A $500 million Columbus wind farm, paired with battery storage, has received contract terms from Montana’s Public Service Commission.
Caithness Beaver Creek plans to build four 80-megawatt wind farms near Rapleje, in what’s becoming Montana’s sweet spot for renewable energy development. There are five projects in various stages of development in the area.
State regulators set terms for Caithness’ sale of power to NothWestern Energy on Tuesday, after wind farm developers and NorthWestern failed to come to terms on their own. It remains to be seen whether the energy sales price set by the PSC is one Caithness can work with. There have been renewable energy projects in the recent past that stalled because developers found terms set by the commission unfeasible.
New York-based Caithness was unprepared to comment on Tuesday’s rate setting when The Billings Gazette contacted the company Wednesday.
Commissioner Roger Koopman, who represents the area where the wind farm would be located, said he’s excited about the potential of Caithness Beaver Creek, which is Montana’s first renewable energy project with battery storage.
“It’s the single most important, cutting-edge (renewable energy) decision the commission has yet made during my tenure, owing to its very unique and cutting-edge design,” Koopman said in an email.
Battery storage means Caithness will have electricity to sell NorthWestern Energy when the wind isn’t blowing, which is no small matter for the monopoly utility that markets its coal power as being available “when the sun doesn’t shine and the wind doesn’t blow.”
That coal power comes at a premium price to Northwestern customers, who according to Montana’s Consumer Counsel pay about $78 a megawatt hour for energy from Colstrip Unit 4, in which NorthWestern has 30% ownership. The price set by the PSC for Caithness Beaver Creek energy is a net rate of $38.41 a megawatt and a 20-year contract.
Caithness Beaver Creek had asked for a 25-year contract and $49.10 a megawatt, a price it estimated would be equal to what it would cost NorthWestern to produce the power itself. It’s the price difference between Caithness’ request and what the PSC set that has cast uncertainty over whether the project can proceed.
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NorthWestern had argued the Caithness rate was too high. Witnesses for NorthWestern argued in PSC proceedings that Caithness Beaver Creek power be priced on a sliding scale that on the high end was about one-third the price Caithness has suggested. The utility has repeatedly in other renewable energy cases argued that renewable energy power be discounted because of its infrequency.
But Caithness argued that its energy stored in batteries, about 20 megawatts worth, deserved a better rate because it is available, in the parlance of NorthWestern, “when the wind doesn’t blow.' Caithness wanted the battery-power priced on par with NorthWestern’s coal-fired or gas-fired power plants.
The PSC granted NorthWestern some concessions, but not all. The utility has asked the Caithness contract be cut to 15 years. Commissioners settled on 20 years. NorthWestern must accept the terms set by the PSC, barring a legal challenge. The obligation is grounded in a 42-year-old federal law guaranteeing contracts for alternative energy projects of a limited size. Tuesday’s terms apply to just two of Caithness Beaver Creek’s four phases, each of which generate 60 megawatts of wind energy and battery storage of 20 megawatts. They are qualifying facilities for guaranteed contracts the federal law known as the Public Utility Regulatory Policies Act.
Officials in the project’s host county support the wind farm. Caithness Beaver Creek will generate about $4 million a year in taxes, most of which will go to Stillwater County. Impact fees paid by Caithness to cover the wear and tear on roads during construction can also be shared with affected schools, said Tyrel Hamilton, Stillwater County commissioner.
Just on the other side of Reed Point, Stillwater Wind Farm has paid impact fees that not only maintained roads, but also paid for a new classroom, Hamilton said. The money is a big deal in a rural area where taxable values on farm land are low and taxpayers are few.
“We’re allowed statutorily by the state to give some of that money to affected schools, and in the case of Stillwater Wind the county supplied Reed Point School District with a little over $300,000-plus,” Hamilton said. “That allowed them to build an elementary wing next to their high school.”
The wind farms are paying the impact fees voluntarily, Hamilton said.
In addition to the Stillwater Wind farm, owned by Pattern Energy, there are three other projects in addition to Caithness under development. The Grizzly and Black Bear wind farms, developed by Optimum Renewables, are seeking contracts with NorthWestern, as well. Just over the county line in Wheatland County, a wind project being developed by Wheatland County Wind LLC is petitioning for contract terms with NorthWestern, as well.
Two things are drawing wind farms to the area, Hamilton said: persistent wind that isn’t too strong, and access to power lines built nearly 50 years ago to move electricity west from the Colstrip Power Plant. In Montana’s vastness, there are only three power line corridors capable of moving energy to western markets. NorthWestern is the just the first customer. The further west renewable energy travels, as far as Seattle in the case of the Colstrip line, the more favorable it is received.