Blacks Hills eyes wind, solar, waste-to-energy bids as top options

Black Hills/Colorado Electric Utility Co. LP received over 40 bids from multiple project developers in response to its All-Source Solicitation for new power supplies, said the company in a “120 Day Report” filed Nov. 26 with the Colorado Utilities Commission.

The company assessed each of the bids individually and as integral components of alternative compliance portfolios. It said it used the same evaluation modeling tools from the 2013 Electric Resource Plan, as well as other sensitivity analyses to look at the risks associated with the various projects. Following screening, analysis and evaluation of the bids and associated risks, the company is bringing three proposals to the commission for its consideration. Between $80m and $100m in investment in new renewable generation within Colorado could result from the commission’s decision in this matter.

The top three projects, from unnamed bidders, are:

  • 46.4 MW photovoltaic (PV Solar) facility and 10 MW Waste-to-Energy facility (Bids 191-1 and 253-1) The lowest cost proposal from a strict net present value revenue requirement (NPVRR) standpoint consists of these two separate bids.
  • 60 MW PV Solar facility, without a Waste-to Energy component (Bid 207-3).
  • 60 MW wind project (Bid 236-3A). This proposal represents the combination of low cost, superior “cost of compliance” and generation of Renewable Energy Credits (RECs).

“Based on the totality of the circumstances surrounding these bids, the Commission would appear to prefer Bid 236-3A, if it applies the ‘cost of compliance’ standard applied in Proceeding No. 13A-0407E, Decision No. C13-1445,” said Black Hills. “There, the Commission rejected the lowest NPVRR wind project based on the superior RECs and lower cost of compliance compared to second lowest bid. By contrast, if the Commission applies the strict NPVRR analysis it rejected in the previous Proceeding No. 13A-0407E, then the 46.4 MW PV Solar facility and 10 MW Waste-to-Energy facility should be chosen. Black Hills presents both options because Commission guidance in Decision No. C13-1445 and strict NPVRR economic analysis lead to different conclusions.”

Approval of either of the first two proposals would result in long-term Renewable Energy Purchase Agreements (REPA) with the winning project developers/owners. Approval of the third proposal would be followed by a Certificate of Public Convenience and Necessity (CPCN) proceeding. After transfer, the investment in this facility would be included in the company’s Energy Cost Adjustment (ECA) and/or base rates.

Each of the projects has certain issues with it, Black Hills noted. For example: “The developer of Bid 236-3A asserts that the 60 MW wind project can achieve commercial operation by the end of 2015. Meeting this deadline will depend on prompt regulatory approval of the project, as well as timely project management execution and construction by the Bidder, and ultimate transfer to Black Hills. The Company understands it will need to file a CPCN to facilitate this alternative; however, it cannot initiate such an application until the Commission completes its review of this 120-Day Report, which will occur near the end of February 2015. The Company will therefore request expedited approval from the Commission for the CPCN if Bid 236-3A is selected.”

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.