Element Power builds its North American pipeline

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Chris Taylor of Element Power said the company's growth has exceeded expectations.

Two years after joining North America's renewable energy scene, Element Power is on the verge of becoming a major player.

The company, a developer of large-scale wind and solar projects, has amassed a pipeline of projects worldwide that, once built, will account for nearly 7,800 megawatts of wind energy and more than 1,700 megawatts of solar power. That’s enough electricity to power some 2.6 million homes.

Nearly all of that — 83 percent of the wind projects and 70 percent of solar — are U.S.-based projects being led by the company’s Portland-based North American headquarters, established in March 2009.

“A lot of the growth in our pipeline has been in North America,” said Chris Taylor, the company’s chief development officer for North America. “We’ve been aggressively building up a portfolio of projects.”

But the vast majority of that portfolio are projects still several steps away from going into construction and even further from generating power. The company knows that its reputation won’t be forged until it gets more wind turbines and solar arrays installed and generating power.

That makes 2011 a seminal year in Element’s short history.

“This is an important year to get additional projects into construction,” Taylor said.

But it won’t be easy.

Alex Klein, research director for renewable power at Cambridge, Mass.-based IHS Emerging Energy Research, said getting projects online this year is proving to be challenging.

Since the recession, oil prices have remained low, at least relative to the cost of renewable power, and energy demand is down.

As a result, several markets have an oversupply of renewable energy credits, the tradeable commodities that distinguish renewable power from traditionally generated electricity.

To be what Klein called a “bankable” project, a developer today needs to secure an agreement with a utility willing to buy the power, called power purchase agreements.

Even through state-level renewable portfolio standards — requirements placed upon utilities to include certain amounts of renewable energy into their total power mix — have helped build demand nationwide, the supply of renewable energy is larger that the needs of utilities.

“It’s very challenging to find utilities who are seeking large quantities (of renewables),” he said. “Because there was a boom in renewables in the last few years, a lot of utilities are well supplied and well positioned to meet their compliance goals.”

Element Power got off to a good start this year, announcing in February the start of construction on the 50-megawatt Macho Springs Wind Farm in New Mexico and a deal to sell the power to Tucson Electric Power.

It is the company’s first major North American project. Before that, Element amassed much of its North American portfolio through acquisitions, such as the 1.4 gigawatts in wind energy projects procured last year from Illinois-based EcoEnergy.

But Taylor described that as a necessity at a time when the company was just starting up and didn’t have a staff big enough to undertake major project development.

Today it employs 40 across North America, with 27 in Portland, led by a team with ample experience in getting projects completed.

CEO Ty Daul led North American project development for Portland-based PPM Energy, which later was acquired by the renewable energy division of Spanish utility Iberdrola S.A. and became that company’s North American headquarters. Chief Operating Officer Raimond Grube led regional development efforts for Iberdrola.

Taylor, meanwhile, managed renewable energy development in the Pacific Northwest for Horizon Wind Energy while that company was privately owned and through acquisitions by Goldman Sachs and eventually EDP Renováveis S.A., another Spanish utility.

Element is backed by Hudson Clean Energy Partners, a Teaneck, N.J.-based private equity fund created in 2007 by the team that ran Goldman Sachs’ clean energy investment

In late 2009, Hudson closed its initial fund, raising more than $1 billion. Its portfolio today includes seven renewable energy investments, including San Jose-based SoloPower, the thin-film solar energy firm building a manufacturing plant in Wilsonville.

Element Power, however, remains its largest investment, Taylor said, though the company won’t disclose exact terms. Taylor said Element has also received subsequent outside investment.

Element may have acquired much of its initial portfolio, but Taylor said its business model is built around developing and building projects of its own.

Though wind energy accounts for the larger portion of its portfolio, the company intends to develop solar projects.

While wind might be abundant in places like Texas, its often blows at night when electricity demand is at its lowest.

Solar projects, particularly in sun-drenched, energy-thirsty areas like Arizona, produce power at peak hours, and some regions affix a higher price to renewables generated when demand is highest.

Today the company is active in 24 states.

“I think we’ve exceeded our expectations,” Taylor said. “As far as getting projects built, we’re where we expected to be.”

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