Trump's Clean Power reversal spurs price battle; Spanish utility wins US offshore lease
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Trump's reversal of Clean Power Plan laws set to spur price competition
President Trump signed an Executive Order March 28 which reverses Clean Power Plan (CPP) objectives set out by the previous Obama administration.
The order, pledged by Trump during the presidential campaign, lifts the ban on Federal leasing for coal production, lifts restrictions on the production of oil, natural gas, and shale energy. The order also directs all government agencies to conduct a review of existing actions that "harm domestic energy production" and suspend, revise, or rescind actions that are not mandated by law, the White House said in a statement.
"By revisiting the federal overreach on energy regulation, President Trump is returning power to the states – where it belongs," the White House said.
The President's move is set to intensify price-based competition between power generation types.
The Production Tax Credit (PTC) which has supported wind power growth remains in place, for now, and in many states wind power generation has become highly competitive against other generation types such as coal-fired plants.
The US Energy Information Administration (EIA) has said that even if the CPP is not implemented, low natural gas prices and current tax credits will make natural gas and renewable energy the primary sources of new generation capacity.
US forecast annual generation capacity additions
Source: EIA Annual Energy Outlook 2017
A number of utilities and corporations have signed large wind power deals in recent months.
Utilities are increasingly looking to wind power to expand their rate bases or replace aging, inefficient coal-fired power plants, Moody's Investors Service said in a new report published March 15.
"Wind power economics are driving coal generation up the dispatch curve and into earlier retirement," Jairo Chung, Moody's analyst, said.
In the Great Plains states, the average all-in power purchase agreement (PPA) price for wind power is around $20/MWh, while operating costs for coal-fired power generation average at around $30/MWh, Moody's said.
"Around 56 GW of regulated coal-fired capacity in the Midwest has operating costs that are higher than the all-in costs of new wind power," Chung said.
Demand for a planned 700-mile wind power line from Oklahoma to Tennessee exceeded five times capacity, project developer Clean Line Energy Partners told Wind Energy Update last month.
The 4 GW Plains and Eastern line is set to unlock $7 billion of wind power investments and has received 22 GW of demand from generators and industrial consumers such as Kellogg’s, General Motors and Unilever.
U.S. installed wind capacity rose 11% in 2016 to 82 GW to overtake hydroelectric power and become the fourth-largest source of power generation behind natural gas, coal and nuclear energy, according to figures from the American Wind Energy Association (AWEA). Wind power now generates around 5.5% of U.S. electricity and in 13 states wind power represents over 10% of power generation.
The U.S. wind power sector now employs over 100,000 workers, up from an estimated 88,000 workers at the end of 2015, according to figures published by the U.S. Department of Energy (DOE).
Xcel Energy to develop 1.2 GW new capacity in Texas, New Mexico
Xcel Energy has submitted proposals for 1.2 GW of new wind energy capacity in Texas and New Mexico, the Minneapolis-based utility said March 21.
A week previous, Xcel Energy announced it would invest in 1.6 GW of new wind capacity in the Upper Midwest states of Minnesota, North Dakota, South Dakota and Iowa. Xcel Energy would own the majority of this new capacity, it said.
Xcel Energy is also investing in Invenergy's 600 MW Rush Creek wind project in Colorado and construction is expected to begin this spring, the company said.
"Xcel Energy has proposed a combination of owned wind farms and power purchase agreements [PPAs]. The company anticipates investing a significant amount in wind generation over the next five years to build company-owned wind projects. Xcel Energy is using federal production tax credits [PTCs] to secure low wind energy prices as part of the company’s ‘steel for fuel’ strategy," it said.
The PTC extension provides 10 years of tax credits at $23/MWh for greenfield and repowering projects started in 2016. The PTC drops by 20% for projects started in 2017 and is scaled down annually until zero support from 2020.
By 2021, Xcel Energy will supply 35% of its energy portfolio from wind power, the company said.
Iberdrola subsidiary Avangrid wins its first US offshore wind lease
The U.S. Bureau of Energy Management (BOEM) has allocated a 122,405-acre North Carolina offshore wind lease to Avangrid Renewables, a subsidiary of Spanish utility Iberdrola, BOEM said March 16.
Avangrid Renewables has already developed 6.5 GW of U.S. onshore wind and solar capacity and Iberdrola has developed European onshore and offshore projects.
The lease represented the seventh competitive lease sale in federal waters and Avangrid Renewables paid $9.1 million, representing an average price of $74.1 per acre.
In comparison, Statoil recently bid a record high U.S. price of $535/acre for a 79,350 acre site in New York State waters.
The North Carolina offshore lease would allow Avangrid to play a "leading role in the growing U.S. offshore wind industry," the company said in a statement.
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