Electric Utility Exelon Buys John Deere Wind Business for $860 Million

Sept. 10, 2010
While construction activity in the wind market has declined in 2010 because of on-again, off-again federal subsidies for wind development, bureaucratic

While construction activity in the wind market has declined in 2010 because of on-again, off-again federal subsidies for wind development, bureaucratic red tape, and local NIMBY (not in my back yard) resistance to development, there's still plenty of signs of life blowing through the business.

Exelon Corp., Chicago, recently announced a deal valued at $860 million to acquire John Deere Renewables, a developer of wind power, in a transaction that will add 735 operating megawatts to Exelon's generation portfolio, as well as an additional 230 megawatts in advanced stages of development. Exelon expects to close the transaction with John Deere Renewables in the fourth quarter of 2010. Under the terms of agreement, Exelon will acquire John Deere Renewables' 735 megawatts of installed, operating wind capacity — enough to power 160,000 to 220,000 households — spread across 36 projects in eight states. Approximately 75 percent of the operating portfolio is already sold under long-term power purchase arrangements. As part of the acquisition, Exelon also has the opportunity to pursue 1,468 megawatts of new wind projects in various stages of development, including the 230 megawatts in advanced stages of development.

“We expect to see increasing demand for clean, efficient wind power at a national level and in the 29 states that already have a renewable energy standard,” John Rowe, Exelon chairman and CEO said in press release. “This acquisition gives Exelon a strong position in the wind generation business that adds diversity to our generation fleet and provides more options for future growth.”

The acquisition will become part of the Exelon Power division of Exelon Generation, which already includes more than 1,000 megawatts of owned and contracted renewable power, including hydroelectricity, wind, landfill gas and solar. Before this acquisition, Exelon was already the largest wholesale marketer of wind energy east of the Mississippi, with 352 megawatts of wind power capacity from five wind projects in Illinois, Pennsylvania and West Virginia. Exelon Power also owns and operates a 10-megawatt solar plant in Chicago, the largest urban solar plant in the country.

The acquisition is a move by Exelon, which provides electrical power to approximately 5.4 million customers in northern Illinois via ComEd and southeastern Pennsylvania via PECO, to diversify its generation portfolio. It's the nation's largest generator of nuclear power, operating 10 nuclear power plants in Illinois, Pennsylvania and New Jersey -- approximately 20 percent of the U.S. nuclear industry's power capacity.

While Exelon is a mammoth player in the utility market, with $17 billion in 2009 revenues and generating capacity of 31,003 megawatts, the company is a comparatively small player in the wind market compared to several other investor-owned utilities, according to data supplied by the American Wind Energy Association (AWEA), Washington, D.C. AWEA says the five largest utility providers of wind power are as follows: Excel Energy (3,176 megawatts); MidAmerican/PacfiCorp. (2,923 megawatts). Southern California Edison (1,772 megawatts); American Electric Power (1,196 megawatts); and Pacific Gas & Electric (1,131 megawatts).

Familiar names in the electrical market are becoming increasingly bigger players in the wind business AWEA says that last year GE Energy was the largest player in the United States, with 2,663 of the 4,770 wind turbines installed in the United States, followed by Danish manufacturer Vestas (830 turbines) and Siemens (505 turbines). GE Energy's 1.5MW turbine accounted for 40 percent of all the new capacity added in the United States.