Utility company MidAmerican Energy Holdings Co., a subsidiary of Warren Buffett’s Berkshire Hathaway Inc., has announced it’s ordering around $1 billion of wind turbines for wind power projects in Iowa, Bloomberg has reported.
It makes a lot of sense for the utility because declines in equipment costs are starting to make renewable energy competitive with fossil fuels, such as coal. The order for 1,050 megawatts of wind power, comprised of 448 wind turbines, is the industry’s largest ever order of land-based wind turbines.
Wind power is now within 5.5% of the cost of electricity generated from burning coal, as wind turbine prices have dropped 26% worldwide since the first half of 2009. Further, wind has become the cheapest source of power in Iowa, where the MidAmerican projects will be located.
The company is expecting the rising demand for wind power to offset the waning use of fossil fuels. The growing wind capacity provides “a hedge” for the power utility’s customers “in an era of reduced coal generation”, MidAmerican CEO Bill Fehrman explained. The planned wind projects will also quality for the federal production credit which is set to expire at the end of this year.
MidAmerican Energy is expecting to shutter some of its coal-fired power plants by 2015, as the price of installing wind capacity continues to drop, and regulations on emissions from coal-fired plants become stricter over time. In addition, many people expect natural gas prices to rise, making wind power very competitive indeed.