Montana wind developer says low PURPA rates could kill its project

Dive Brief:

Greycliff Wind Energy, developer of a 25 MW wind farm near Big Timber, Mont., says its project cannot move forward at the rates offered by the state’s Public Service Commission (PSC) under the Public Utility Regulatory Policies Act (PURPA).
The PSC approved contract terms for the wind project earlier this week, but at $45.49/MWh for up to 25 years, which Greycliff says is about 16% below the price it would need to earn a profit from the project.
The wind project still might move forward under a request for proposal process aimed at providing about 25 MW to fulfill the state’s renewable portfolio standard target.

Dive Insight:

The possible cancellation of Greycliff Wind’s 25-MW Montana project is the latest skirmish in ongoing battles over tariffs paid to renewable energy projects in Montana.

In June the Montana PSC temporarily suspended rates for small solar projects under the Public Utility Regulatory Policies Act (PURPA).

Utilities are obliged to purchase power from projects deemed qualifying facilities (QFs) under PURPA at avoided cost rates established by the state. Those rates have not kept pace with declines in power prices because of falling natural gas prices and falling costs of renewable resources, and that has spurred PURPA battles in states across the West, including Utah, Oregon and Idaho.

Many of the more recent battles involve solar power and small renewable projects, but wind farms up to 80 MW are also eligible for PURPA tariffs.

In the case of the Greycliff Wind project, the PSC instructed NorthWestern Energy to negotiate with the developer. Greycliff spent “a couple hundred thousand dollars” to show avoided costs in the state and came up with an offer of about $53/MWh. NorthWestern came back with about $34/MWh, said Rhyno Stinchfield, CEO of Greycliff.

The PSC stepped in again and came back with the $45.49/MWh prices, but “We can’t do the project at that price,” Stinchfield said. He noted that NorthWestern pays $68/MWh for power from Talen Energy’s 2,094 MW Colstrip coal-fired plant.

Montana seems to have little appetite for more renewable power, Stinchfield said, noting that NorthWestern recently bought 11 hydroelectric plants totaling 630 MW from PPL before it spun off its generation business to Talen Energy.

There is little one can do to contest the PSC decision regarding the PURPA tariffs, the wind developer said. Greycliff’s best hope for moving its wind project forward at this point hinges on the solicitation process for meeting the state’s renewable energy targets

“PURPA’s been a mess here,” Stinchfield said.