Exelon to spend nearly $1 billion on windmills: Update
Power giant buys John Deere Renewables
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."