By Nick Worth
Dale Osborn, president and CEO of Disgen Holdings, has been developing wind power projects for quite a while.
“I’ve been at this for 25 years,” Osborn said. The former president of U.S. Wind Power started Disgen in 1996. He said the company specializes in Greenfield development.
“We’re a family-owned business and we currently have a total of five employees,” Osborn said.
Disgen’s first project was in Colorado, followed by projects in Pennsylvania and Massachusetts, and the small country of Eritrea in Africa.
“We have developed wind energy projects on five continents,” he said.
He said Disgen goes through several steps to bring together a project such as the 390 MW wind farm planned for north of Joseph City.
“The first step is to get the land rights tied up with a long-term contract,” Osborn said. Once that step is complete, the company then does an assessment to study the potential for wind and solar energy production. Following favorable findings for wind and solar potential, the company conducts environmental studies of the local populations of birds, especially raptors, animals and plants.
Osborn said Disgen has been working with the Arizona Game and Fish Department on the flora and fauna studies, and that the AG&F recommended Dr. Carol Chambers, a bat biologist from Northern Arizona University, to study the bat populations in the area to make sure there are no bat dens or a large feeding zone in the area.
Wind turbines cause changes in air pressure that cause problems with bats’ lungs and navigation abilities, Osborn noted. The effects are serious enough that they have led to the deaths of some endangered bats in the past.
According to Osborn, Chambers has put out monitors to detect bats in the area of the proposed wind farm and has found virtually no bat activity.
“The site is clear, but we’re going to continue the studies,” Osborn said. He said the environmental studies would cost approximately $100,000.
A Large Generating Interconnect Agreement has been reached with Arizona Public Service Co. (APS) to provide a connection from the wind farm to power transmission lines at Cholla Power Plant. The studies for that agreement came with a price tag of approximately $200,000.
The next step, according to Osborn, is a study to analyze the electrical transmission lines between Cholla and wherever the eventual power customer is, in this case most likely southern California. The transmission lines study will cost Disgen approximately $350,000.
“Those studies are waiting to be commissioned,” said Osborn. “We’re waiting on the outcome of the Southern California Edison (SCE) and APS deal.”
“Once they’re done, then we’ll need to get a power purchase agreement for a fixed price for 20 to 25 years,” Osborn said.
Osborn said SCE currently owns 48 percent of two generating units at the Four Corners Power Plant, which it is in negotiations to sell to APS. APS would then shut down three generating units and operate just the two it purchased from SCE.
According to Osborn, SCE holds the lease on a large transmission line from Four Corners to southern California. Once the sale is complete, SCE is supposed to release that line and APS will take it over.
“Moving energy over a line, there is a ‘toll’ of so many cents per kilowatt hour,” said Osborn. He described the fee as a ‘postage stamp’ fee. In other words, it costs the same no matter how much energy you move over the line.
The fee to move 390 MW of energy over the transmission lines would come to about $3 million per month, said Osborn.
“Our goal is to focus on the lowest cost per kWh for our customers,” Osborn said. He said that even though the wind generators are rated to produce 390MW, when all factors are considered, such as days with no wind, the actual output would be closer to 50 percent of capacity.
Because of this lower output, Disgen is in the process of seeking another special use permit with Navajo County to install a 200 MW solar generating array to supplement the 195 wind turbines. Osborn said his company has acquired the rights to another 40 parcels of land in the Joseph City wind farm area to install the solar generators.
Peggy Saunders of the Navajo County Planning and Zoning Department confirmed the paperwork has been received for the special use permit, but the application is still waiting processing until the required fees have been paid.
In order to qualify for a production tax credit of 2.3 cents per kWh, Disgen has to commence construction of the facility in 2013. Osborn said Disgen must spend five percent of the total project cost of $900 million, or around $50 million to satisfy the requirements.
Since the wind turbines make up about $630 million of the total cost of the project, Osborn said Disgen would probably begin by purchasing some of the wind turbines. He said Disgen has analyzed 18 different turbine designs.
He also said the wind portion of the project will generate approximately $25 million in property taxes over the 25-year life of the project, while the solar end would generate $18 million in property taxes. After the 25 years are over, the farm would be “repowered” with new, updated equipment.
“Right now we are in the pre-construction development phase in anticipation of the SCE and APS deal,” said Osborn. “I’m pretty optimistic. I believe the project is an exceptional project.”
He said when finished, the Joseph City wind farm will be the largest in the United States that is marrying wind and solar.
“The current estimated capital cost of both (wind and solar) together is $1.4 billion,” Osborn said. “We are in dialogue with two investors that are each capable of investing that much. We’re working with a turbine supplier and a construction company, and we believe the money will arrive.
“I’ve run the numbers on this eight ways from Sunday and it works,” said Osborn.
By Nick Worth