USA - Wal-Mart signs up its first major wind power purchase

Wal-Mart Stores Inc. has agreed to buy wind-generated electricity from Duke Energy Corp. to power up to 15 percent of its 360 stores and facilities in Texas – a first for the retailing giant.

Under the four-year agreement, Bentonville, Ark.-based Wal-Mart (NYSE:WMT) will buy power directly from Duke's Notrees Windpower Project in Ector and Winkler counties in Texas starting in April 2009, the companies reported Thursday.

It will be Wal-Mart's first direct purchase of wind-generated electricity and make up about 226 million kilowatt-hours per year, the company said.

The 150-megawatt Notrees project is expected to start producing power in December and be fully operational next year. It's part of a total of 500 megawatts of wind power Charlotte, N.C.-based Duke Energy (NYSE:DUK) plans to have up and running by year's end, including its Ocotillo project in Howard County, Texas and the Happyjack project near Cheyenne, Wyo.

Duke Energy spokesman Rick Rhodes wouldn't disclose how much Wal-Mart will pay for the power or the cost of its wind power projects.

The utility plans to have its next wind power project, the 99-megawatt Campbell Hill project near Casper, Wyo., up and running by the end of 2009, and plans to announce more projects in the coming months, he said.

As for the effect of the financial crisis on Duke's wind power plans, "We don't really see the economy affecting our goals," Rhodes said. Duke has already ordered turbines for projects planned through 2010, he said.

Danish wind turbine maker Vestas will supply turbines for the Notrees project, and Duke has also purchased turbines from India's Suzlon and U.S. manufacturer General Electric Co., Rhodes said.

Wind power is a fast-growing source of renewable energy for the United States, doubling to more than 20 gigawatts in the last two years, the American Wind Energy Association reported in September (see U.S. Wind Power Doubles in Two Years).

While wind turbines still provide only about 1.5 percent of the nation's power, the U.S. Department of Energy in May forecast that wind power could make up 20 percent of the nation's supply by 2030.

The ongoing financial crisis and economic downturn may put a crimp in wind power's short-term growth, however (see Energy Financing Gone With the Wind).

T. Boone Pickens has said he may have to hold off on plans to develop a 4-gigawatt wind farm in Texas that was meant to begin producing electricity in 2011. The massive project is part of the Texas oil billionaire's plan to wean America from its dependence on foreign oil (see Knocking the Wind Out of Pickens and T. Boone Pickens Has a Plan).

Pickens had planned to spend about $10 billion on the project, but the economic downturn has led to his hedge fund, BP Capital, losing about $2 billion and investors fleeing the fund, the Wall Street Journal reported last month.

In October, major wind turbine manufacturer Gamesa said it would temporarily halt production at some of its factories while it waited for customers to confirm their purchase plans before setting its future production and sales targets (see Wind Turbine Shortage Over?).

And FPL Group (NYSE: FPL), which owns utility Florida Power and Light Co., said in October that it would scale back its 2009 wind power installation goals to 1.1 megawatts, down from 1.5 megawatts previously planned, as part of an overall cut in capital expenditures for next year (see FPL Cuts Wind Power Plans).

Still, wind power analysts say that its longer-term outlook remains bright, given wind's proven ability to provide power and the one-year renewal of tax credits for wind power projects by Congress last month (see Lawmakers Approve Energy Tax Credits, Bailout).

Wal-Mart isn't the first retailer to make a move into wind power. San Antonio, Texas-based grocery chain H-E-B is installing vertically spinning wind turbines at its distribution center in Weslaco, Texas (see Wind Energy Corp. Raises Cash, Installs First Small-Wind Turbine).

But that small wind turbine, a prototype built by startup Wind Energy Corp., is meant to produce between 25 and 50 kilowatts, much less power than Wal-Mart intends to buy from Duke Energy.