Were Enron’s answers blowing in the wind?

Company’s neglected subsidiary faces an uncertain future, as does the domestic wind power industry

The Green Power I Wind Power Facility near Palm Springs is one of Enron Wind Corp.’s many holdings around the country.

The Green Power I Wind Power Facility near Palm Springs is one of Enron Wind Corp.’s many holdings around the country.

Courtesy Of Enron wind corp

Enron did not generate electricity. No, it became the world’s seventh highest revenue-generating corporation by acting as a middleman, merely trading the juice that has become the lifeblood of modern society, squeezing out profit from other people’s electricity-generating assets.

One of the few energy-related hard assets Enron maintained was its wind turbine-manufacturing subsidiary, Enron Wind Corp., which is based in California. Even though wind power has been the fastest growing power supply source over the past decade, Enron had been trying to sell its wind unit for more than a year.

Enron seemed to not have a clue about the true value of America’s last major wind company. Or perhaps it just viewed a company whose revenues grew from $50 million annually in 1997 to $750 million in 2001 as a source of cash to shore up its shaky financial footing.

Now the subject of headlines and investigatory hearings, Enron’s financial collapse and the resulting fallout offers lessons, perils and opportunities for wind power in the United States.

Enron got lost in a virtual world of online bandwidth futures and Internet connections, and forgot about fostering real innovations in supplying electricity from actual hardware that can offer lasting solutions.

To its credit, Enron was a proponent of curbing emissions to help prevent global climate change. Yet the firm failed to recognize that Enron Wind Corp. showed tremendous profit potential due to global climate change concerns.

“We are one of the top three wind turbine manufacturers in each of the top three world wind power markets: the United States, Germany and Spain,” points out Adam Umanoff, CEO and president of Enron Wind Corp.

Among those interested in Enron Wind Corp., which is not part of the bankruptcy proceeding that has engulfed its ailing corporate parent, is UBS Warburg of Great Britain. If snatched up by a European firm, the billions of U.S. dollars in private and public sector capital invested into wind technology will have failed to sustain even one major domestic wind turbine manufacturer.

Whether Enron Wind Corp. remains in the hands of an American company, or is sold to a foreign interest, is more a matter of pride and principle than something that would have a direct impact on consumers. Of course, this could become another example of how U.S. taxpayer investments in a new technology create a winner in the marketplace, only to have long-term jobs and other economic benefits stemming from this new technology exported to other countries.

Of greater consequence to consumers across the country is how the fall of Enron impacts federal deregulation legislation, particularly the rules governing transmission investments. These rules will determine whether wind power, a technology that Enron helped become a commercial technology, can really deliver on the promise of a better world tomorrow.

The fall of Enron is also casting a long shadow on current debates over further deregulation of the $200 billion U.S. power industry. Umanoff extols the virtues of deregulation, noting, of course, that competition in states such as Texas and Pennsylvania have helped open up new opportunities for wind and other renewable resources.

“California did not get it right, but that is no reason to abandon deregulation. Both Texas and Pennsylvania protect consumers from the wild price uncertainty that hit here. The devil is always in the details,” said Umanoff.

“For the first time in history, wind power can compete without subsidy with the least cost fossil fuel alternatives. This cost parity is the main driver behind today’s great global expansion of wind power,” he concluded. Last year, $6.5 billion was invested in new wind power facilities across the globe.

Deregulation’s chief opponents at the national level include still regulated private utility monopolies led by the Southern Company, whose prime assets are some of the dirtiest coal-fired power plants in the country. Southern Company, and other “dirty power” monopolies, see the Enron scandal as an opportunity to slow or stop states’ movement toward deregulation, and even turn the trend around.

“Companies that can deliver electricity to the grid in a clean, cheap and reliable manner are now positioning themselves to compete for customers since the demise of Enron,” points out Bruce Piasecki, president of the AHC Group of Saratoga, New York, a consulting firm working closely with utilities to improve their environmental performance.

“There are a number of coal-based utilities taking an opposite approach,” continued Piasecki, referring to Southern Company and other utilities based primarily in the south and Midwest. “They are trying to delay the inevitable triumph of clean over dirty. Congress will look not only at the unreliable accounting practices of Enron, but at the air emission profiles of all 120 electric utilities of consequence in this nation.”

Federal lawmakers will commence hearings on federal deregulation bills—in trouble before Enron’s nosedive—in February. There is much at stake for the domestic wind power industry on transmission issues, the part of the electricity business where the Federal Energy Regulatory Commission (FERC) holds sway.

Traffic congestion on the nation’s interstate transmission system increased more than 200 percent last year, according to the Edison Electric Institute. Clearly, policy-makers have for too long ignored how to retool the nation’s obsolete transmission highways.

America has the best wind resources in the world, they just happen to be located in rural regions, such as the Dakotas, Montana and the rest of the Great Plains, where transmission lines are few and far between. Anyone concerned about global warming needs to recognize that opening up the transmission grid to new players willing to bet on wind power is one of the key solutions to our long-term energy supply.

While just a footnote in the unfolding drama surrounding Enron, the future of wind power in the U.S. and the tedious details of transmission policy loom as critical components of our energy future and efforts to bring our antiquated power system into the 21st century.