The members of the Michigan Public Service Commission on Dec. 20 approved a request by Consumers Energy related to two stages of future expansion of the Cross Winds Energy Park.
In June 2013, Consumers Energy filed an application for review and approval of the Wind Turbine Purchase Agreement (WTPA) for the Cross Winds Energy Park (CWEP). Cross Winds is a 105.4-MW wind farm located in Tuscola County, Michigan. The commission approved this application in June 2013.
On Nov. 14, 2016, Consumers filed an application requesting commission review and approval of an amended WTPA with General Electric (NYSE: GE). The purpose of the amendment is to secure an additional 19 wind turbine generators (WTG) for CWEP II with an option to purchase 33 WTGs for a future build to be called CWEP III. Preliminary construction on CWEP II will begin in 2016 while construction on CWEP III will begin in 2019.
The commission approved Consumers’ current renewable energy plan (REP) on March 29, 2016. The approved REP includes the construction of an additional wind farm in 2022. However, due to extension of the federal production tax credit (PTC), the company sees benefit in moving the construction date up to start in 2016. By making a safe harbor payment to GE for WTGs by the end of 2016 the company indicates that it can secure the full PTC for CWEP II and CWEP III.
In further support of its application, Consumers stated that the installed cost for CWEP II will be $45 per megawatt-hour (MWh) which is less than the installed cost of $87 per MWh assumed for the 2022 wind farm in Consumers’ REP. In this application, Consumers requested that the commission provide assurance that the full costs of the CWEP II project will be recoverable through the combined application of the transfer price mechanism, application of the renewable energy surcharges, and, subject to the end of the renewable energy plan period, an appropriate ratemaking mechanism.
Said the Dec. 20 approval: “The Commission has reviewed the contract submitted by Consumers pursuant to Act 295 and finds that the contract should be approved. The Commission finds that the projected cost per MWh price under the contract is less than the amount that was approved in Consumers’ REP. The Commission agrees to provide assurance that the costs of the amended contract will be recoverable through the application of the transfer price mechanism and the applicable transfer price schedules, subject to the approval of an application for engineering, procurement and construction for CWEP II to be filed at a later date. The Commission will address recovery of costs associated with CWEP III when Consumers elects to exercise its option under the WTPA.”
Consumers Energy is a unit of CMS Energy (NYSE: CMS).
Cross Winds II is a planned 44-MW project. The Nov. 14 Consumers Energy application said: “The accelerated Cross Winds II schedule is consistent with the Company’s RE Plan and is substantially similar to the Commission’s approval of the RE Purchase Agreement between Consumers Energy and Geronimo Huron Wind, LLC, which was also predicated by moving forward a future wind generation project.” Consumers Energy said that if it begins construction on additional capacity at Cross Winds by Dec. 31, 2016, it can apply for full federal tax credit coverage.
The application added: “Since the purchase of the original GE 62 1.7-100 wind turbines under the Turbine Purchase Agreement, the technological advancement of wind turbines has continued and GE now offers a 2.3 MW wind turbine model with a 116 meter rotor diameter on a 94 meter hub height (“2.3-116″) that is suitable for the Michigan wind resource. The Company and GE have negotiated a Change Order to provide the 2.3-116 model wind turbines under the option to purchase provided in the original Turbine Purchase Agreement, rather than the previously negotiated 1.7-100 wind turbine model. The 2.3-116 model turbines will be provided at a price that results in a cost that is more than 30% less (on a $/kilowatt basis) than the cost of the first 62 wind turbines supplied for Cross Winds.”
The utility added: “The Change Order offers an additional benefit as it provides an option for the Company to purchase an additional 33 wind turbines (75.9 MW) for delivery in 2019, commonly referred to as the Cross Winds III project, to complete the entire buildout of Cross Winds. These additional wind turbines are included at the same price as the 19 wind turbines proposed for Cross Winds II.”