Alliant to sell wind, renewable business
Madison, Wis.-based Alliant said “recent economic conditions have constrained financial markets and lowered funding for large capital projects in the renewable energy services market. With fewer renewable energy projects receiving funding, the competition for those projects has intensified and profit margins have been negatively impacted.”
RMT reported operating losses of 19 cents per share, which it said was due primarily to problems with a contractor on a solar project in New Jersey. It also reported losses on its Bent Tree wind farm project in Wisconsin and Minnesota.
Among Alliant operations is a 121 megawatt wind farm in Franklin County, Iowa, which opened in 2009. Alliant made no reference to the profitability status of the Franklin County project in its earnings release.
“2011 utility and transportation results were in line with our expectations, however RMT results disappointed,” said Bill Harvey, Alliant Energy Chairman and CEO.
Alliant said in its earnings statement that “RMT also experienced modest erosion of margins on its wind projects in 2011. In February 2012, Alliant Energy’s Board of Directors approved a plan to sell the RMT business. Alliant Energy currently expects to begin reporting the results of RMT in discontinued operations in 2012.”
Wind energy projects have been squeezed in the last year from competition from lower-price natural gas, which has come into larger supply in the U.S. because of large drilling operations in shale rock formations in the Southwestern U.S. and also in Pennsylvania, West Virginia and Ohio.
As natural gas prices have dipped to a ten-year low because of the large supply several utilities have announced plans to cancel or postpone wind energy projects. Also, the wind energy industry is sweating out extension of the production tax credit, which expires at the end of this year.
Alliant is part of the trend toward natural gas, saying it wants to buy a natural gas-fired generating plant in Wisconsin and that its next new generator in Iowa likely will be gas fired as well.
Alliant’s Interstate Power & Light subsidiary, which serves 550,000 electric and gas customers in Iowa, including Cedar Rapids, Dubuque, Mason City, Ottumwa, Marshalltown, Newton and Osceola, reported operating earnings of $124.3 million in 2011, down slightly from $128 million a year earlier.
Alliant also owns Wisconsin Power & Light, the major investor-owned utility in that state.
While Alliant is withdrawing from the wind business Iowa’s other major investor owned utility, MidAmerican Energy of Des Moines, has proceeded ahead with renewables.
The Berkshire Hathaway-owned company is completing the second phase of a 1,000 megawatt expansion of its Iowa wind farm complex and also has purchased solar power operations in Arizona and California.