Nevada ‘green power’ plan seeks financing

David Strow

Friday, Aug. 13, 1999 | 11:20 a.m.

If it comes to life, the Nevada Green Energy Project will be a power producer of historic proportions.

Producing more than 1,000 megawatts of electricity through solar, wind and geothermal power, the project would be the largest "green" energy producer in the world. It would prove, on an unprecedented scale, that solar and wind power can be generated at prices competitive with fossil fuels or nuclear power.

A powerful stable of companies, including subsidiaries of Duke Energy Corp. and Siemens, have signed on as partners.

"This is an opportunity on a (large-scale) basis to demonstrate the coordination of the available renewable technologies," said Bill Arrington, president and chief executive of Composite Power Corp., the Las Vegas company coordinating the project. "We believe we can be cost-competitive in today's marketplace."

But the ultimate question is how the $1 billion-plus project will be financed. That's the responsibility of Composite Power -- but it isn't clear where the funds will come from.

As proposed, the project will sprawl over as many as 5,000 acres near Amargosa Valley, located in Nye County, 110 miles northwest of Las Vegas. Hundreds of generation units, using the sun and wind of the area, will be aggregated to generate the kind of electrical output now produced by large coal, natural gas or nuclear power plants.

One thousand megawatts equals about one-fourth of the entire electricity demand of southern Nevada at its highest levels, according to Nevada Power Co.

With 350 days of sunshine a year and average winds of 17 to 21 miles per hour, the area is ideal for both solar and wind-generated power.

The electricity would be sold primarily to utilities in Nevada, California and Arizona. But in the emerging deregulated electricity environment, utilities across the country will be looking to buy blocks of generation to fill short-term and long-term needs -- and the project will look to sell to all of them, Arrington said.

"There's a lot of interest and pent-up demand for green power," Arrington said. "If we could start putting out power tomorrow, we'd have it sold."

One way the company will make its financing job easier is by putting the project up in phases, rather than all at once. The first phase of the project would have a capacity of 50 to 150 megawatts, at a cost of $150 million to $250 million. Arrington said he's hoping to complete it in two years.

"We're just trying to define what the first phase will be right now," said Joe Underwood, vice president of Duke Solar, a project partner. "You have to take the first step, and see where the first 50 to 150 megawatts goes. If that's successful, there's no telling what the limit is out there. There's certainly plenty of sunshine in Nevada."

As Arrington envisions it, partners would build their own generation facilities within the project. Composite would then be responsible for aggregating, marketing, selling and transmitting the power. That would greatly reduce the direct cost of the project to Composite.

Ten companies, including Duke Solar and Siemens Power Transmission and Distribution, have agreed to participate. The parents of the North Carolina companies have significant capital reserves -- but at this stage, it appears both are supplying their expertise, rather than cash.

Siemens, for example, is providing a study to see if the power lines going through the area are capable of handling the amount of power the project will generate. Siemens also said it will build a system that will compile the power from the various generators and feed it into transmission lines. It didn't, however, say who was paying for that system.

"Our only position right now is as a technology provider," Underwood said. "They're responsible for the financing. As a team player, we'd bring what we could to that, but currently, there's no commitment from Duke Energy to provide any financing."

Duke Solar became acquainted with Composite Power after investigating the possibility of putting solar operations in Nye County, Underwood said.

"This is an excellent location for this kind of plant," he said. "It'll be a great showplace for these renewable energy technologies."

But Underwood said the project is in the evaluation stage right now.

Arrington said Composite is discussing financing with "several major financial institutions," and said they're interested, but it isn't clear what form the financing would take. Composite is publicly traded, but since it has less than $10 million in assets, it doesn't report earnings to the Securities and Exchange Commission.

Composite Power's main business is the production of "environmentally friendly" electric transmission poles. Made of plastic materials, the company's towers present an alternative to wood and steel, weigh less than either and cost less.

The company's revenues and profitability are unknown.

Composite had announced a similarly ambitious power generation development in January, but shelved it while the company focuses on the Nevada project.

In January, Composite talked with officials in Carbon County, Mont., about building four coal-fired, 500-megawatt plants. The project, as proposed, carried a pricetag of nearly $2 billion, and would transmit power as far as Wisconsin. Carbon County, with a population of less than 10,000, is located on the Wyoming border, about 20 miles southwest of Billings.

But since the early discussions, Carbon County hasn't heard back from Composite, said a county commissioner.

"They've been asking for a lot of money from several different partners, but I guess they're not having much success there," said Commissioner John Prinkki. "As far as I know, they're still trying ... but I haven't heard from anyone for several months.

"They have good ideas ... but they don't have any of their own capital."

A company spokeswoman said Composite Power hasn't scrapped plans for the Montana plants, but is trying at this time to focus on raising funds for the Nevada Green Energy Project.