The ALLETE Clean Energy subsidiary of ALLETE Inc. (NYSE:ALE) has worked out a major wind development agreement with Montana-Dakota Utilities, a division of MDU Resources Group (NYSE: MDU).
ALLETE Clean Energy (ACE) acquired the rights to develop the Thunder Spirit project near Hettinger, N.D., about 100 miles southwest of Bismarck. ACE will develop and construct the 107-MW wind farm on the site using 43 turbines. The project will then be sold to Montana-Dakota for approximately $200m. Montana-Dakota will own and operate the project for use by its utility customers. Construction of the project is expected to be completed in December 2015. The purchase is subject to regulatory approvals.
“We are pleased to have been selected to partner with MDU to develop this carbon-free resource to serve its customers,” said Eric Norberg, president of ALLETE Clean Energy. “At the same time, we look forward to extending and refining our own competencies in the expanding renewable energy marketplace.”
ALLETE utility division Minnesota Power has developed nearly 500 MW of wind generation in North Dakota since 2010. The Bison Energy Center will be the largest wind farm in North Dakota when it is completed near the end of this year.
In addition to developing this new project with Montana-Dakota, ACE operates wind generation facilities in Minnesota, Iowa, and Oregon. ACE also has an option agreement to acquire from AES Corp. the 101MW Armenia Mountain, Penn., wind farm in mid-2015. 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 energy innovations.
“We are committed to investing capital resources to meet the needs of our customers and our growing legacy business,” said David L. Goodin, president and CEO of MDU Resources Group. “This project is a positive step in executing that plan and will be a great addition to Montana-Dakota’s generation portfolio. We believe this will be a great partnership with ALLETE.”
Montana-Dakota originally signed a power purchase agreement with Thunder Spirit Wind in October 2013 to purchase the output of the wind farm. Montana-Dakota then determined that owning and operating the wind farm is the best long-term solution to meet customer need for energy. Montana-Dakota partnered with ALLETE Clean Energy on an agreement for ACE to acquire the Thunder Spirit Wind project, complete the development and sell the completed project to Montana-Dakota. ALLETE has developed other wind projects in North Dakota.
“Our electric demand continues to increase and this project is a great opportunity to increase our electric generation to meet that customer demand. Our customer energy requirements are expected to grow at five percent per year for the next five years,” said Frank Morehouse, president and CEO of Montana-Dakota. “Not only does this project provide needed generation, but it also further diversifies our generation portfolio, boosting our renewable segment to 20 percent.”
The wind farm location is beneficial in that it allows Montana-Dakota to connect the project to its transmission system in an area the company already provides electric service, further enhancing the company’s deliverability of power to its customers.
MDU Resources Group, a member of the S&P MidCap 400 index, provides value-added natural resource products and related services that are essential to energy and transportation infrastructure, including regulated utilities and pipelines, construction materials and services and exploration and production.
ALLETE Inc. is an energy company headquartered in Duluth, Minn. ALLETE’s energy businesses include Minnesota Power, Superior Water, Light & Power Co., BNI Coal, and ALLETE Clean Energy.