Microsoft Makes Its Largest Wind Investment
Microsoft Corp. has announced its largest purchase of wind energy to date: Under two new agreements, the global tech giant is adding on 237 MW of wind to its portfolio.
Microsoft has contracted with Allianz Risk Transfer (ART) to fix its long-term energy costs and purchase the power connected with the 178 MW Bloom Wind project in Kansas.
According to Microsoft, the project is the first to use ART’s new structure designed to offset high upfront costs associated with the creation of large-scale wind projects. Microsoft says the new structure has the potential to bring clean energy projects online at a faster pace.
“It is important for investors in renewable energy projects to secure long-term, stable revenues, and our structure does just that,” explains Karsten Berlage, managing director of ART. “We are thrilled to be partnering with Microsoft on this groundbreaking project.”
In addition, Microsoft has contracted with Black Hills Energy to purchase 59 MW of renewable energy credits from the Happy Jack and Silver Sage wind projects, which are adjacent to Microsoft’s Cheyenne, Wyo., data center.
The combined output of the Bloom and Happy Jack/Silver Sage projects will produce enough energy to cover the annual energy used at the data center, says Microsoft.
With these new agreements, Microsoft’s total investment in U.S. wind has reached more than 500 MW.
Microsoft and Black Hills Energy also worked together to create a new tariff, available to all eligible customers, that allows the energy company to tap the local data center’s backup generators, thereby eliminating the need for Black Hills Energy to construct a new power plant. The tariff received approval from the Wyoming Public Service Commission in July.
These are Microsoft’s third and fourth wind energy agreements, joining the 175 MW Pilot Hill wind project in Illinois and 110 MW Keechi wind project in Texas. In March, Microsoft also signed an agreement with the Commonwealth of Virginia and Dominion Energy Inc. to bring 20 MW of solar energy onto the grid in Virginia.
“We are constantly looking for new ways to approach energy challenges and avenues of engagement with our utility partners,” says Christian Belady, general manager of cloud infrastructure strategy and architecture at Microsoft. “The team worked closely with ART to come up with a completely new model to enable faster adoption of renewables. Likewise, the tight engagement with Black Hills created the opportunity for Microsoft’s data center to become an asset for the local grid, maintaining reliability and reducing costs for ratepayers. This kind of deep collaboration with utilities has great potential to accelerate the pace of clean energy, benefiting all customers – not just Microsoft.”
BLM Issues Final Public Lands Rule For Wind, Solar
In support of the president’s Climate Action Plan, Secretary of the Interior (DOI) Sally Jewell has announced that the Bureau of Land Management (BLM) finalized its rule governing solar and wind energy development on public lands.
According to the BLM, the rule strengthens existing policies and creates a new leasing program that will support renewable energy development through competitive leasing processes and incentives to encourage development in suitable areas.[adright zone=’190′]
“This new rule not only provides a strong foundation for the future of energy development on America’s public lands, but is an important and exciting milestone in our ongoing efforts to tap the vast solar and wind energy resources across the country,” says Jewell. “Through a landscape-level approach, we are facilitating responsible renewable energy development in the right places, creating jobs and cutting carbon pollution for the benefit of all Americans.”
Specifically, the rule formalizes aspects of the BLM’s existing Smart from the Start approach to renewable energy development by the following:
- Supports development in areas with the highest generation potential and fewest resource conflicts through financial incentives, awarding leases through competitive processes and streamlining the leasing process;
- Ensures transparency and predictability in rents and fees – for example, gives developers the option of selecting fixed-rate adjustments instead of market-based adjustments; and
- Updates the BLM’s current fee structure in response to market conditions, which will bring down near-term costs for solar projects.
As reported, the rule complements the department’s landscape-scale planning efforts, including the Western Solar Plan, California’s Desert Renewable Energy Conservation Plan and Arizona’s Restoration Design Energy Project, which were designed to streamline development in areas with high generation potential, while also protecting environmental, cultural and recreational resources.
“By offering incentives for development in areas with fewer resource conflicts, the BLM’s rule provides a framework to support all of the landscape-scale planning we’ve done to better plan for and manage wind and solar development,” says Assistant Secretary for Land and Minerals Management Janice Schneider. “The rule also refines the BLM’s approach to fair market value to ensure that taxpayers get a fair return from these important resources.”
The president’s Climate Action Plan calls on the DOI to permit 20,000 MW of renewable power by 2020. Since 2009, the DOI has approved 60 utility-scale renewable energy projects on public lands, including 36 solar, 11 wind, and 13 geothermal projects and associated transmission infrastructure that could support nearly 15,500 MW of renewable energy capacity.
According to the BLM, the rule’s competitive leasing provisions will help renewable energy development flourish on the 700,000 acres of public lands that have been identified in Arizona, California, Colorado, Nevada, New Mexico and Utah.
Further, the BLM says the rule refines the application review process and increases financial certainty by giving developers the option to lock in fixed-rate adjustments and providing for megawatt capacity fee phase-ins. The rule also allows the BLM to offer lands outside of designated leasing areas competitively; although, the BLM anticipates that most projects in these areas will continue to use the application-by-application process.
It is clear, however, that not everyone is pleased with this rule.
In a statement, the American Wind Energy Association (AWEA) says that the BLM final rule will put wind energy at a competitive disadvantage.
According to AWEA, the final rule makes federal lands even less attractive to wind energy developers, based on its preliminary review, as it adds “time, uncertainty, complexity and expense to a process that was already more difficult than developing on private lands.”
“The rule penalizes projects pursued outside of designated zones, yet there are no designated zones for wind energy, and there may not be for years. This discriminatory treatment places wind energy at a competitive disadvantage to energy sources that have such areas designated and can avail themselves of the incentives to develop in these areas,” says AWEA’s statement.
Tom Vinson, vice president of federal regulatory affairs for AWEA, comments, “This rule will only serve to further discourage wind development on public lands – contrary to BLM’s stated intent.”[adleft zone=’190′]
Although over 98% of wind farms have been developed on private land, wind energy development on U.S. public lands has significant potential. An estimated 20.6 million acres of public lands in 11 Western states have wind energy development potential, according to the BLM. However, of the 4,740 MW of wind energy that the BLM has authorized since 2009, less than 470 MW has actually been built.
The regulations will become effective 30 days after they are published in the Federal Register.
Xcel Energy Achieves Military Hiring Goal
Xcel Energy is celebrating the achievement of 15% of new hires having a military background, exceeding the company’s goal of 10%, while also doubling results from two years ago. In addition, Xcel recently honored its veterans at Veterans Day events throughout the company’s eight-state service area, including celebrations at power plants and operations service centers in Texas and New Mexico.
“We appreciate the sacrifice that our veterans and their families have made to ensure the safety and security of our nation, and we are honored that so many of these women and men are part of our workforce,” says Ben Fowke, chairman, president and CEO of Xcel Energy. “Our military veterans bring leadership, teamwork and dedication to the job – exactly the kind of skills we need to meet the energy needs of the future.”
Robert S. Munoz, a second-year apprentice lineman in Carlsbad, N.M., is one of more than 1,000 military veterans currently working at Xcel Energy across the company’s service area that stretches from the upper Midwest to New Mexico.
As part of Xcel Energy’s efforts, it recently joined Veterans in Energy, a national organization that is a recruiting network linking veterans to current job openings in the energy industry. Launched in October, Veterans in Energy is a partnership that includes energy companies nationwide, along with the U.S. Departments of Energy, Defense, Labor and Veterans Affairs.
Xcel Energy works to reduce carbon emissions and deliver clean energy solutions from a variety of renewable sources.
Alberta Kicks Off Renewables Initiative
On the heels of the Canadian government’s announcement to power its buildings and operations with renewables by 2025, the government of Alberta is taking its own clean energy pledge by launching the Renewable Electricity Program.
Using a competitive bidding process administered by the Alberta Electric System Operator (AESO), the program will add 5 GW of renewable electricity capacity by 2030, according to a news release from the province’s government, which adds that the program will put Alberta on a path to achieve its target of 30% renewables by that time.
Shannon Phillips, Alberta’s minister of environment and parks and the minister responsible for the climate change office, spoke on the program at the Canadian Wind Energy Association’s (CanWEA) trade show in Calgary. Phillips said the province will be proceeding with a procurement of an initial 400 MW of renewables as a first step toward meeting the 30%-by-2030 target. In addition, she said, the government will set clear timelines for further developing renewables in the province.
“This program is built on the recommendations from the AESO, who studied jurisdictions around the world to come up with the best possible program design in the interests of Albertans,” said Phillips. “This process will be competitive and transparent and will provide renewable electricity we need at the lowest possible price. The program will also complement the coal phase-out to ensure system reliability is maintained at all times.”
The government will also soon introduce the Renewable Electricity Act, which will reinforce Alberta’s commitment to the 30%-by-2030 target and provide the legislative framework for the Renewable Electricity Program.
The government’s release says the successful projects will be privately funded and will result in new investments of at least C$10.5 billion into the Alberta economy by 2030. In addition, the government expects 7,200 jobs to be created for Albertans.
The AESO is gathering feedback from the industry on draft commercial terms before the first competition takes place in 2017. Successful projects will be financially supported by reinvesting a portion of carbon revenues from large industrial emitters. In addition, safeguards will be in place to ensure that the process is fair and transparent, adds the Albertan government in the release.
“As the AESO built our recommendations for government, we were keenly aware of ensuring that competitive outcomes drive the best result for the province,” comments David Erickson, president and CEO of the AESO. “Reaching 5,000 MW of new renewable generation is a complex task, but we are confident we can reliably integrate this much renewable energy into the electricity system in a cost-effective manner by accessing the benefits of robust competition.”
“Our members are excited for the opportunity to work in renewable energy,” adds Robert Hornung, president of CanWEA. “The province’s plan is an excellent way to create jobs for the province, while diversifying the economy of Alberta. We have over 1,200 members that are trained and ready to work in the renewable energy industry.”
DONG Ditches Oil & Gas
In its third-quarter financial report, Denmark-based energy group DONG Energy has announced its intention to stray away from its oil and gas (O&G) business and focus more on renewable energy.
Commenting on the newly issued, interim financial report, Henrik Poulsen, CEO and president of the company, says DONG Energy “continues to develop positively” and is in line with its “strategic and financial plans.”
However, he says, “We have decided to initiate a process with the aim of ultimately exiting from our oil and gas business. This should be seen in the context of DONG Energy’s strategic transformation towards becoming a global leader in renewables and a wish to ensure the best possible long-term development opportunities for our oil and gas business.”
Poulsen notes that there is currently no timetable for the completion of the shift.
“O&G continues the substantial restructuring of the business and delivered a strong operational performance in the first nine months,” he continues. “Cost performance continues to improve, driven by continued renegotiation of supplier contracts, reduced exploration spending and improved operational efficiency – with total cash spend decreasing by 36 percent compared with the same period last year. We now expect O&G to be cashflow-positive in 2016, a year earlier than previously communicated.”
Poulsen says DONG Energy, which has seven large offshore wind projects currently under construction globally, will “continue to shape [its] pipeline of offshore wind project opportunities for the period beyond 2020.”
The company adds that it has achieved significant milestones since its interim financial report was issued for the first half of the year. For wind power specifically, in August, the U.K. government granted DONG Energy permission to build the Hornsea Project Two offshore wind farm, located 89 kilometers off the Yorkshire coast.
China’s 10-Year Outlook Shifts Downward
MAKE Consulting has downgraded China’s 10-year outlook by 6.5% from 2016 to 2025 for both installed and grid-connected capacity due to cutbacks in the national target of wind power in the Thirteenth Five-Year Plan and increasing curtailment impacting new grid-connected capacity.
This news comes after China’s Thirteenth Five-Year Plan (2016-2020) for renewable power was submitted to the state council for final approval.
MAKE’s report states that the national targets for wind power have been reduced to 210 GW of grid-connected capacity (including 5 GW of offshore) by 2020 instead of the original target of 250 GW (including 10 GW of offshore) included in the draft earlier in 2016.
As reported, cumulative installed offshore capacity will face a 47.4% decrease by year-end 2020 and 60.0% decrease by year-end 2025.
According to MAKE, annual installed capacity will drop to 20 GW-22 GW between 2017-2020. New projects in northern regions will find it increasingly difficult to connect to the grid in the short term as pressure mounts over curtailment and excess power supply. Northwest provinces, such as Gansu and Xinjiang, with heavy curtailment of wind power will suffer significantly lower growth from 2016 to 2018.
The new plans will trigger a more severe shift in growth to southern regions, the report states. Southern regions (including the South, East and Central regions) are considered focus regions in the Thirteenth Five-Year Plan and will contribute with more than 50% of annual growth over the next three years.
Curtailed wind output in the first half of 2016 was almost at the same level as fiscal year 2015, predominantly occurring in northern regions but later in the southern regions of Yunnan and Shandong. Local authorities may limit connection of installed projects to the grid in order to reduce curtailment in the short term.
The report says growth of new orders started slowing down from the fourth quarter of 2015 and decreased noticeably in 2016. Newly installed capacity of Tier I turbine original equipment manufacturers is expected to drop between 5% to 30%. Component suppliers significantly suffered from decreased orders, with a range of a 20% to 30% year-over-year decrease in 2016.
In addition, blade suppliers built up large inventories in 2015 and the first half of 2016. The report says the sudden decrease in deliveries and new orders from July 2016 hit the blade industry hard.
Further reductions to onshore feed-in tariff (FIT) levels in 2018 and to the offshore FIT from 2017 have been proposed and are expected to be released in December 2016. Proposed FIT reductions and increasing curtailment of wind power production will dampen investment enthusiasm. Impact on developers in northern regions will be even harder than before, especially in those provinces with severe curtailment.
According to the report, progress of 10.53 GW (changed to 10.45 GW) of centrally planned offshore projects has been slower than anticipated, with only 40% installed, under construction or approved. Planned projects that fail to be approved by year-end 2016 will be canceled. However, there is no indication that independent power producers are accelerating project approvals. A complete lack of investment incentives means offshore growth remains limited, depending entirely on political drive, MAKE concludes.
Firms Strategize On Offshore Wind
Baltimore-based US Wind Inc. recently partnered with Tradepoint Atlantic (TPA) – the firm overseeing the 3,100-acre redevelopment of the former Sparrows Point steel mill – to host major offshore wind supply-chain manufacturers at TPA’s Port of Baltimore facility.
Business leaders at the meeting included representatives from turbine, electrical cable and steel manufacturing, vessel construction, and local marine support services companies. Attendees discussed the facilities at TPA’s site and how US Wind’s offshore wind renewable energy credit (OREC) application needs state approval to spark investments.
According to US Wind, which plans to build a 750 MW site, TPA is uniquely positioned to become a major hub of offshore wind on the East Coast.
“US Wind chose to invest in Maryland because it has everything we need to become the central hub of offshore wind on the East Coast – optimal location, deep water, available land and access to a world-class workforce,” said Paul Rich, director of project development. “We want to be in Maryland, and we want to drive economic activity in Maryland.”
Recently, US Wind leaders briefed various Maryland state and Baltimore County agency officials about the significant interest expressed by the industry in the TPA facility, the timeline of development, and the importance of US Wind’s receiving its OREC approval (which the Public Service Commission [PSC] was expected to begin reviewing at the end of November).
US Wind says TPA’s facility has a 1,200-foot-long deepwater pier, a 2,200-foot deepwater marine berth and 3,100 acres of available land dedicated for manufacturing development. The TPA port is managed by T. Parker Host terminals and its subsidiary, Bay Marine Services.
“Tradepoint Atlantic sees great potential in the offshore wind industry and the opportunity to work with US Wind,” said Joe Greco, TPA’s vice president of commercial/trade development. “The manufacturing aspects of this opportunity are incredibly attractive, and our property is proven to support them. Add the logistical benefits we provide in areas of rail, highway access and marine, and it becomes very compelling how Baltimore and Tradepoint Atlantic can support coast-wide wind projects and bring manufacturing jobs back to Sparrows Point.”
US Wind planned to begin the OREC proceeding with the Maryland PSC at the end of November. The PSC is anticipated to make its decision by the end of May 2017.
US Wind officials say that without approval from the PSC, other competing ports on the East Coast will seize the chance to capture a multibillion-dollar manufacturing industry. Competing ports include Paulsboro, N.J., and New Bedford, Mass.