Merchant wind power

Main article: Wind Power

Merchant wind power (MWP) is a framework of developing electricity from wind turbines placed on land owned by brown-field sites, such as those of heavy industry. The wind-turbine operators then supply the land owners with power at reduced rates.

History

The phrase was originally coined by Ecotricity, a UK-based, renewable energy company and wind developer. This has created a market where MWP companies install and operate the turbines on brown field sites, with site owners leasing land to the operator and purchasing green electricity at reduced rates.

In most cases the development, installation and operation of the turbine site is carried out by a company specialising in merchant wind power who effectively own and operate the turbines, taking all the financial risk required such as paying for procurement of turbines, installation cost etc.

In the United States

In the United States, "merchant wind power" refers to plants built to serve spot electricity markets. Typically, wind plants in the US are built based on long-term (10–20 years) contracts or "power purchase agreement" with a wholesale purchaser (such as a regulated utility or power marketing firm). Such arrangements allow for more favorable financing, as lenders and investors are more certain of future plant revenues when a credit-worthy utility agrees to purchase all or most future output at pre-defined prices (note, price may not be fixed, and can be defined either based on broad inflationary indices or linked to related commodity markets). However, in a merchant power arrangement, the wind plant is built without (or with little) prior commitment of its output to contractual off-takers. Instead, the power is sold on a spot or short-term contract basis, such as on the PJM Interconnection, NYISO, or ISO-NE independent system operator power markets that have developed in the Northeastern US.

Examples

The wind power project in Madison, NY is an example of a US merchant wind power plant.

An example exists in the UK at Green Park which is situated on the M4 motorway in Reading.