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Northwest Wind Rebound May Be More Supportive Of Q1'20 Earnings

After low winds reduced wind power production in the U.S. Northwest in 2019, winds picked up in first-quarter 2020, providing significant additional generation to the region. This boost in generation comes at a time when reported load at Bonneville Power Administration, or BPA, came in somewhat lower. While much of the region is impacted by COVID-19 pandemic mitigation measures, initial analysis indicates that BPA load responds to temperature changes more than demand reduction from stay at home orders issued in April.

S&P Global Market Intelligence estimates that the average capacity factor of wind on the BPA system in the first quarter of 2020 was 35%, an increase of almost 300% from the first quarter of 2019 average capacity factor of 12%. Regional wind farm owners Portland General Electric Co., NextEra Energy Inc., and Avangrid Inc. all reported financial impacts of low wind resource in the first quarter of 2019. Portland General Electric reported 43% lower than average wind in the first quarter of 2019. NextEra saw wind speeds that were 91% of the long-term average in the first quarter of 2019, compared to 102% in the first quarter of 2018 and said a 1% change in wind production index equates to roughly 3 cents to 4 cents of EPS for the balance of the year. Avangrid's wind fleet generation had a 10-year low in the first quarter of 2019, 14% lower than the first quarter of 2018 and 17% below expectations. This contributed 7 cents of negative impact on Avangrid's first-quarter EPS. In contrast to 2019, the rebound of the Northwest wind capacity factors may contribute to more positive financial impacts in the first quarter of 2020. Portland General Electric is scheduled to report first quarter earnings on April 24 and Avangrid reports next week.

Portland General Electric owns the 450-MW Biglow Canyon Wind Farm which had an 8% capacity factor in January 2019 and a 20% capacity factor in January 2020. NextEra Energy owns the Stateline Energy Center (WA), Stateline Energy Center (OR), Vansycle I Wind, and Vansycle II Wind Energy Center projects in Oregon and Washington with over 300 MW of capacity. Avangrid owns 277 MW of wind project capacity in Washington and Oregon among 11 different projects, including Montague Wind Facility (Leaning Juniper III), Big Horn, Juniper Canyon Wind Energy Project and Klondike III.

Timely data on loads is not readily available in the Northwest. The second quarter of 2020 is shaping up to be more normal, with temperature changes determining BPA load more than impacts of COVID-19 stay-at-home orders. The BPA seven-day moving average load trended above the maximum seven-day moving average load for the past five years for 12 days in late March and early April, during which the daily high temperatures were below average in Seattle, Portland, Spokane, Wash., and Montana. April 16-17 saw BPA loads less than the minimum load for the last 5 years, paired with unseasonably warm temperatures in the Northwest U.S. A large BPA load reduction attributable to stay-at-home orders is not apparent so far in April 2020.

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