Minnesota regulators on Wednesday approved Xcel Energy's $750 million wind farm "repowering" project, one of several proposals from the utility to help speed up the state's economic recovery from COVID-19.
Xcel, the state's largest utility, said its plan to retool several existing wind farms will save ratepayers $160 million through efficiency gains. The Public Utilities Commission (PUC) unanimously agreed, though the Minnesota Department of Commerce opposed Xcel's plan.
"I believe the record shows this will lead to substantial customer savings and ratepayer benefits," said Matt Schuerger, a PUC member.
Xcel's project involves rebuilding wind-power plants with new technology and bigger blades that will extend their life spans by about 10 years.
"Modernizing our wind farms with new technology will increase the amount of low-cost, carbon-free wind energy we deliver to our customers, while saving money and putting people back to work," Minneapolis-based Xcel said in a statement.
The project primarily involves four larger wind farms in southern Minnesota, which together have the power generation capacity of 651 megawatts. That's about the same capacity as a large coal generator, except that wind power is variable.
Xcel's project will be eligible for federal wind-power tax credits.
Repowered wind farms typically generate at least 10% more electricity.
"This is an opportunity to make existing projects more efficient," Kevin Pranis, Minnesota marketing manager for the Laborers' Union, told the PUC. A representative for Minnesota's operating engineers union, which represents construction-equipment operators, also spoke in favor of the wind project.
Xcel said the projects will create about 700 construction jobs, which are expected to be filled by union workers.
The PUC in early May requested that the state's electric and gas utilities submit plans for how they could "assist in Minnesota's economic recovery from the COVID-19 pandemic." The PUC was particularly looking for projects that would create jobs and more carbon-free energy.
Xcel came forward with a $3 billion plan, which has since been pared to $2 billion to $2.5 billion. The biggest projects: speeding up planned rebuilding of wind plants and accelerating the construction of a new solar plant in Becker that would be at least four times larger than Minnesota's current largest solar array.
The wind projects were the first to get approved by the PUC.
Several environmental and clean-energy groups supported the wind project. "There are a lot of things to like," Allen Gleckner, energy markets director for research and advocacy group Fresh Energy, told the PUC.
Not only will the wind farms have updated technology, but transmission lines are already in place to carry their output, he said. Currently, there's a large backlog of proposed renewable energy productions in the Upper Midwest due to transmission constraints.
"The record shows [Xcel's] projects are economic," Gleckner said.
The Commerce Department, which does research for the PUC, wasn't so sure.
The department asked the PUC to deny Xcel's proposal, saying among other things that it was concerned with the bidding process for the projects. Xcel said the Commerce Department's conclusions were incorrect.
The Commerce Department also said it wasn't able to replicate Xcel's modeling of the wind project's future cost savings. "There is not a robust analysis … that it benefits ratepayers," Stephen Collins, a department rates analyst, told the PUC.
Another Commerce Department analyst, Danielle Winner, told the PUC that "while Xcel's results were showing cost savings, we were showing costs, sometimes in the hundreds of millions of dollars."
A mismatch of data between Xcel and the Commerce Department could have been an issue. "I see evidence of a lack of communication between the department and the company," Schuerger said.
Xcel will recover wind repowering costs from ratepayers through base rates or bill riders or both. Xcel said that ratepayer savings will be $160 million over 25 years.
The wind repowerings will occur at Xcel's wind farms in Grand Meadow and Pleasant Valley Township in Mower County; Nobles Township in Nobles County; Ewington Township in Jackson County; and Pleasant Valley Township in Rolette County, N.D. All but the Ewington wind farm, by far the smallest of the bunch, are directly owned by Xcel.
Grand Meadow and Nobles went online respectively in 2008 and 2010; North Dakota's Pleasant Valley and Border Winds in 2015. Once repowered, the life spans of those four wind farms will be extended from 2043 to 2049.