SPI wind farm looks years away at the earliest

So far, talk of wind farms off South Padre Island has been just that: wind.

However, giant turbines offshore may be closer to reality now that the state has awarded leases to two companies studying their feasibility along the Texas coast. One is Baryonyx Corporation, which in July signed a contract with the Texas General Land Office to lease 8,000 onshore acres in Dallam County in the Texas panhandle and 38,000 acres off South Padre Island and Mustang Island. The company is headquartered in Houston, though its officers and directors are based in the United Kingdom.

Baryonyx's plan is to develop two large-scale wind projects offshore within five to seven years - specifically, 170 to 225 wind turbines located between 4.25 miles and 10.3 miles offshore, over 19,800 acres of the Gulf of Mexico. The turbines would stand between 262 and 328 feet above the waves, depending on site conditions, with rotors up to 413 in diameter - taller than the Statue of Liberty. Baryonyx's plan is to provide green energy to computer data centers: facilities that house computer systems, servers and other components.

Other proposals have come and gone. In 2006, Superior Renewable Energy of Houston announced plans to erect 170 wind turbines offshore at a cost of at $1 billion and possibly $2 billion. Had it been built, it would have been the nation's largest wind farm. Citing cost, Superior cancelled the project in 2007.

In October of this year, Los Angeles-based Pavilion Energy Resources Inc. announced it was a 10-percent equity partner in a joint venture that had submitted a proposal to the state for building a wind farm off Padre Island. Dubbed the "Texas Coastal Clean Power Project," the group envisioned at least five wind farms along the coast based on technology developed by Peter Sterling, Pavilion's president and CEO.

"They basically put out their own press release without having a contract with us," says GLO spokeswoman Kari Meltzer. "We've never done a deal with them."

A Louisiana-based company, Wind Energy Systems Technology (WEST), also has leases with the state and is studying potential for a wind farm off Galveston, though the firm also holds a lease off South Padre Island.

"We are working with WEST and Baryonyx," Meltzer says. "We think those deals are very like to have real turbines up and we're very optimistic about it."

Once a firm leases land from the GLO, however, it's up to the company to go through the rigorous process of conducting studies and getting permits, she says.

"Then there's the financing," Meltzer adds. "That can be a long process."

The GLO manages state lands and mineral-right properties. Meltzer describes it as "kind of a public real estate agent." The money the agency brings in from minerals and renewable resources goes into the Texas Permanent School Fund, which augments local property taxes in paying for public education statewide.

Patrick Warren, an investor and one of the directors with Louisiana-based WEST, which has five leases along the South Texas coast, says market conditions aren't so great for wind energy projects. For one thing, it's much cheaper to generate electricity from natural gas these days, so there's just not much demand for wind power - not a situation likely to attract investors.

"Right now with the gas real low it's not very economically feasible," Warren says.

WEST has been collecting wind data off the coast of Galveston to find out whether a wind farm makes sense there. The chances of the company actually building a wind farm in the Gulf is "a coin toss," he says, though one thing is for sure: Texas and the country need more generating capacity - situation that will be felt more acutely as the economy gets going again.

"Texas is bobbing up against its generational capacity," Warren says. "We need more power plants here. We need more generational capacity."

Baryonyx, rather than duking it out on the open market, is betting on a business model that sells "clean energy" to computing company data centers. Peter Sills, Baryonyx director of corporate communications, says this approach provides a ready market, which in turn should give the company the means to develop the first phase of a wind farm. Having a guaranteed customer also decreases the risk for investors, he says. Baryonyx is preparing to launch an initial offering of stock in the company, sometime in the first quarter of 2010.

If Baryonyx survives the grueling, two-year-plus process of environmental and economic impact studies and permitting, the first step will be the Texas Offshore Pilot Project, either off Mustang Island or Padre Island. This would entail at least three turbines, plus a wind monitoring tower, that eventually would be part of a larger array, construction of which would take three to five years and cost between $4 billion and $6 billion.

The United States has no offshore wind generation, though Cape Wind, a proposed wind farm in Nantucket Sound, is making gains. European countries are years ahead of the United States in establishing offshore wind power as an alternative energy resource. It's too soon to gauge the likelihood that Baryonyx will ever build a wind farm off the South Texas coast, Sills says.

"An important part of our evaluation process will be a public consultation or outreach program to take ... comments from all interested parties, and to make public the results of the environmental assessment," he says. "At this early stage it is very difficult to quote a figure (of probability), but the initial signs are very encouraging."