How Billionaire Philip Anschutz Is Cashing In on California’s Thirst for Wind Power
A firm controlled by Philip Anschutz, the billionaire entertainment and pro sports magnate, will soon build the largest wind farm in the United States to serve utilities in California, where officials have set ambitious green power goals.
The $5 billion project, however, will be constructed 700 miles away in Wyoming, a state better known for coal mines and oil fields.
The vast distance between the two states provides a different Anschutz-owned firm with another big opportunity: a $3 billion project building transmission lines to deliver the power—one of a dozen similar power-line projects by other companies across the West.
In all, about 5,700 miles of transmission lines are in development with the goal of delivering renewable energy to California from other states, according to the Western Interstate Energy Board.
Such investments are an outgrowth of an emerging paradox of California’s well-known political bent toward aggressive environmentalism. Green power advocates and state officials want more wind power—but California conservationists increasingly oppose more wind farms as an environmental blight on the state’s pristine desert landscape.
Those conflicts are pushing wind farm development to other states, creating new opportunities for wind power and transmission firms to deliver electricity to California’s nearly 40 million residents.
“It’s the right project, in the right place, at the right time,” said Bill Miller, chief executive of the two Anschutz-owned companies—Power Company of Wyoming and TransWest Express.
Though wind power is surging nationally, the future of wind farms in California suffered a major blow last year when regulators completed an eight-year process designed in part to identify locations for new renewable energy projects.
The U.S. Bureau of Land Management, the California Energy Commission and state and federal wildlife agencies sought to balance green power development with preservation of scenic vistas, Native American tribal lands and critical habitats for threatened species such as the desert tortoise and the Mohave ground squirrel.
But the solar and wind power industries have argued that the resulting plan unfairly favors land conservation over projects needed to wean California off fossil fuels and combat climate change.
The California Wind Energy Association estimates that only 2 GW of additional wind power can be developed here, a figure its executive director, Nancy Rader, called “a stretch.” California will need about 15 GW to meet its goal of deriving half of its power from renewable sources by 2030—and far more if the state succeeds in a separate effort to promote electric vehicle adoption, according to state estimates.
Anschutz, who lives in Denver, got his start in the oil drilling industry in Wyoming. He has amassed a fortune of $12.5 billion, according to Forbes, through real estate and entertainment properties including the movie theater chain operator Regal Entertainment Group. Anschutz Entertainment Group holds ownership interests in professional sports teams including hockey’s Los Angeles Kings and basketball’s Los Angeles Lakers, along with dozens of major arenas, theaters and music festivals.
The billionaire’s backing helped the Power Company of Wyoming and TransWest Express support their wind and transmission projects through an eight-year permitting process that Miller said cost $100 million.
Now other developers are watching those projects as a bellwether for their own planned investments in transmission lines to bring renewable power to California.
“If we see another project being successful, then we’ll be a lot more willing to invest $100 million in permitting,” said Michael Skelly, president of Clean Line Energy Partners, which has proposed two separate transmission projects in the West but is currently focusing on the Midwest.
Factors beyond California’s environmental politics are driving investments in wind farms outside the state. Nationally, the costs of wind power generation have dropped 66% in seven years, according to the American Wind Energy Association, an industry trade group.
Further, California already has wind farms in the areas best suited for them, and states such as Wyoming offer lower construction costs and higher winds.
Those lower costs are what make billion-dollar transmission projects feasible. A report prepared for California state agencies last year estimated that Wyoming and New Mexico wind power, using new transmission, would cost $21 per megawatt-hour, compared with $43 to $58 per MWh for in-state wind.
California state policy, meanwhile, offers a virtual guarantee of high demand for renewable energy. The state is currently only about halfway to its goal of deriving half of its electricity from renewable sources by 2030, according to the California Energy Commission.
Helping the state meet that target is the “next big market opportunity” for a project under development by Duke American Transmission, a partnership between Duke Energy (DUK) and American Transmission, said DATC spokeswoman Luella Dooley-Menet.
Since 2011, the company has been developing the $2.6 billion Zephyr transmission line to run from Wyoming to Utah, where it will connect with existing lines running into California. Power would be supplied by another wind power project under development in Wyoming, the $4 billion Pathfinder wind farm, from a company backed by privately-held conglomerate Sammons Enterprises Inc and investment firm Guggenheim Partners.
Path to Power
Transmission spending by utilities has more than doubled since 2010 and is projected to reach $22.5 billion this year, according to the Edison Electric Institute, a utility trade group. That spending, however, has largely not included large, multi-state projects, which are more difficult to get approved and built.
“The big systems that are going to allow for a much more dynamic bulk power market, within regions and between regions – those are the tough ones,” said Jim Hoecker, an energy attorney who advises the transmission trade group WIRES.
Developers of the SunZia line—a $1.5 billion transmission project that will stretch 500 miles between New Mexico and a major transmission hub in Arizona—understand the permitting challenges. Its owners agreed to bury segments of power lines that will run near the White Sands Missile Range in New Mexico—at substantial additional cost—after the U.S. Department of Defense raised objections.
The SunZia line, scheduled to start construction next year, is owned by MMR Group, Royal Dutch Shell’s wind energy unit, and Tucson Electric Power, a unit of Fortis (FRTSF). It aims to transport wind energy from a Pattern Energy Group LP project in New Mexico.
Pattern partnered with SunZia’s developers last year after reaching two deals in 2015 to supply electricity to Southern California Edison and Sacramento Municipal Utility District with low-cost wind from New Mexico. Pattern realized it couldn’t continue to invest in the state without new transmission.
“SunZia was the best alternative to bring additional power from New Mexico into Arizona and California,” Pattern CEO Mike Garland said.
In Wyoming, construction started late last year on the Anschutz-owned Chokecherry and Sierra Madre wind project, and the company is in talks with utilities to buy the power and suppliers to provide about 1,000 turbines that will spin on the site.
After eight years in development, the project seems to align well with the needs of California regulators and utilities, which need more wind power from out of state to augment in-state solar installations that can’t provide power during nighttime hours.
“A whole bunch of things kind of had to line up,” Miller said. “Now, they have pretty much lined up.”