, is the world's largest generator of renewable energy, producing 12 gigawatts of wind power.

The company also sees three challenges to operating in the U.S.: competition from natural gas, uncertainty after the recession and regulatory constraints.

Burkhartsmeyer said energy demand, which fell during the recession, is not expected to exceed 2007 levels until 2012. He said natural gas extracted from shale formations is expected to account for half the country's gas production by 2025, up from 20 percent today.

Uncertainty about government policy has limited wind power construction, and may again. The U.S. added 10 gigawatts of wind power in 2009, the most ever. With the stimulus grants due to end in 2012, construction is expected to drop to less than 7 gigawatts this year, Burkhartsmeyer said.

Iberdrola is the second-largest operator of wind farms in the U.S., behind Juno Beach, Florida-based NextEra Energy Inc. Iberdrola said in July it has built 41 wind farms in 23 states with a total capacity of 3,877 megawatts, with an additional 850 megawatts under construction.