Minnesota PUC agrees to forego app for 200-MW Red Pine Wind project

The Minnesota Public Utilities Commission on Nov. 3 agreed to drop Red Pine Wind LLC‘s Sept. 16 application for a Certificate of Need for the up to 200.1-MW Red Pine Wind Project in Lincoln County, Minnesota.

On Sept. 16, Red Pine Wind filed for a certificate for the construction of the Red Pine Wind Project. On Oct. 17, Red Pine Wind filed a request to withdraw the certificate of need application. On Oct. 28, the Minnesota Department of Commerce Division of Energy Resources filed comments on the matter indicating that it did not object to the request to withdraw the application for a certificate of need (CON). No other comments or objections regarding the withdrawal request were filed, the commission noted.

Red Pine Wind, a wholly owned subsidiary of EDF Renewable Energy, said in the Oct. 17 withdraw request that since filing the CON application, it has finalized power offtake plans for the project, and now qualifies for a CON exemption. So it wanted to drop the application. On Sept. 30, Red Pine separately filed a revised site permit application reflecting the updated project plans discussed in this request.

Said the Oct. 17 Red Pine request: “Because project financing parties and tax equity investors look for stable power prices in making their financing decisions, Red Pine has negotiated a long-term hedge agreement with a large, investment grade financial institution. The electricity produced by the Project will be sold in the competitive MISO marketplace at market-based rates, and MISO will use this energy to fulfill its obligations to MISO market participants. MISO provides an open, liquid competitive market for wholesale sales of electricity.

“Because the power prices to be received by Red Pine from the market are variable, investors and owners are seeking to reduce this variability in order to support building of the project. By entering into the hedge agreement, Red Pine is able to obtain the price certainty necessary to support building the Project. The hedge agreement itself is a swap transaction with the counterparty that is settled at the Minnesota Hub, a liquid trading point in MISO. Under the hedge, Red Pine receives a fixed price for sales of electricity (and pays a floating price), and this transaction in aggregate offsets the variable price exposure that Red Pine experiences selling energy in the MISO marketplace. Red Pine also is exploring different opportunities to sell the renewable energy credits produced by the Project, but no commitments have been made to date.

“Similar hedge structures are very common in wholesale marketplaces and are widely understood and accepted by tax equity investors, renewable energy developers and hedge counterparties as an alternative to the traditional utility power purchase agreement. Securing this arrangement for Red Pine signifies Minnesota’s competitiveness in providing energy resources and the growing market among private commercial entities for investment opportunities in clean energy.

“As a result of finalizing offtake arrangements, Red Pine has also revised the anticipated project schedule to target beginning construction in the second quarter of 2017 and achieving commercial operation by December 31, 2017. In order to achieve this timeline, Red Pine has dropped plans to build a 2 mile, 345 kV transmission line to interconnect the project to the grid and instead has moved the planned location of the Project substation to be adjacent to the point of interconnection.”

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.