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Renewable Advantage

 

Renewable advantage

 

Seeking lower energy costs for customers

  • We’re proposing to add up to 200 megawatts (MW) of new, low-cost renewable energy resources to our Southern Colorado system.
  • As part of our Renewable Advantage plan, we submitted our “120-Day report” to the Colorado Public Utilities Commission, a detailed analysis of bids received during a competitive solicitation held earlier this year. The report also outlines our preferred bid along with several back-up options for review and approval by the PUC.
  • The response to our Renewable Advantage solicitation was outstanding. In total, Renewable Advantage attracted 54 bids from 25 renewable energy developers for projects ranging from wind, solar and battery technology options.
  • With the participation of a third-party evaluator, we completed extensive modeling and analysis of each of the bids to fully assess the value of each project.
  • Our analysis affirmed that Renewable Advantage would provide far-reaching economic and environmental benefits to our customers in terms of cost savings and a broad, “ripple effect” of benefits through local, state, and federal taxes paid, construction jobs created and lower carbon emissions, among others.

Highlights of our preferred bid

Our preferred Renewable Advantage project is a large-scale solar facility – 200 megawatts – to be constructed in Pueblo County. The project is forecast to lower customer energy costs by approximately $66 million over 15 years and provide far-reaching economic and environmental benefits to our customers and communities. At a glance, our preferred bid is projected to result in:

  • $66 million in customer cost savings
  • $178 million in direct and indirect economic benefits through state and local taxes, federal taxes
  • 250 construction jobs
  • 51 percent renewable energy mix
  • 71 percent reduction in carbon emissions by 2024

If approved, the project would be owned by a third-party renewable energy developer with Black Hills Energy purchasing all of the energy generated at the facility under the terms of a 15-year power purchase agreement. Construction would begin in 2021 with the project coming online in 2023.

Carbon-free energy for Southern Colorado

Subject to Colorado Public Utilities Commission approval, the addition of up to 200 MW solar project would result in approximately 51 percent of the utility’s Southern Colorado generation portfolio coming from carbon-free resources by 2024. The company will achieve 30 percent renewables by 2020.

 

Frequently asked questions

What are you announcing?
We submitted the “120-Day report” for Renewable Advantage to the Colorado Public Utilities Commission. This filing represents the next step in a process to lower energy costs for customers by adding up to 200 megawatts of new renewable energy resources to our Colorado electric system. (The 120-Day report was filed with the PUC on June 19, 2020.)


What is the purpose of the 120-Day report?
The 120-Day report is a detailed analysis of bids received for our Renewable Advantage plan during a competitive solicitation held earlier this year. The report also outlines our preferred bid along with several back-up options for review and approval by the PUC.


What was the response to the competitive solicitation for Renewable Advantage?
The response to our Renewable Advantage solicitation was outstanding. In total, Renewable Advantage attracted 54 bids from 25 renewable energy developers for projects ranging from wind, solar and battery technology options.


How did you evaluate the bids?
With the participation of a third-party evaluator, we completed extensive modeling and analysis of each of the bids to fully assess the value of each project. We assessed each bid according to a set of economic and environmental criteria which included: initial eligibility screening, economic assessment, transmission and interconnection assessment, portfolio analysis, social cost of carbon and carbon emissions reductions.


What were your overall findings?
Our analysis found that Renewable Advantage would provide far-reaching economic and environmental benefits to our customers in terms of cost savings and a broad, “ripple effect” of benefits through local, state, and federal taxes paid, construction jobs created and lower carbon emissions, among others.

Which project did you select as your preferred bid and why?
Our preferred bid is a 200 MW solar project to be constructed in Pueblo County. The project is forecast to lower customer energy costs by approximately $66 million over 15 years and provide far-reaching economic and environmental benefits to our customers and communities. At a glance, our preferred bid is projected to result in:

  • $66 million in customer cost savings
  • $178 million in direct and indirect economic benefits through state and local taxes, federal taxes
  • 250 construction jobs
  • 51 percent renewable energy mix
  • 71 percent reduction in carbon emissions by 2024

Is Black Hills Energy planning to build and own this new solar project?
No. Once approved by the PUC, Black Hills Energy would enter into a 15-year power purchase agreement with an independent renewable energy developer for all of the energy generated at the selected facility.


Can you specify where in Pueblo County the solar project would be built and by whom?
No. Until Renewable Advantage is further along in the process and the project has been approved by
the PUC, we are not able to discuss the specifics of the location nor name the developer.


When would the new solar project be placed into service?
If approved, construction would begin in 2021 with the project coming online in 2023. With 200 MW of large-scale solar on your Colorado electric system, how much renewable energy would Black Hills Energy have in total under the Renewable Advantage plan? The addition of 200 MW of renewable energy on our system would mean that approximately 51 percent of our customers’ energy mix would be generated with low-cost, renewable energy by 2024.


How much renewable energy does Black Hills Energy currently have on its system?
With the company’s three wind projects – Busch Ranch I, Busch Ranch II and Peak View - the company will achieve 30 percent renewables by 2020, fulfilling the requirements of Colorado’s renewable energy mandates.


Do you need the extra power on your system?
The company has sufficient power resources to meet customers’ day-to-day electricity needs, however, Renewable Advantage proposes to deliver significant customer cost savings by supplementing existing power supplies with lower cost renewable energy.


If prices for renewable energy are so low, why not add more than 200 MW?
Our current transmission system can accommodate up to 200 MW of new renewable energy resources without increasing costs to customers. Going forward, the company anticipates adding even more renewable energy to our system, assisting Colorado in its clean-energy transition.

Why are your proposing two back-up bids?
We are proposing two, very strong back-up bids as a contingency to ensure our customers see the benefit of Renewable Advantage as quickly as possible. In these uncertain economic times, we are laying the groundwork for new renewable energy projects to progress should developers encounter challenges and/or production delays.

Please describe your back-up bids:


Renewable Advantage back-up bid No. 1: A portfolio of two solar projects representing a total acquisition of 170 MW – a 120 MW solar project to be located in Pueblo County and a 50 MW solar project to be located in the City of Pueblo. Projections include:

  • $43 million in customer cost savings over 15 years
  • $298 million in direct and indirect economic benefits through state and local taxes, federal taxes
  • 350 construction jobs
  • 47 percent renewable energy mix
  • 70 percent reduction in carbon emissions by 2024


Renewable Advantage back-up bid No. 2: A 150 MW solar project to be located south of the City of
Pueblo in Pueblo County. Projections include:

  • $38 million in customer cost savings over 20 years
  • $152 million in direct and indirect economic benefits through state and local taxes, federal taxes
  • 188 construction jobs
  • 45 percent renewable energy mix
  • 69 percent reduction in carbon emissions by 2024


Can you specify where the back-up bid projects would be built and by whom?
No. Until Renewable Advantage is further along in the process and the project has been approved by the PUC, we are not able to discuss the specifics of the locations nor name the developers.

Beyond customer cost savings, in what other ways will customers benefit from Renewable Advantage?
With abundant wind and solar resources, we believe our communities have the potential to lead the nation in the adoption of clean energy development, while also saving customers money and growing the regional economy. As we did with our recently completed Busch Ranch II wind project, we’ll continue to seek out local businesses and suppliers for a stronger, cleaner Colorado.


Why act now?
Time is of the essence for an acquisition from Renewable Advantage. Expiring tax credits provide developers the opportunity to pass along meaningful cost savings to customers, and it is unclear if or when savings of this magnitude may be available again.


Why didn’t you introduce a plan like Renewable Advantage sooner?
This is the perfect time for Black Hills Energy to introduce Renewable Advantage because of expiring federal tax credits. As a result, we expect our customers will benefit from highly competitive prices for new renewable energy resources.

How do you know your customers want more renewable energy?
Our customers have expressed a strong interest in having their electricity supplied by clean, emissionsfree renewable energy resources. With Renewable Advantage, more than 50 percent of Black Hills Energy’s total generating mix would come from carbon-free renewable energy resources by 2024. The City of Pueblo and Pueblo County have committed to be served by 100 percent renewable energy by 2035. Renewable Advantage would make significant progress towards this goal.


With all of this renewable energy on your system, will you still need PAGS?
Yes. It takes a balanced mix of generating resources to ensure our customers have the clean, safe, and reliable energy they need and expect – 24x7. The power supplied by PAGS, our modern, highly efficient natural gas-fired generating station, is critical to this effort. Because of the intermittent nature of renewable energy-based generation - the wind doesn’t always blow, and the sun doesn’t always shine - we must have a consistent source of generation available to be dispatched at all times. PAGS is the most efficient means of ensuring reliable service to our customers.


Do customers still have pay for PAGS if more of their electricity is generated by renewable energy resources?
While the cost to have PAGS’ five units available for dispatch is reflected in base electricity rates, customers only pay for fuel costs when PAGS is running. More electricity generated by renewable energy resources will reduce the fuel costs of PAGs, lowering the cost of natural gas on customers’ bills.


With so much renewable energy on Black Hills Energy’s system, is the LM6000 peaking unit still needed?
Yes. The LM6000 is critical to meeting our customers’ power needs and ensuring reliable service. The LM6000 peaking unit runs over a hundred times a year and produces hundreds of thousands of kilowatt-hours of energy to serve our customers.

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