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Growing before the contract is dry -- Gas-wiind deal for Minnesota could double in size

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The innovative 350 MW gas-wind deal developed by Northern Alternative Energy (NAE) in Minnesota is growing -- and might result in a merchant wind plant.

NAE's Greg Jaunich says that final contract negotiations in the company's 350 MW dispersed small wind and natural gas plant for Northern States Power (NSP), now Xcel Energy (story below), has resulted in what could eventually double the wind portion's original size (Windpower Monthly, May 2000). "It looks like NSP is going to option another 50 MW of wind and another 50 MW of CTs [combined cycle gas turbines]," Jaunich says.

"That means we will build it and they can exercise the right to purchase the output. There is a merchant component in this in the sense they may or may not actually purchase the power." That would leave NAE with merchandise in the form of wind kWh it would sell on the open market.

The new agreement now puts wind at 100 MW of the project and gas generation at 350 MW, even though NSP is not guaranteeing it will buy all the additional output. Jaunich is not worried. "I can think of 200 MW in the Midwest that will be needed for wind power in the next few years," he says. "It is just as easy to permit 100 MW as it is to permit 50 MW." He adds that NAE wants to get the facility built and permitted while the Production Tax Credit is still valid.

Jaunich says that if the extra 50 MW wind output is not bought, it can still be sold at the region's avoided cost rate, which has been rising. "The current avoided cost is above the cost of where some of the last wind projects came in," he says of the fuel costs that will be avoided if wind supplies the electricity. "There is no downside risk in this agreement." NAE expects to break ground for the project in the autumn. Located along Buffalo Ridge, it will be sited to the north and west of the town of Lake Benton in south western Minnesota.

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