Xcel Energy's Colorado utility plans to build a 600-MW wind farm that is expected to produce power for $28.68/MWh over 25 years, making it the utility's least expensive wind resource and saving its customers about $443 million, according to an application filed with state regulators. Public Service Co. of Colorado said it expects to spend $1.04 billion on the Rush Creek wind farm and a related 345-kV transmission line, according to the application filed Friday with the Colorado Public Utilities Commission.
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The proposal will help PSCo meet pending federal policy and is consistent with state policy, which encourages the development of renewable generation beyond the 30%-by-2020 renewables requirement faced by investor-owned utilities, the application said.
The wind farm project in eastern Colorado is being developed by Invenergy Wind Development North America. If approved, PSCo will buy the project from Invenergy when construction is ready to begin.
The planned 90-mile transmission line will be rated to carry 1,600 MW, allowing other potential wind farms access to the grid, according to PSCo.
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PSCo estimates the Rush Creek wind farm, which consists of two wind farm areas, will have a 43.6% capacity factor and produce 2.3 million MWh a year.
LOWER COST THAN RECENT PPAS
The Rush Creek wind farm's estimated $28.68/MWh levelized cost compares favorably with recent wind power purchase agreements, according to PSCo.
Most recently, PSCo entered in wind PPAs to buy 199 MW from NextEra Energy Resources for $29/MWh and 250 MW from MultiBand Renewables for $34.80/MWh, according to the application. The purchases grew out of a 2013 solicitation.
In the solicitation, E.ON Climate and Renewables offered to sell power to PSCo from 250-MW and 150-MW farms on the same site as the Rush Creek areas for $35.83/MWh and $36.82/MWh, the application said.
PSCo expects the project will be able to qualify for 100% of the extended federal wind production tax credit, garnering $55 million to $65 million a year over 10 years when the project begins operations.
Under guidance issued in early May, the Internal Revenue Service said a wind project is eligible for the full PTC if it is operating within four years after construction starts, up from two years previously. SIZE OF PROJECT SAVINGS HINGE ON GAS PRICES
The utility's cost savings estimates for the wind farm depend on the price of natural gas. Power from the planned wind farm will cost about as much as electricity from a combined-cycle plant with gas costing $3.19/MMBtu, according to the application.
Under a "base" gas price forecast, PSCo expects gas prices to climb to about $4/MMBtu by about 2021 and then to climb to about $6/MMBtu around 2032.
Even if gas prices are lower than expected, PSCo expects to see $213 million in savings compared with $443 million under the base case. Savings would reach $744 million under a high natural gas price scenario.
PSCo asked the PUC to review the application on a fast-track basis and separately from an upcoming long-term resource plan, expected to be filed by June 1.
If approved, PSCo plans to start building the wind farms late next year and bring them online before November 2018.
PSCo said it will consider renewable projects from third parties in a solicitation related to its upcoming resource plan. If the PUC approves Rush Creek, PSCo will still need to acquire about 615 MW, the utility said.
PSCo asked the PUC to approve the wind farm proposal by November 10.
The utility expects to start its next resource solicitation in the summer or fall of next year.
--Ethan Howland, email@example.com
--Edited by Keiron Greenhalgh, firstname.lastname@example.org