Municipal utilities get deal on Alma wind energy
Three in West Michigan are buying from the expanding Beebe wind farm.
Among the municipal utilities that will be buying the future power are Grand Haven Board of Light and Power, Holland Board of Public Works and Zeeland Board of Public Works.
Beebe (pronounced “beebee”) Renewable Energy Project is owned by Exelon Wind, a division of Exelon Power based in Chicago.
The first phase of the wind farm was completed in late 2012 — 34 turbines producing up to 81.6 megawatts. An expansion now underway will add 21 turbines, producing up to 50.4 megawatts. The 2.4 megawatt Nordex turbines used there are among the largest used on land in the United States.
Dave Walters, general manager of the Michigan Public Power Agency, took a tour of the construction site in late August with representatives of some of the MPPA member utilities, including Annette Allen, general manager of Grand Haven Board of Light and Power. He said it is on track to start generation in November.
According to Walters, who was formerly the general manager of the Zeeland Board of Public Works, the Lansing Board of Water & Light contracted directly with Beebe for electricity equivalent to the output of eight of the 21 new turbines, and the MPPA contracted for the remaining 13, or 31.2 megawatts. The MPPA contract is for 20 years.
The Holland Board of Public Works will buy the equivalent of seven of the MPPA’s 13 turbines, or 16.8 megawatts. It distributes electricity to more than 27,000 customers, and has more than 200 megawatt generating capacity of its own, using coal and natural gas.
The municipal utilities in Zeeland and Grand Haven and the Wyandotte Municipal Services will split the remaining 9.6 megawatts.
Walters said the agreed price the utilities will pay for the increased wind energy from Beebe is about 4.5 cents per kilowatt hour in the first year of the contract, but it will increase at a rate of 2.5 percent per year.
Allen at Grand Haven Board of Light and Power said the price is “competitive” with the cost of generating electricity at their existing coal-fired plant in Grand Haven.
“That made it a very good fit for what our board is trying to do, which is to increase our (use of) renewable … when it comes in at the right cost.”
The Beebe electricity will equal about 2 percent of the total load on the Grand Haven system.
Allen said the Grand Haven utility works to balance reliability of service, affordability and protection of the environment.
However, GHBLP will not actually need the Beebe electricity in order to meet the state requirement to use 10 percent renewable energy by the end of 2015.
“When Beebe gets in, we’ll be above 10 percent,” said Allen. “It looks like we’re going to have more than what we need” to meet the Clean, Renewable and Efficient Energy Act of 2008.
However, the GHBLP is taking steps to be ready if Michigan’s Renewable Portfolio Standard is raised above 10 percent.
“We still have an interest in acquiring renewables when they are at the right price, because I think we’d be foolish to sit here and assume that the existing 10 percent requirement is all that we’ll ever need,” she said.
Allen said GHBLP actually had contracted for renewable energy “before there was a 10 percent requirement.” She said they anticipated an increase in the price of renewable energy when Michigan utilities were required by law to use more of it.
One type of electricity GHBLP has been buying is generated by methane gas recovered from landfills around Michigan.
“I like the landfill gas because that’s a power that’s available more around the clock, in your peak times, and wind isn’t always available at peak” demand, said Allen.
The Grand Haven power plant is one of the most advanced in Michigan, with emission scrubbers allowing it to burn coal from Illinois, which has a higher sulfur content, while other coal-fired plants in Michigan mainly use the lower-sulfur coal from Wyoming, in lieu of more expensive environmental equipment.
Walters cautions against making comparisons between the cost of wind power and the cost of electricity generated from fossil fuel, equating it with comparing apples to oranges. Utilities must also contract for electricity from conventional plants, as backup for those times when the wind isn’t blowing.
Wind energy “can’t be depended on in our long-term planning” at utilities, he said. “It’s there some of the time but it’s not always there at the peak time when you actually need it.”
Another major factor in the price of wind energy is the production tax credit offered by the federal government to wind farm developers like Exelon. The tax credit is transferrable and can be sold, making it a valuable incentive. Walters said the ability of the Beebe wind farm to sell for 4.5 cents per kilowatt hour “depended entirely on that tax credit they get.”
Even though the program has since expired, federal rules of the production tax credit allows the second phase of investment at Beebe to qualify, as did the first phase.
Walters said the federal government is expected to renew the production tax credit for wind farm development, “but who knows if they will or not?” Renewal of the federal tax credit for investment in research and development is in the same boat, he noted.
Michigan’s Thumb has been determined to be “the sweet spot” in wind energy in the state, according to Walters, because of its close proximity to high demand in southeast Michigan and the reliable wind conditions there. A key element in siting wind farms is the transmission infrastructure required, which can be as costly to build as the wind farms themselves.
Walters guesses that about 1,200 megawatts of wind energy are installed or in process of being installed in the Thumb, with a future capacity of double that amount. The transmission lines are also being upgraded around the Thumb to move the energy from that growing cluster of wind farms, at an investment cost of almost $500 million.
Walters said some wind power enthusiasts have speculated that up to 30 percent of the electricity load needed in the state could come from Michigan wind energy, but he believes it might not be practical to rely that much on an energy source that has such a variable output. It would still require other sources of generation that can be ramped up when the wind dies down.
“It’s tough to operate (an electrical distribution) system like that,” he said.