Merchant wind power (MWP) is a framework of developing electricity from
wind turbine
A wind turbine is a device that converts the kinetic energy of wind into electrical energy. Hundreds of thousands of large turbines, in installations known as wind farms, now generate over 650 gigawatts of power, with 60 GW added each year. ...
s 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
Renewable energy is energy that is collected from renewable resources that are naturally replenished on a human timescale. It includes sources such as sunlight, wind, the movement of water, and geothermal heat. Although most 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
Merchant power plant development began in the United States in 1998 with fossil fuel generation projects. In 2000, the first merchant wind plant constituted a signal that wind power costs had declined sufficiently to support investment in wind power without reliance on off-take contracts.
In the United States, "merchant power" refers to electric power generation plants built to serve
spot
Spot or SPOT may refer to:
Places
* Spot, North Carolina, a community in the United States
* The Spot, New South Wales, a locality in Sydney, Australia
* South Pole Traverse, sometimes called the South Pole Overland Traverse
People
* Spot (produ ...
electricity markets, without reliance on off-take contracts. Typically, power 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 plant is built without 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 11MW wind farm in
Madison Madison may refer to:
People
* Madison (name), a given name and a surname
* James Madison (1751–1836), fourth president of the United States
Place names
* Madison, Wisconsin, the state capital of Wisconsin and the largest city known by this ...
, New York was the first merchant wind power plant in the United States. It was developed by the unregulated arm of PG&E by Laura Walker.
Enron had planned to build the first merchant wind power plant in the country. However, prior to beginning operation in June 1999, the 16.5MW California plant entered into a power purchase agreement for its output. PG&E Generating Company's
Madison Windpower Project began commercial operation in New York in October 2000 without relying on a power purchase agreement—thus making it the first pure merchant wind power plant in the country.
Another example of a merchant wind farm exists in the UK at Green Park
which is situated on the
M4 motorway
The M4, originally the London-South Wales Motorway, is a motorway in the United Kingdom running from west London to southwest Wales. The English section to the Severn Bridge was constructed between 1961 and 1971; the Welsh element was largely ...
in
Reading
Reading is the process of taking in the sense or meaning of Letter (alphabet), letters, symbols, etc., especially by Visual perception, sight or Somatosensory system, touch.
For educators and researchers, reading is a multifaceted process invo ...
.
See also
*
Electricity market
In a broad sense, an electricity market is a system that facilitates the exchange of electricity-related goods and services. During more than a century of evolution of the electric power industry, the economics of the electricity markets had un ...
*
Power purchase agreement
*
Project finance
References
{{reflist, colwidth=30em
Wind power