Xcel does deal for fourth wind project, seeks Minnesota approval

Northern States Power d/b/a Xcel Energy (NYSE: XEL), applied Aug. 9 at the Minnesota Public Utilities Commission for approval of a 150-MW wind generation project that would be in addition to the three, 200-MW wind projects that it recently worked out deals with.

The utility has entered into contracts with RES Americas to develop the Border Winds Project, which will be located in northeastern Rolette County, N.D. Once complete, RES Americas will transfer ownership of the plant to Xcel Energy.

The Border Winds Project is a resource the company identified for acquisition through its February 2013 Request for Proposals (RFP) for additional wind resources. On July 16, the company requested approval by the commission of three other wind resources it identified through that same RFP process – the 200-MW Odell and 200-MW Courtenay Power Purchase Agreements (PPAs), and the Purchase Sale Agreement (PSA) with RES Americas for the 200-MW Pleasant Valley wind facility.

Like with the Border Winds Project, Xcel would buy Pleasant Valley from RES Americas. It would merely buy power under the PPAs from Odell and Courtenay.

“In our July 16 filing we noted the Company was currently reviewing the viability of a second build and transfer proposal by RES Americas with attractive pricing, but also with transmission risks that we were in the process of analyzing,” the Aug. 9 application noted. “That proposal was the Border Winds Project.”

The company said it has been able to identify the scope of the transmission risks associated with the Border Winds Project, and has structured its PSA with RES Americas to protect the company and its customers from excessive transmission cost.

In order to capture the benefits identified, construction of the Border Winds Project must be underway before the end of 2013 to qualify for the federal Production Tax Credit (PTC). Xcel asked that the commission issue a notice of the opportunity to comment on this petition with deadlines that will allow commission action on this proposal sometime in October, if at all possible.

RES Americas has not yet completed the generator interconnection process prescribed by Midcontinent Independent System Operator (MISO) tariffs. Preliminary work indicates that the project may be responsible for transmission network upgrades costing $50m or more, however, that result is very sensitive to the modeling assumptions used. The extent of transmission network upgrades will be better known as MISO studies are completed this fall and winter. Given the deadline for PTC eligibility, Xcel said it can’t wait for better transmission information before presenting this petition.

Instead, Xcel negotiated contract provisions that allow it to terminate development of the project at various stages in the MISO interconnection process if it becomes apparent that transmission costs are too high. It expects Border Winds to begin operating in late 2015, if all goes well.

Preliminary work indicates that the project might trigger the need for improvements to the 500-kV line to Winnipeg. The Border Winds Project will interconnect at a new 230-kV substation on Xcel’s Rugby-to-Glenboro 230-kV line. A less than one-mile 230-kV line will connect the wind farm’s collector substation to the point of interconnection. The project has applied for and will participate in MISO’s August 2013 Generator Interconnection Study cycle, which will identify all transmission upgrades required for the project to interconnect to the grid.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.