Xcel Energy Proposes Another Hefty U.S. Wind Expansion

Posted by Betsy Lillian on March 21, 2017 No Comments
Categories : Featured, New & Noteworthy

On the heels of its announcement to significantly expand its wind power investments in the Upper Midwest, Minneapolis-based Xcel Energy is proposing another 1.23 GW in Texas and New Mexico.

Xcel Energy projects it could save Texas-New Mexico customers $2.8 billion over a 30-year period by displacing higher-cost energy with these wind projects, which would provide enough electricity to power more than 440,000 typical homes.

Most of the new megawatts of wind energy would be generated at two facilities constructed and owned by the company at sites located in eastern New Mexico and in the Texas South Plains region. Another new wind energy development would sell energy to the company through a long-term contract.

The proposal was filed today with the New Mexico Public Regulation Commission and the Public Utility Commission of Texas.

Notably, the locations of the proposed sites in the southern part of Xcel Energy’s Texas-New Mexico area take advantage of the company’s transmission network: Transmission additions and upgrades since 2010 through Xcel Energy’s “Power for the Plains” initiative have helped promote the development of renewable resources in the region, the company says.

According to David Hudson, president of Xcel Energy for New Mexico and Texas, the new wind initiative is part of an overall corporate strategy to invest in infrastructure projects that lower the cost of energy production that is affected by volatility in the natural gas market. Natural gas is used to generate close to 40% of the energy delivered to Xcel Energy customers in Texas and New Mexico, the company notes.

“These new wind facilities will cost $1.6 billion to build but will allow us to produce wind energy at a cost lower than energy produced at our coal and natural gas-fueled plants,” he says. “These lower energy costs, in addition to savings from tax credits, add up to more than $2.8 billion in nominal customer savings over 30 years. These investments will also create significant tax base in communities where the facilities are located, as well as create jobs and long-term economic growth.”

The electricity at the new company-owned wind farms will be generated by Vestas turbines, which were ordered last year. At the time the new wind facilities come online, the federal production tax credit will be valued at around 2.5 cents per kilowatt-hour.

The wind sites the company plans to acquire are currently under development by two different developers.

In Roosevelt County, N.M., approximately 20 miles south of Portales, Xcel Energy has entered into an agreement to purchase the Sagamore Wind Project from Invenergy LLC. This facility will be capable of generating 522 MW, which is enough to power about 194,000 homes. The Sagamore project is expected to be in service by the end of 2020, and the total project cost is $865 million.

In Hale County, Texas, just north of Lubbock and south of Plainview, Xcel Energy has entered into an agreement to purchase the Hale Wind Project from a subsidiary of NextEra Energy Resources LLC. This facility is expected to generate up to 478 MW – enough to power about 168,000 homes – and be in service by the end of 2019. The total project cost is $769 million.

As part of its agreement with NextEra Energy Resources, Xcel Energy also will purchase 230 MW of wind energy under a 30-year power purchase agreement (PPA) from two sites around Lubbock (collectively known as the Bonita PPA). These facilities will generate enough power for about 81,000 homes, says Xcel Energy. One Bonita site will be located in Cochran County, roughly 60 miles west of Lubbock, and the other is located in Crosby County, roughly 20 miles east of Lubbock. Xcel Energy expects to be receiving energy from these purchases by 2019.

“The Hale Wind Project is the result of an initial investment made by the landowners of Hale County in 2009,” notes Mike O’Sullivan, senior vice president of development for NextEra Energy Resources. “These community leaders have made a commitment to generate affordable, clean energy and bring good jobs and millions of dollars in taxes and economic benefits to their community. Their support is the foundation of this partnership.”

The finalization of the Xcel Energy agreements is subject to the approval of utility commissions in both New Mexico and Texas.

Specifically, the company seeks as follows:

  • Approval to acquire the Hale and Sagamore wind projects;
  • Approval to amend the company’s Generation Certificate of Convenience and Necessity to allow construction and inclusion of these projects;
  • Approval of certain ratemaking principles; and
  • Approval of the 230 MW PPA.

Just last week, Xcel Energy rolled out a proposal to add seven wind farms in the Upper Midwest. Totaling 1.5 GW, the projects would be situated in Minnesota, North Dakota, South Dakota and Iowa.

In addition, in Colorado, construction is set to begin this spring on the Rush Creek Wind Farm, which is the largest wind farm of its kind in the state, says Xcel.

In total, the company has proposed 11 new wind farms in seven states, which would add a total of 3,380 MW of new wind generation to its system. According to Xcel, that represents the U.S.’ biggest multi-state investment in wind capacity.

“We’re investing big in wind because of the tremendous economic value it brings to our customers. With wind energy at historic low prices, we can secure savings that will benefit customers now and for decades to come,” states Ben Fowke, chairman, president and CEO of Xcel Energy.

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