Midwestern utilities Xcel and Westar make big wind buys

Dive Brief:

Xcel Energy increased its ownership of installed wind capacity from 325 MW to 675 MW at the end of 2015 by acquiring the 150 MW Border Wind Farm in North Dakota and bringing online its 200 MW Pleasant Valley Wind Farm in Minnesota.
This doubling of its wind generation moved Xcel closer to its goal of getting 35% of its power for its Upper Midwest customers by 2030 from wind and, in these cases, it came at a price that is “competitive with new natural gas generation,” according to Regional President Chris Clark.
Westar Energy signed a contract with NextEra Energy Resources for the 200 MW output of the Kingman Wind Energy Center in Kansas, which is expected online in 2017. The deal allows Westar to purchase 50% of the project before it comes online.

Dive Insight:

The Xcel wind buys move it nearer its target of adding 750 MW of operational wind capacity by 2018 and the Westar PPA acquisition brings its wind capacity to 1.7 GW.

In the Midwest and beyond, many utilities are moving to acquire more renewables as a way of satisfying demand from key corporate customers. NV Energy’s Green Energy Rider and Duke Energy’s Green Source Rider are early efforts to provide renewables generation to large-scale electricity buyers who might otherwise buy power directly from a wind or solar developer.

Both programs allow large customers to offset some or all of their utility-delivered electricity with renewables generation. They allow the utilities to avoid lost revenue that comes when corporate buyers sign with independent power providers to meet sustainability goals with renewably-sourced electricity.

Those programs' renewables-generated electricity comes at a premium and, because the premium is on top of the utilities’ base fuel cost, the retail electricity price fluctuates with the price of fuel. Renewable*Connect, a new proposal from Xcel Energy Minnesota, would establish a fixed price for the renewables-generated electricity that could, as the cost of fossil fuels rises, potentially be lower than grid electricity.