Xcel Energy’s Southwestern Public Service Company is looking to buy nearly 700 megawatts of wind power in the U.S. Southwest, no doubt pursuing some silly green-eyed vision of a clean energy future that will drive up the utility bills for hard-working folks in the state. Right?
Er, actually, no.
Details of three power purchase agreements the company wants approved weren’t released, but the company said “the price per megawatt-hour of energy generated at these wind facilities will be less than the per-megawatt-hour price of most of the company’s natural gas-fueled generation.” The deals cover 20 years, Xcel said it “expects to save $590.4 million in fuel costs” over the period.
Apparently free fuel has its advantages.
Xcel is seeking approval of power purchase agreements for wind from Oklahoma (199 MW at NextEra’s Mammoth Plains project); Texas (249 MW at NextEra’s Palo Duro project); and New Mexico (250 MW at Infinity Wind Resource’s Roosevelt Wind project).
Xcel arrived at these PPAs through a solicitation it put out in March that drew more than 75 bidders. The company already purchases 600 MW through PPAs, part of a portfolio of nearly 1,500 MW of wind energy capacity on a transmission network that “spans the Panhandle and South Plains regions of Texas, six eastern and southeastern counties in New Mexico and portions of Oklahoma and Kansas.”
“We started shopping for more wind energy in March after seeing some very good prices on the market,” Riley Hill, president and CEO of Southwestern Public Service Company, said in a statement. “We are making these acquisitions purely on economics and the savings we can deliver to our customers.”
While the production tax credit for wind helps make these low prices possible, there are signs that wind could continue to become even more competitive in the Southwest. Energy watcher Platts reported just last week that the imminent completion of a $6.9 billion transmission project will help move wind energy from windy West Texas to the big cities to the east.
Platts, citing analyst Jurgen Weiss, said that “even at the current relatively low price levels being seen for gas, wind generation in Texas will be cost-competitive with gas, while coal is likely to be the biggest loser in the competition as coal-fired generation faces increasing environmental regulation at the state or federal level.”