Recently approved power purchase agreements (PPAs) by the Michigan Public Service Commission (MPSC) underscore the continuation of several positive trends of late, including utility procurement of wind, the lowering of cost per MWh and the effectiveness of the production tax credit (PTC).
On May 15, the MPSC approved two PPAs between utility DTE Electric and two subsidiaries of NextEra Energy Resources: Pheasant Run Wind LLC and Pheasant Run Wind II LLC.
Each PPA is for 74.8 MW of wind energy for projects located in Michigan's Thumb region. The MPSC also approved an option for DTE Electric to purchase the Pheasant Run Wind II project.
With the addition of 150 MW of wind energy, a DTE Electric spokesperson tells NAW that the utility is close to meeting Michigan's 10% (and 1,100 MW) by 2015 renewable portfolio standard (RPS). Further, with the completion of the wind projects expected in 2014, DTE will meet the RPS one year early.
According to the filing, the price for each PPA is ‘up to’ $49.25/MWh, which is a great price considering that wind in Michigan used to be $110/MWh, explains Peter Kelley, spokesperson for the American Wind Energy Association (AWEA).
‘It is a clear demonstration that the price of wind continues to come down,’ Kelley explains, citing industry statistics that show the price of wind energy has declined 33% over a three-year period. And in the Michigan case, says Kelley, ‘the cost has come down more than half.’
Notably, the NextEra bids were submitted on timetable to make them PTC eligible, which Kelley says is yet another indicator that having predictable policy works.
‘Without it, wind becomes more expensive,’ he says. ‘And the utility is able to lock-in steady and predictable rates over the long term.’
However, not all wind industry participants, such as developer Geronimo Energy LLC, were thrilled with NextEra's unsolicited bid.
Geronimo claimed that its 100 MW Apple Blossom wind project, located in Huron County, Mich., is a competing proposal and as such, should be considered by the utility as a competitive bid. However, the MPSC denied the developer's request.