SunZia Transmission project signs first anchor tenant

SunZia Transmission on Sept. 6 announced the signing of a letter of intent (LOI) with a renewable energy producer for a deal which, if consummated, would make the producer the project’s first and largest anchor tenant.

“This marks yet another major accomplishment in the progress made thus far for the SunZia project,” Tom Wray, SunZia’s project manager, said in a statement announcing the agreement.

Boston-based First Wind Energy signed the LOI reserving up to 1,500 MW of transmission capacity to provide service to one of its high-capacity wind energy projects under development in New Mexico. First Wind develops, finances, builds and operates utility-scale renewable energy projects elsewhere in the West, Northeast and Hawaii and has more than 1,000 MW of nameplate capacity in operation.

SunZia developers began solicitations for anchor tenants on Nov. 1, 2011, initially offering up to 1,350 MW, or 50%, of the line’s merchant capacity, retaining 10% of the project’s total 3,000 MW capacity for itself. Since then, ownership percentages have fluctuated slightly between utility and non-utility entities as the developer ensured it remained in compliance with FERC orders, a SunZia spokesperson told TransmissionHub Sept. 6.

Interest expressed in the project’s transmission service has exceeded the project’s available capacity, Wray said, though First Wind is the first developer to sign an LOI. Once the threshold of 50% capacity is locked in place with anchor tenants, an open season process will determine the balance of the project’s capacity, the spokesperson said.

The deal, however, hinges on SunZia developers successfully resolving the ongoing siting challenges with the Department of Defense (DoD) over the portion of the project that passes through the northern extension of the White Sands Missile Range. 

“If SunZia can resolve its siting challenges, First Wind plans to accelerate the development of this project in central New Mexico,” Kurt Adams, First Wind’s executive vice president and chief development officer, said in the statement.

Meetings with military officials “are continuing through the [Bureau of Land Management (BLM)],” a spokesperson for the developers told TransmissionHub Sept. 6.

The BLM has led the preparation of an environmental impact statement (EIS) on the SunZia Project since May 2009. The final EIS was issued by BLM in June, with a record of decision (ROD) still expected later this month or early October.

The 515-mile SunZia project will originate at the new SunZia East substation in New Mexico and head west, with significant portions running parallel to I-25 and the Rio Grande River. The route follows a pipeline corridor north of I-10 in New Mexico and continues into Arizona, where it alternately uses existing pipeline and utility corridors where available before terminating at a new substation in Pinal County, Ariz., near Coolidge, Ariz.

A consortium of five companies is sponsoring the project. Three of those companies – Southwestern Power Group II/MMR Group, Shell WindEnergy Inc., and Tucson Electric Power – are sponsoring 86% of the project. Salt River Project has a 13% stake and Tri-State Generation and Transmission Association has a 1% interest.