MidAmerican Energy plans two new wind farms

Idaho (3.1 GW)

MidAmerican Energy said May 1 that it has filed plans with the Iowa Utilities Board for the development of up to 552 MW of new wind power in Iowa, which would be under the tenth iteration of its wind development program.

MidAmerican Energy is obtaining necessary permits and easements for the construction of wind farms at two new sites. Pending board approval, the company plans to begin construction in spring 2016, with completion scheduled for the end of 2016. Total cost of the project is about $900 million.

Bill Fehrman, president and CEO of MidAmerican Energy, said: “We are very excited about building additional wind farms that will produce clean, carbon-free energy."

Iowa Gov. Terry Branstad noted that MidAmerican Energy’s efforts have helped the state become a national leader in wind generation. “Iowa derives a greater percentage of its electricity from wind than any other state, and we’re second in the nation in the number of people employed in the wind industry,” Branstad said. “Thanks to our low electricity prices and commitment to renewable energy, major tech companies and other energy-intensive businesses are interested in locating and expanding facilities here, which is good economic news for all Iowans.”

Increasing the company’s investment in wind turbines gives MidAmerican Energy the ability to reduce its reliance on coal, which helps protect customers from rising costs associated with meeting stricter environmental standards, the company said.

“If we look back a little more than a decade ago, we did not own any wind generation resources across our system,” said Fehrman. “As a company, we made a commitment to developing wind as a resource for our customers, and we’re proud to say we’ve followed through with and expanded upon that commitment. Once the proposed projects are completed, we’re projecting that 57 percent of our total retail load could be served with energy from these turbines. This puts us in a strong position to comply with future carbon emissions limits without placing the significant financial burden of that compliance on our customers.”

MidAmerican Energy customers have expressed their support for renewable energy, and today, wind makes the most economic sense for Iowa and the Midwest, the company said. “We have abundant wind resources in Iowa and community leaders and landowners who want wind development in their areas,” Fehrman said. “Over the next 30 years, an estimated $1.5 billion in property taxes and lease payments will flow to local communities as a result of our wind projects.”

Since 2004, MidAmerican Energy has invested about $5.8 billion building wind projects in Iowa, placing the company far ahead of all other rate-regulated utilities in the nation in terms of wind ownership. With the addition of the two projects announced May 1, MidAmerican Energy’s wind assets will include about 2,000 turbines, more than 4,000 MW of wind generation capacity and a total investment of about $6.7 billion.

MidAmerican is seeking from the Iowa Utilities Board in an April 30 application approval of ratemaking principles for its Wind X Iowa Project. MidAmerican contemplates building this generation at sites in Ida and O’Brien counties, Iowa. MidAmerican would commence construction quickly after obtaining acceptable ratemaking principles and would plan to place all Wind X generation into service prior to the end of 2016 to assure the project’s qualification for federal production tax credits (PTC), said Fehrman in testimony filed with the board.

Fehrman wrote: "If the Project is not completed before January 1, 2017 as the result of a force majeure event or some other issue outside of MidAmerican’s control, there is reasonable basis to believe that MidAmerican would be able to demonstrate 'continuous effort' to qualify the Project for the PTC. Obtaining the PTC benefits remains critical to MidAmerican’s objective of adding cost-effective wind generation. In order to be well positioned to finish all Wind X generation prior to the end of 2016 within the Project’s cost estimates, it is important to obtain a ratemaking principles order by September 9, 2015."

Fehrman said in his testimony that a key point is that these projects will help with compliance with EPA's CO2-reducing Clean Power Plan, which was proposed last year and is due to be issued in final form this summer. It calls for 30 percent CO2 reductions from existing power plants by 2030.

He wrote: "The EPA's proposed Clean Power Plan calculated state-specific emission rate targets to be achieved based on four building blocks that it determined comprised the 'Best System of Emission Reduction.' The four building blocks include: (1) an average 6 percent heat rate improvement at existing coal-fueled generating facilities, based on a 2 percent improvement from equipment upgrades and a 4 percent improvement due to operational changes; (2) increased utilization of existing combined-cycle natural gas-fueled generating facilities up to 70 percent capacity factors; (3) increased deployment of renewable and non-carbon generating resources, like Wind X; and (4) increased end-use energy efficiency. Under the EPA's June 2014 proposal, states may utilize any measure, including any combination of the four building blocks, to achieve the specified emission reduction goals, with an initial implementation period of 2020-2029 and the final goal to be achieved by 2030.

"Overall, MidAmerican supports the use of the building blocks but they are not without issues. MidAmerican has determined that building block 3 – increased utilization of renewables and other non-carbon generating resources – provides the most significant potential to comply with the Clean Power Plan. MidAmerican has an economic incentive to improve operating efficiencies and therefore already exercises best operating practices at its existing units.

"Under the methodologies considered by EPA to set emissions standards, as the Clean Power Plan is currently proposed, Iowa’s 2030 emission rate target ranges between 800 and 1,301 lb/MWh. In 2017, without the construction of Wind X, MidAmerican’s CO2 emission rate is expected to be about 1,003 lb/MWh. With the addition of Wind X, MidAmerican’s 2017 CO2 emission rate is expected to be about 940 lb/MWh. These numbers assume that MidAmerican retains all environmental attributes associated with wind generation. If MidAmerican sells the environmental attributes embodied in renewable energy credits ('RECs'), the Company’s emission rate would be adjusted accordingly."

Adam L. Wright, the Vice President-Wind Generation and Development for MidAmerican Energy, said in April 30 supporting testimony: "I managed the development and construction of the final 406.9 MW of MidAmerican’s Wind VII project, and I am currently managing the 1,050-MW Wind VIII and 162-MW Wind IX projects that were approved by the Iowa Utilities Board ('Board') in August 2013 and January 2015, respectively. MidAmerican is now proposing to construct additional economic wind generation—the Wind X Iowa Project ('Wind X' or 'Project'), under a new, but mostly similar, set of proposed ratemaking principles, to be located at two Iowa sites discussed later in my testimony. We are targeting up to 552 MW (nameplate capacity) of new wind generation assets under Wind X."

Notable is that exact site information, and details of existing agreements to obtain project equipment, are redacted from the public version of his testimony.

Since 2004, MidAmerican has successfully constructed about 2,840 MW of wind generation assets at 16 discrete locations in Iowa, and currently is constructing another 657 MW at two new locations as follows: the remaining 495 MW under the Wind VIII project approved by the Board in 2013, and 161 MW under the Wind IX project approved by the board in 2015.

Wright added: "MidAmerican will serve as its own general contractor for the Wind X project, but the [balance of plant] scope of work will be performed under an engineer-procure-construct ('EPC') arrangement. MidAmerican will negotiate the EPC contract(s) for the BOP work, the contract for the Vendor B turbines, and the contract for purchase of the pad mounted transformers. Thus, MidAmerican will purchase the turbines, and contract with one or more contractors to perform the BOP work. The BOP contractor(s) will be responsible for performing the BOP work, which usually includes procurement of materials for and construction of the access roads, underground electrical collection and fiber optic systems, and turbine foundations; installation of the pad mounted transformers; and erection of the towers and turbines."

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