Colo. approves its largest wind farm

Source: Daniel Cusick, E&E reporter • Posted: Wednesday, October 5, 2016

Colorado’s largest proposed wind farm cleared a key hurdle last week as the Colorado Public Utilities Commission granted final permission to build the 600-megawatt Rush Creek Wind Project in the state’s remote eastern plains.

Under a PUC-approved settlement between developer Xcel Energy Inc. and more than a dozen parties, the Rush Creek wind farm will begin construction in 2017, with an expected completion date of late 2018, according to officials involved with the project.

Plans call for installing 300 turbines across 116,000 acres in four counties along the Interstate 70 corridor. Accompanying the project would be a 90-mile-long high-voltage transmission line to deliver the wind energy to Xcel customers along the Front Range, according to utility and PUC officials.

The Vestas Wind Systems A/S V110-2.0 MW turbines, to be delivered by the Danish firm’s Colorado manufacturing facilities, will help drive employment in the state’s wind energy sector, while also generating between $3 million and $7.5 million in annual lease payments to eastern Colorado property owners, officials said.

According to the settlement, the Rush Creek wind farm will be subject to a cost cap of just under $1.1 billion, and any cost savings earned by remaining under the cap will be shared between Xcel and its customers, according to the PUC.

The agreement also allows Xcel to move more quickly to complete the project, making Rush Creek eligible to claim hundreds of millions of dollars in federal tax credits that it would have forfeited under its former timetable.

“We believe the settlement is a victory for Xcel Energy customers and the state of Colorado,” David Eves, president of Xcel Energy-Colorado, said in a statement. “Rush Creek will provide low-cost energy to our customers and it adds a clean, renewable generation resource to the state that will help us meet potential federal and state air quality mandates.”

According to Xcel, emissions-free electricity from Rush Creek is expected to offset roughly 1 million tons of carbon dioxide equivalent annually, helping the state achieve greenhouse gas reduction targets and comply with the federal Clean Power Plan targeting utility-sector greenhouse gases.

The settlement was welcomed by environmental groups, rural economic development officials and the wind energy sector, which has a manufacturing base in Colorado. But critics, such as the Independence Institute and the Ratepayers Coalition, argued that the project’s promoters and the PUC gave short shrift to the public review process to help Xcel gain a tax credit windfall.

“For the biggest wind project in state history, [Xcel] proposed a schedule that shortened the time for everything,” the Ratepayers Coalition said in a Sept. 27 statement preceding the PUC’s approval. “It demanded faster appearances by intervening parties, shortened response times, earlier testimony, [and] expedited everything.”

Building bigger wind farms

Among its criticisms, the coalition said the Rush Creek project was not sufficiently scrutinized for its impacts on Xcel ratepayers in the form of future costs, adding that the circumstances surrounding the approval were affected by political pressure and prejudice in favor of renewable energy.

But such arguments did not sway the PUC, which voted to approve the settlement agreement without modification.

PUC Chairman Joshua Epel said in a statement that he was encouraged that nearly 20 parties could agree to a plan that “significantly increases renewable energy in the state, will be a driver of economic development in rural Colorado, and helps sustain the renewable energy supply chain that has matured in Colorado.”

The Rush Creek project will be the largest wind farm in Colorado, at least for now, and its size reflects a recent surge in larger wind farms being built across the United States.

Minneapolis-based Xcel last month announced it would seek requests for developers to build an additional 1,500 MW of wind energy capacity in its Upper Midwest service territory, which does not include Colorado, with an investment price tag upward of $2 billion (EnergyWire, Sept. 23).

In August, Iowa regulators approved a proposal by Des Moines-based MidAmerican Energy Co. to build what is expected to be the nation’s largest wind project at a cost of $3.6 billion. That project, known as Wind XI, will be built on a half-dozen sites across Iowa and is expected to begin delivering power by 2019 (ClimateWire, Sept. 6).

Experts attribute the growing scale of wind farms to several factors, including steeply falling costs for wind power, growing consumer demand for clean energy, and a desire by developers to get projects into the planning and construction pipeline before the federal production tax credit begins to be gradually scaled back next year.

Projects that commence construction before the end of 2016 will receive the full PTC benefit amounting to 2.3 cents per kilowatt-hour of electricity generated for 10 years. The value of the PTC is reduced by 20 percent annually in each of the three successive years through 2019.

Similar reforms will apply to another popular renewable energy subsidy called the investment tax credit, which has been less widely used by the wind power sector. The ITC currently allows for developers to receive a 30 percent tax credit on renewable energy projects, including wind farms. Its value will be stepped down to 24, 18 and 12 percent in annual increments through 2019.