Credit Crisis Slows Wind-Power Deal Flow

Even healthier companies that have helped finance the wind boom are being weighed down by the economy, meaning they aren't making as much money so they don't need the tax credits, said Peter Maloney, chief editor at Platts Global Power Report, an energy-industry magazine.

The investment money flowing into the wind-energy business flattened this year for the first time in several years, at about $5.5 billion dollars, said industry analyst Joshua Magee of Emerging Energy Research.

And J.P. Morgan (JPM), another of those major investors, is predicting that flow will fall by more than 20 percent in 2009, to about $4 billion.

The projects most in jeopardy are those that are in their infancy -- the ones in which developers were looking for sites and financing when the economic tsunami started.

"If you're talking about a project that's planning to enter construction in 2009, there has been a very slow deal flow ... since the financial crisis began," said Magee, adding that situation for many smaller developers is "fairly dire."

No one tracks just how many projects are in the development stages, between planning and building, but industry analysts say there are many.

One company, Chicago-based Midwest Wind Energy has one project under construction in Illinois and another it hopes to start building next year, president and founder Stefan Noe said.

He's optimistic that those and other projects will happen, in part because the company works with a financially healthy subsidiary of Edison International (EIX), the utility giant, to finance its projects.

And, with President-elect Barack Obama pledging financial support for renewable energy, Noe thinks wind power could be on the verge of significant growth, but only if the country's faltering economy doesn't get in the way.

"If there's any concern I have, it's that the capital markets don't open up quickly enough, because there are certainly plenty of projects in development," he said. "Eventually, those markets need to free up for anybody to continue to successfully develop these projects because they are capital intensive."

Illinois has at least a dozen or so projects that haven't started construction. The state is the country's eighth biggest wind-power producer with 11 wind farms generating about 744 megawatts of power, according to the Wind Energy Association.

Texas is tops, with 6,300 megawatts of existing capacity spread over dozens of wind farms.

Farms that are built mean mini windfalls for land owners like Doyle, and for local governments.

McLean County, where Doyle lives, will be paid $288,000 next year in taxes for the turbines, county administrator John Zeunik said.

"Then obviously for the school districts, there's more," he said.

That money may be harder to come by as building slows.

But O'Connel, from Black & Veatch, is optimistic that the hurdles will be worked out, but not necessarily in the next year. The companies that were pushing wind-energy development, he said, are no longer able to do so.

"Some of those financial institutions have gone bankrupt," he said, "and none of those people are making money.

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