Xcel Energy Inc. is making a multibillion-dollar investment in wind power across seven states, from Minnesota to New Mexico — and using Colorado-made turbines from Vestas Wind Systems for a large chunk of it.
The Minneapolis-based company (NYSE: XEL) is proposing to build or buy power from 11 new wind farms in the seven states that would generate up to 3,380 megawatts worth of renewable energy — enough to meet the power demand of about 1,014,000 homes.
The company expects to spend between $3.5 billion and $4.4 billion on the wind farms, if all the projects are approved by regulators, according to a spokeswoman.
If all the projects are approved by regulators, wind would make up nearly 35 percent of Xcel’s total power portfolio by 2021, the utility said. That nearly doubles wind’s 19 percent share of Xcel’s power portfolio in 2016.
The utility serves 3.5 million customers in eight states, including Colorado — where it’s the largest utility serving about 70 percent of the state’s population.
“We’re investing big in wind because of the tremendous economic value it brings to our customers. With wind energy at historic low prices, we can secure savings that will benefit customers now and for decades to come,” Ben Fowke, Xcel’s chairman, president and CEO, said Tuesday in a statement.
The cost of power from the new wind farms is about $20 per megawatt-hour, or 2 cents per kilowatt hour, according to an Xcel spokeswoman.
The push to build new wind farms stems from Xcel’s “steel-for-fuel” strategy which launched in 2016 to take advantage of low prices for wind farms and turbines due to the federal Production Tax Credit, Xcel officials have said.
The credit is worth $23 per megawatt for the first 10 years of a wind farm’s life — as long as the project was under construction by the end of 2016, a definition that includes orders for wind turbines. The credit then will be gradually phased out over five years.
Xcel’s “steel-for-fuel” idea is to buy or build wind-based power, the “steel” part of the equation due to the amount of steel used in the wind turbines, and bank on the savings generated over the years via reduced fuel costs — since the wind is free.
Fowke told analysts during a conference call in February the utility is taking advantage of a “unique opportunity.”
“Because of the strong wind resources in our service territories, we have a unique opportunity to invest in renewable generation in which the capital costs can be offset by fuel savings. As a result, we are planning to invest about $3.5 billion in renewables over the next five years,” Fowke said.