Much of the electricity generated over the next 30 years by Hale Wind Project will remain local instead of being sent to ERCOT or other power grids, thanks to a deal announced Tuesday by Xcel Energy.
Xcel Energy projects it can save Texas-New Mexico customers $2.8 billion over a 30-year period by displacing higher-cost energy with an additional 1,230 megawatts of wind energy, which is enough electricity to power more than 440,000 typical homes.
More than a third of that additional electricity – 478 MW – will be coming from turbines in the southern half of the Hale Wind Project area. That’s because Xcel is acquiring Phase 1 and 2 of the Hale Community Wind LLC project – generally in the Petersburg area. The remainder of the Hale Community Wind LLC, east and southeast of Plainview, has been retained by NextEra.
“I see this as good news for both Plainview and Hale County, as well as everyone served by Xcel Energy,” said Mike Fox, executive director of the Plainview/Hale County Economic Development Corporation. “We will benefit from the clean low cost energy produced by these turbines, our school districts and county will benefit from tax revenues generated by this project, and we all will benefit from the construction. Those dollars will remain local.”
Regulatory Filing Details
In its filing March 21, Xcel Energy seeks four main items from regulatory authorities:
• approval to acquire the Hale and Sagamore wind projects;
• approval to amend the company’s Generation Certificate of Convenience and Necessity (CCN) to allow construction and inclusion of these projects;
• approval of certain ratemaking principles; and
• approval of a new 230-megawatt long-term purchased power agreement.
• The location of these sites in the southern part of Xcel Energy’s Texas-New Mexico area takes advantage of the company’s robust transmission network. Transmission additions and upgrades since 2010 through Xcel Energy’s “Power for the Plains” initiative have helped promote the development of renewable resources in the region.
• The southern geographic location of the Hale and Sagamore projects near existing transmission infrastructure helps Xcel Energy integrate the additional wind energy onto other areas of its system in an efficient manner and presents another cost-savings measure for regional customers. Additionally, wind energy from the proposed 230-megawatt long-term purchased power agreement would originate from the southernmost portion of Xcel Energy’s transmission network.
• In addition to overall customer savings from a cheaper energy resource, the value these new facilities bring to counties in the Xcel Energy service area will pay dividends for years in the form of higher land values and additional tax revenue for counties and school districts.
• Most of the electricity generated in Xcel Energy’s Texas-New Mexico service area is derived from coal- and natural gas-fueled steam units, which require a large amount of water for boiler makeup and cooling purposes. The generation of wind energy does not require the use of the area’s limited water resources. Additionally, there are no air or water emissions associated with the generation of wind energy.
Xcel Energy’s Current Wind Capabilities
• Xcel Energy has been the nation’s No. 1 utility wind energy provider for 12 years running and is ranked No. 4 nationally for delivering renewable energy. Currently the company has close to 1,600 megawatts of wind energy available in its Texas-New Mexico generation mix, which provides more than 22 percent of carbon-free electricity for customers.
Xcel’s Hale Wind Project is expected to be in commercial operation by 2019. It is expected to result in more than 300 construction jobs and 11 to 22 full-time operations careers. The 478 MW of power generated by the local Xcel turbines is enough to serve 168,096 homes.
The regional power utility says most of the new megawatts of wind energy would be generated at two facilities constructed and owned by the company at sites, located in eastern New Mexico and in Hale County. Another new wind energy development will sell energy to the company through a long-term contract.
The proposal, filed March 21 with the New Mexico Public Regulation Commission and the Public Utility Commission of Texas, represents Xcel Energy’s commitment to customers to deliver affordable and reliable energy with a dedication to a diverse energy portfolio, the foundation of the strategy Xcel Energy refers to as “Our Energy Future for the Southwest.”
David Hudson, president of Xcel Energy – New Mexico, Texas, said Xcel Energy is the nation’s leader in procuring and delivering cost-effective renewable wind resources for its customers’ benefit, and the Texas-New Mexico wind initiative is part of an overall corporate strategy to secure customer savings by investing in infrastructure projects that lower the cost of energy production that is so often affected by volatility in the natural gas markets. Natural gas is used to generate close to 40 percent of the energy delivered to Xcel Energy customers in Texas and New Mexico.
“The decision to add additional wind generation is purely in the economic interest of our customers,” Hudson said. “These new wind facilities will cost $1.6 billion to build, but will allow us to produce wind energy at a cost lower than energy produced at our coal and natural gas-fueled plants. These lower energy costs, in addition to savings from tax credits, add up to more than $2.8 billion in nominal customer savings over 30 years. These investments will also create significant tax base in communities where the facilities are located, as well as create jobs and long-term economic growth.”
The fuel for the wind generators – the wind itself – is free of charge, and wind generating technology has come down in cost dramatically. By acting now, Xcel Energy can lock in cost and tax benefits to develop what will be the region’s least expensive generating resource.
The electricity at the new company-owned wind farms will be generated by wind turbines manufactured by Vestas-American Wind Technology Inc., a world leader in wind turbine technology and manufacturing. Xcel Energy entered into an agreement with Vestas to purchase the turbines in 2016, which qualifies company-owned developments for 100 percent of an available federal production tax credit. At the time the new wind facilities will come on line, the credit will be valued at around 2.5 cents per kilowatt-hour.
The wind sites the company plans to acquire are currently under development by two different developers.
–In Hale County. Xcel Energy has entered into an agreement to purchase the Hale Wind Project from a subsidiary of NextEra Energy Resources, LLC. This facility is expected to generate up to 478 megawatts. Total project cost is $769 million. (Xcel is acquiring the southern portion of the Hale Wind project with NextEra retaining the northern portion. As envisioned, all four phases of the Hale Community Wind project is expected to produce at least 800 MW.)
–In Roosevelt County, New Mexico, approximately 20 miles south of Portales, Xcel Energy has entered into an agreement to purchase the Sagamore Wind Project from Invenergy, LLC. This facility will be capable of generating 522 megawatts, enough to power about 194,000 homes. The Sagamore project is expected to be in service by the end of 2020. Total project cost is $865 million.
As part of the agreement with NextEra Energy Resources, Xcel Energy also will purchase 230 megawatts of wind energy from NextEra Energy Resources under a 30-year purchased power contract from two sites around Lubbock collectively known as the Bonita PPA. These facilities will generate enough power for about 81,000 homes. One Bonita site will be located in Cochran County, roughly 60 miles west of Lubbock. The other is located in Crosby County, roughly 20 miles east of Lubbock. Xcel Energy expects to be receiving energy from these purchases by 2019.
NextEra Energy Resources contributes extensive experience to this partnership. The company has developed wind projects for Xcel Energy outside of Texas and New Mexico, and in 2016, Xcel Energy began purchasing solar energy from a NextEra Energy Resources-developed project near Roswell, N.M.
“NextEra Energy Resources and Xcel Energy, both leaders in renewable energy, have developed a strong partnership over the past decade,” said Mike O’Sullivan, senior vice president of development for NextEra Energy Resources. “We are pleased to work together once again on the Hale Wind Project and Bonita PPA. The Hale Wind Project is the result of an initial investment made by the landowners of Hale County in 2009. These community leaders have made a commitment to generate affordable, clean energy and bring good jobs and millions of dollars in taxes and economic benefits to their community. Their support is the foundation of this partnership.”
Invenergy is also the lead developer on Xcel Energy’s Rush Creek Wind Project in Colorado, announced in 2016. The Chicago-based company and its affiliates have developed more than 14,900 megawatts of renewable energy around the globe.
“We are thrilled once again to be partnering with Xcel Energy, ensuring clean, home-grown power is a part of New Mexico’s energy future,” said Mick Baird, Invenergy’s senior vice president of development.
The finalization of the agreements for the new wind facilities is conditional upon the approval of utility commissions in both New Mexico and Texas.