Another Minnesota utility is investing in wind power to take advantage of its current low cost and an extended federal tax credit.
Minnesota Power, the Duluth-based utility that serves 143,000 customers including iron mining companies, said Thursday that it plans to build a $345 million expansion of its Bison wind farm in North Dakota.
The 200-megawatt project will increase the utility's wind power capacity by 50 percent. The additional capacity means the utility will meet the Minnesota mandate to supply 25 percent of power from renewable sources in 2015, or 10 years ahead of the 2025 deadline, the company said.
"We've found a way to meet the state of Minnesota's renewable energy standard early and reduce costs at the same time," Al Hodnik, CEO of Minnesota Power's parent company, said in a statement Thursday.
He said the new wind farm offers "the lowest cost resource over time by capturing the benefits of the extended production tax credit and a competitive turbine market."
The announcement, made on the same day the company released financial results, comes two weeks after Xcel Energy Inc. said it will increase its wind generation in Minnesota. The company said prices of wind generation are so low that customers will save $180 million over 20 years.
In May, Otter Tail Power Co., based in Fergus Falls, Minn., announced that it would purchase wind energy from the Ashtabula III wind farm northeast of Valley City, N.D., owned by NextEra Energy Resources, under a 25-year deal that includes an option to buy the farm. With the new wind farm, renewable energy makes up 19 percent of Otter Tail's retail power sales, the company said.
Xcel CEO Ben Fowke, speaking to analysts in a separate conference call, said the 30 percent increase in wind power purchased by his company is priced so low that paying for it over 20 years is cheaper than buying natural gas to burn in its own power plants over the period.
"We are seeing phenomenal pricing on wind," he said.
The competitive pricing is partly driven by the extension through 2014 of the federal production tax credit, which is equivalent to about 30 percent of a project's cost, though it is paid over 10 years on a per-kilowatt basis.
Minnesota Power already has 101 turbines at its Bison wind farm near Salem, N.D. The additional 64 turbines should be running by the end of 2014, generating enough power for 92,000 homes, the company said. Minnesota Power owns a 465-mile transmission line that carries North Dakota wind power to its northern Minnesota service area.
For the second quarter, Allete Inc., the parent company of Minnesota Power, reported a 10 percent drop in per-share earnings to 35 cents compared to 39 cents during the same quarter last year. Net income dropped to $14 million, compared with $14.4 million a year earlier. Revenue was up for the quarter to $235.6 million compared with $216.4 million a year ago.