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Tuesday, August 31, 2010

Exelon to spend nearly $1 billion on windmills: Update

Exelon Corp., Chicago-based owner of Philadelphia's Peco Energy and its electric-power affiliates, says it's agreed to pay $860 million, and maybe $40 million more, for tractor-maker Deere's wind-power developer and manager, John Deere Renewables, whose 700+ megawatts of power capacity (when the wind's blowing) and 200MW+ of projects will be added to Exelon's power-generation division.

ADD: It's the first successful big Exelon deal in a couple years, since PSE&G and NRG refused Exelon's attempts to buy them, Bloomberg says here.

EARLIER: Exelon's been shutting coal-fired plants and upgrading its uranium nuclear reactors, betting on limits to carbon-burning, though that's not likely in Congress very soon. Wind energy is still expensive, compared to cheaper natural gas and other sources, but Exelon buys wind power when use rates peak, for example in the air-condition season. Expectations are for wind's relative price to drop as cheap Chinese turbines and subsidized European components flood the market.  Meanwhile, demand is weak due to the recession.

Which looks like it's why Deere is getting out. The company says it's actually losing money on the sale, taking a net $25 million charge. That implies the company spent nearly $1 billion developing a business it's selling for cost. NEW: Deere spokesman Ken Golden tells me: "The net result will be roughly break even," after adjusting taxes to help cover the loss on Deere's investment. He says Deere is cutting back to focus on its "core equipment businesses."

Exelon statement here, Deere statement here
Posted by Joseph N. DiStefano @ 8:48 AM  Permalink | 6 comments
Comments   
  • 0 like this / 0 don't   •   Posted 11:04 AM, 08/31/2010
    This is a perfect example of the fall of American business enterprise on a large scale. The complete incompetence of business school trained, stock price driven, financial service centric is on display. Short minded, taking their money out and putting into exactly what next? What growth industry do you want to bet John Deere reallocates its capital after this loss. I can't wait for the response. Around the world, businesses and governments are scratching their heads in wonderment. How does a nation produce Microsoft, Apple, Cisco, Google, Facebook but still have nitwits who rely on 250 year old Adam Smith made me do it mentality in the face of an all but certain energy future, where oil, coal and gas are too expensive to extract, distribute and compete for against a growing India and China? Investments are not get rich over night schemes, but the prudent accumulation of physical plant in solar and wind technologies while weening ourselves of unstable foreign energy sources that fund our avowed enemies. What happened to that other great pillar of capitalism, deferred gratification? Oh that's right, we need to bulk up on our strategic stokcpile of billionaires that are short supply currently.
    — great society
  • 0 like this / 0 don't   •   Posted 12:01 PM, 08/31/2010
    Nice (when it's blowing) comment; really shows your bias. I bet you don't put (when they're running at full capacity) behind every statement about a coal or nuclear power plant's capacity. Which you should, especially since they don't always runs at full capacity. Did you know that?
    — traggatmot
  • 0 like this / 0 don't   •   Posted 12:16 PM, 08/31/2010
    "Subsidized" is the key word, Free enterprise requires that there be a profit somewhere. Companies can not do something just because it is "right". There has to be a profit. And again if there was a market then prices would come down. You can not create a market just because it's a good idea. That is exactly why the dotcom industry blew. It was all ideas but no practical market for all good ideas.
    — puddydawg
  • 0 like this / 0 don't   •   Posted 3:23 PM, 08/31/2010
    When the wind is blowing too hard, bird shredders (wind mills) must be shut down. Green is gold only to those who profit from it on the backs of the greenie sheeple.
    — LJM
  • 0 like this / 0 don't   •   Posted 4:38 PM, 08/31/2010
    When the wind is blowing too hard, ships must be moved from their gulf coast cleanup of weapons of mass destruction chemical attack(oil spill and oil "dispersant" spraying}. Black tea is only gold to republicans who start wars when their arms are too short to box with GOD!
    — great society
  • 0 like this / 0 don't   •   Posted 7:53 PM, 08/31/2010
    So, Exelon is buying the inefficient wind power business that John Deere is eager to unload? Is this related to PECO's rate increase? But if Obama's Cap & Trade is enacted, electric rates will "necessarily skyrocket" due to carbon taxes. If that happens, wind power could be competitive. Isn't that great?
    — Falls Ed


6 comments
About Joseph N. DiStefano
Joseph N. DiStefano writes this blog to feed his PhillyDeals column in the Philadelphia Inquirer. Joe has been a member of Bloomberg LP’s New York Finance Team, wrote the book “Comcasted,” taught writing at St. Joseph’s University, and studied economics and history at Penn. Reach Joe at 215-854-5194 and JoeD@phillynews.com
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