Chemical Giant Makes Big Bet on Wind

Bloomberg:

Dow Chemical Co., the largest U.S. chemical maker by sales, has agreed to buy 200 megawatts of capacity from a wind farm under development in Texas.

A subsidiary of Bordas Wind Energy LLC is building the wind farm, which is expected to be completed in the first quarter of next year, Midland, Michigan-based Dow said Friday in a statement. The project, which will span almost 35,000 acres, will supply Dow’s Freeport, Texas, manufacturing facility. Terms weren’t disclosed.

“By entering into this agreement, Dow is taking a serious approach to our future energy needs in Texas and cost-competitive wind energy is a great opportunity,” Jim Fitterling, vice chairman of business operations at Dow, said in the statement.

Dow is seeking to increase its use of renewable power to 400 megawatts by 2025. About 900 megawatts of wind capacity will be built this year in the U.S. as almost 60 gigawatts of onshore wind power is installed globally, according to data compiled by Bloomberg New Energy Finance.

CleanTechnica:

So, what does Dow’s huge wind deal say about our energy landscape and the future of power generation? Three things:

1. Accelerating technological innovation and deployment at scale is driving down the cost of renewable energy.

Since 2009, the delivered cost of wind energy from many parts of the country has declined more than 50%. The Energy Information Administration recently released data showing that renewable energy generation provided 47 percent of new electrical generating capacity installed in the US during 2012 and 2013. In 2014 the US had installed a generating capacity of 65,879 MW of wind; this is approximately ten times the installed capacity of wind energy generation at the end of 2004.

Renewable energy is no longer a “what if” scenario. Rather, today we are seeing that renewable energy can be delivered to facilities at costs competitive with alternatives, providing a strong case to integrate renewable energy into our overall electricity supply strategy.

2. Wind energy is a perfect hedge against fossil fuel cost volatility.

In Texas, wholesale electricity prices are heavily influenced by natural gas costs. Natural gas feedstock is also a vital part of manufacturing processes. As consumers of both natural gas and electricity, manufacturing companies have the incentive to lock in a portion of future electricity needs through a long-term power purchase agreement at a known price with low-cost wind energy. While the use of wind energy is not able to directly replace the huge volumes of natural gas that Dow, for example, consumes for chemical manufacturing, this contract provides a cushion against natural gas price volatility and structural price increases at a cost and duration that is unavailable through a standalone natural gas trade.

3. Deals like this represent an efficient use of electricity markets.

Earlier this year, Texas completed a ten-year, $6.8 billion effort to build a huge network of new high-voltage power lines to connect all corners of the state to a robust electricity market that has become one of the most efficient and transparent in the world. These new transmission lines create better access to the market for all forms of electricity generation and allow for more efficient real-time operations and trading. This visionary investment has fostered competition and innovation, giving manufacturing companies more choice in their electricity supply so that they can better manage their costs.

Access to a reliable supply of cost-effective energy is a key ingredient to revitalizing manufacturing in America. Powering manufacturing with renewable energy is just one smart move to secure a future of sustainability, growth, and huge long-term competitive advantage.