Colorado: Wind turbines make 17 percent of Xcel’s electricity, but future cloudy

Posted: Wednesday, December 19, 2012

With many wind turbines sprouting up on the Colorado plains, Xcel Energy reports it has enough renewable energy to meet state requirements.(Denver Post file)

A record amount of wind is being turned into electricity in Colorado this week as the last of 250 turbines started turning at NextEra Energy Resource’s Limon wind farm.

The wind is now providing about 17 percent of all the electricity used by Xcel Energy customers — more than four times the national average.

The future of wind power in Colorado, however, is uncertain as the U.S. Congress has failed to extend a key wind project tax credit and Xcel says it has all the renewable energy it needs to meet state requirements.

“Wind will be an important part of our energy mix,” said Frank Prager, Xcel’s vice president for environmental policy. “But it has to become competitive on its own.”

Juno, Fla.-based NextEra has been in the wind business since 1989 and with the Limon facility has built 10,000 megawatts of turbines in 19 states and four Canadian provinces.

It was after 2001 — when natural gas prices spiked and the technology became more efficient — that the wind market soared, said Michael O’Sullivan, a NextEra senior vice president.

NextEra is selling electricity to Xcel from its Limon wind farm at an average 3 cents a kilowatt-hour — competitive with coal or natural gas, O’Sullivan said.

That, however, includes the federal wind production tax credit of 2.2 cents for every kilowatt-hour — a subsidy set to expire, making it unavailable to new wind farms starting next year.

The Limon facility — the last of 17 Colorado wind farms that supply Xcel with power — just beat the deadline.

Without the tax credit, the wind market is projected to contract by as much as 90 percent in 2013.

“The largest issue is the uncertainty,” O’Sullivan said. “It has left the market at a standstill.”

Much of the Colorado market is driven by the state’s renewable energy standard, requiring that by 2020, investor-owned utilities provide 30 percent of power and municipal utilities 10 percent of power from renewable sources.

Xcel, the state’s largest electric utility with 1.6 million customers, said it now has enough renewable energy to meet the standard for 15 years.

There are opportunities for wind in Colorado, said Tracee Bentley, associate director at the Colorado Energy Office.

Thursday, Tri-State Generation and Transmission Association, which serves 18 Colorado rural electric cooperatives, is dedicating a new wind farm in Fleming, Bentley said.

“There are rural cooperatives on the plains that would be likely to invest in small wind farms,” Bentley said.

Colorado ranked sixth nationally in 2011 in wind-power generation — 9.2 percent — according to the American Wind Energy Association, a trade group.

Wind is going to have to get beyond the renewable energy standard and the production tax credit to have a future in Colorado, Xcel’s Prager said.

Wind is already valuable because it doesn’t emit any air pollution and is a hedge against volatile fossil fuel prices, Prager said.

“The last part is the price point,” Prager said. “It has to be competitive on price and it is starting to move in that direction.”