Duluth, Minn.-based ALLETE Clean Energy, a wholly owned subsidiary of ALLETE Inc., has announced a strategic initiative to refurbish 385 turbines at three wind farms in Minnesota and Iowa.
The project includes replacing select blades, gearboxes and generators on turbines at the Lake Benton wind site in Lincoln County, Minn., and the Storm Lake I and II wind sites in Buena Vista and Cherokee counties, Iowa.
According to ALLETE, the initiative will improve turbine performance and reliability, generate federal production tax credits (PTC) at each site, and support the renewal of power sale agreements at the Storm Lake sites.
“As a central part of ALLETE Clean Energy’s multifaceted growth strategy, this $80 million reinvestment will contribute to future earnings growth,” states Allan S. Rudeck Jr., president of ALLETE Clean Energy. “Revenue from our existing wind sites such as Lake Benton and Storm Lake is the foundation for ALLETE Clean Energy’s momentum and growth. Neighboring communities also benefit by keeping these older sites viable and valuable, which maintains jobs and landowner lease payments.”
The refurbishment will be staged from 2017 through 2020 to minimize turbine downtime and maximize safe energy production at each site, the company notes. In total, the sites produce approximately 700,000 MWh of energy per year and represent about 50% of ALLETE Clean Energy’s current electricity sales.
In addition to the turbine refurbishments, the project includes installing new communications infrastructure at the sites to better integrate them into ALLETE Clean Energy’s corporate operations structure. This includes new fiber optic connections, servers, and data acquisition and management systems.
Energy from the Lake Benton site is fully contracted through 2028, and approximately 8 MW of Storm Lake I production is contracted through 2032. ALLETE Clean Energy is working to re-contract the balance of the Storm Lake I and II power sale agreements, which expire in 2019.
The turbine refurbishment project follows the company’s December $100 million investment in wind turbine components that meet the standards for the PTC’s “safe harbor” provision. The investment in safe harbor turbines allows ALLETE Clean Energy to pursue a three-pronged PTC strategy before the 2020 federal PTC phase-out. The strategy includes building and operating new wind farms based on long-term power purchase agreements, building wind farms for other companies for a development fee, and refurbishing its existing wind farms while extending power sale agreements.
Al Hodnik, president and CEO of ALLETE, says, “Maintaining and enhancing the Lake Benton and Storm Lake sites, along with extending power sales agreements, provide a cost-effective platform for the strategy that is already bearing fruit as the safe harbor turbines connect ALLETE Clean Energy with new industry partners nationwide.”
ALLETE Clean Energy was established in 2011 to acquire or develop capital projects to create energy solutions by way of wind, solar, biomass, hydro, natural gas, shale resources, clean coal technology and other emerging innovations.