Xcel Energy on Tuesday announced its single largest increase in wind generation in the Upper Midwest, saying it will add three large wind farms in Minnesota and North Dakota.
The additional 600 megawatts of electricity, enough to serve 180,000 homes, is a 33 percent increase over the Minneapolis-based utility's existing wind capacity of 1,800 megawatts in the region.
Xcel, which serves 1.2 million electric customers in Minnesota, said new wind generation is priced so competitively right now that customers will save $180 million during the 20-year life of the projects compared with electricity generated from existing power plants. The new wind power is equivalent to the output of one large power plant.
"It's a huge announcement," said Joe Sullivan, a regional policy manager for Wind on the Wires, a St. Paul-based industry group. "What it shows is that when it comes to adding new [generation] resources, wind is floating up to the top. It is beating out other resources in the market."
Xcel said it will buy power from two planned wind farms near Windom, Minn., and near Jamestown, N.D., being developed by Geronimo Energy of Edina, and take ownership of another wind farm planned by RES Americas Development near Austin, Minn.
Financial terms of the deals were not disclosed, but Geronimo said that each of its 200-megawatt wind farms will cost about $350 million. All three projects are expected to be operating in 2015 or earlier.
In a statement, Xcel CEO Ben Fowke said the company is committed to meeting customers' needs in clean and affordable ways. "Wind power is simply the cheapest resource available right now, and we are taking the opportunity ... to further shape our systems for the future," he said.
Xcel to stay tops in wind
The deals, combined with new wind projects that Xcel plans in other states it serves, cements the utility's position as the nation's leading wind power utility, a spot it has held for nine years in a row.
Just last week, Xcel announced it will acquire 700 megawatts of power from three new wind farms in Oklahoma, Texas and New Mexico for its Southwestern Public Service subsidiary. Xcel earlier said it would significantly expand its Colorado wind resources.
All of the projects are moving ahead quickly because the sponsors want to take advantage of the extension of the federal Production Tax Credit, which subsidizes generation for 10 years. Under the law, projects must be launched this year, creating a scramble among wind power developers to please utilities and get projects underway.
"We were very pleasantly surprised — the proposals we have gotten from developers were very competitive," Jim Alders, a regulatory strategist for Xcel, said in an interview. " … It resulted in some prices for additional wind power that were very attractive and can provide some actual reduction in the cost of electricity for our customers."
Alders said Xcel didn't need to buy more wind power to meet its state renewable energy standard of 25 percent of sales from wind by 2020. He said the utility already is at 12 percent.
Xcel got its first wind power in 1994 from a project on Buffalo Ridge in southwest Minnesota, a location that soon sprouted many other wind farms. Xcel now gets power from 50 Minnesota wind projects, large and small, according to state Commerce Department data.
The three new projects will reduce carbon emissions by 1.2 million tons each year in Xcel's Upper Midwest service territory, which covers Minnesota, North Dakota and South Dakota, the company said.
Xcel is seeking approval from Minnesota and North Dakota regulators to acquire the new wind energy. Two of the proposed projects — Courtenay Wind Farm near Jamestown, N.D., and Odell Wind Farm near Windom, Minn. — also need site permits from regulators in the two states. Pleasant Valley, the project by RES near Austin, already has obtained its site permit from the Minnesota Public Utilities Commission.
Betsy Engelking, a vice president at Geronimo Wind Energy, said the company hopes to win approval for the North Dakota project this fall, and the Windom project next year. She said the company intends to finish the North Dakota project by the end of 2014 to secure an expiring state tax credit.
The projects would be the fourth and fifth wind farms developed by Geronimo, which partners with Enel Green Power, a unit of an Italian utility, to finance and own them. Enel will own the two new projects, as it does with the earlier Prairie Rose Wind Farm also developed for Xcel near Jasper, Minn., Engelking said.
Pleasant Valley, the project that Xcel plans to purchase, is adjacent to the Grand Meadow wind project, which the utility also owns.