UPDATE 1-Terra-Gen develops massive Calif. wind power site

* Project doubles capacity of rival projects in Texas

* Underscores wind energy expansion in U.S.

* Industry wants stronger federal support (Adds executive's comments, details on project)

By Edwin Chan

MOJAVE, Calif., July 27 (Reuters) - Terra-Gen Power LLC broke ground on Tuesday for what is slated to become the world's largest wind-power project, banking on U.S. efforts to reduce emissions and expand renewable energy use in coming years.

Once completed in 2015, Terra-Gen's 1,550-megawatt Alta Wind Energy Center in central California will dwarf current leaders E.ON Climate and Renewables' 782 MW facility in Roscoe, Texas, and NextEra Energy's (NEE.N) 736 MW Texas complex.

Executives expect the project -- using turbines from Denmark's Vestas (VWS.CO) and General Electric Co (GE.N) -- to run eventually at the typical industry average of 30-40 percent capacity, supplying electricity to the equivalent of 275,000 homes from 2011 and creating thousands of jobs.

The project comes as U.S. investment in wind power shows signs of flagging after a record 2009 as policy support wanes and prices for fuels like natural gas drop. Construction activity of new wind farms in the United States fell dramatically in the first half of 2010. [ID:nN27273303]

But executives said strong Californian support for renewable energy smoothed the way and will prove pivotal in securing the roughly $2 billion more in financing -- on top of the $1.6 billion committed -- needed to complete the massive project.

California aims for a third of its energy to come from renewable sources by 2020 under a renewable portfolio strategy. It is one of about two dozen states that have any kind of written strategy for achieving renewable energy goals.

"What's really driving demand in California is consistent public policy," said Randy Hoyle, head of wind energy development for Terra-Gen, as pearly white wind turbines rotated lazily across miles of brown rolling hills behind him.

"This is still a difficult credit environment."

BEFORE AND AFTER THE CRISIS

Backed by energy investment groups ArcLight Capital and Global Infrastructure Partners, Terra-Gen's complex in the windswept, sun-drenched hills of Kern County underscores how wind energy is slowly gaining traction from a very low base.

The company said last year it had secured a 1,550-megawatt power purchase agreement with Southern California Edison SCEPe.A, supplier to much of the nation's most populous state.

Wind power had been one of the fastest-growing sources of power generation before the financial crisis squeezed funding. But the U.S. Treasury Department then helped bankroll some 150 renewable energy projects with a portion of the $787 billion American Recovery and Reinvestment Act of 2009, doling out at least $1.5 billion in grants for wind initiatives.

The U.S. wind industry installed more than 10,000 megawatts of capacity in 2009 -- a single-year record and equivalent to about 10 new coal-fired plants.

Advocates now urge renewed policy support to sustain investment alongside other forms of clean energy such as solar.

Denise Bode, chief executive of the American Wind Energy Association, urged on Tuesday U.S. Congress include a renewable energy standard -- which would require a percentage of the country's power supply come from renewable sources -- to be included in an upcoming energy bill as a means of stimulating the industry. [ID:nN26264997]

Lack of government support has contributed to pushing the United States below Europe and China in new wind power development.

Still, wind energy accounts for almost 2 percent of U.S. electricity generation, up from 1.3 percent a year ago, according to the American Wind Energy Association. And in 2009, wind accounted for almost half of all renewable electricity generation in the country, it said. (Reporting by Edwin Chan; Editing by Richard Chang and Matthew Lewis)