Show Navigation

Fort Hood Renewable Energy Facilities Enter Commercial Operations

Killeen, Texas – The U.S. Army’s largest single renewable energy project began officially generating clean electricity on April 27.Apex Clean Energy (Apex) developed, managed construction of, and currently operates the groundbreaking hybrid wind and solar complex, which will provide more than 50 percent of the annual load at U.S. Army Garrison Fort Hood in Killeen, Texas.

Apex and Northleaf Capital Partners (Northleaf) own the renewable energy portfolio of which the complex is a part: the 50.4 MW Cotton Plains Wind and 151.2 MW Old Settler Wind facilities in Floyd County, Texas; and the 15.4 MWac Phantom Solar on-site at Fort Hood.

The Defense Logistics Agency–Energy, on behalf of the Army, is purchasing the power from Cotton Plains Wind and Phantom Solar to supply energy to Fort Hood. The two facilities will save the Army—and taxpayers—an estimated $168 million in direct energy costs over the life of the project. Old Settler Wind, meanwhile, is generating enough clean electricity to power 51,000 average U.S. homes. Apex is providing asset management services for all three facilities.

“With our deep corporate ties to the military, Apex is honored to partner with the Army on its goals to increase our country’s energy independence and protect our national security,” said Mark Goodwin, president and CEO of Apex. “We are all proud to help Fort Hood ensure decades of consistent, affordable, and secure clean energy.”

“We are pleased to partner with Apex, given the company’s reputation as a leading renewable energy company,” said Jared Waldron, a director at Northleaf. “Direct investments in fully contracted wind and solar assets are consistent with Northleaf’s investment strategy and offer stable cash flows and attractive long-term returns for our investors.”

Apex and Northleaf arranged debt financing and tax equity commitments for the renewable portfolio. CohnReznick Capital served as financial adviser to Apex.

The U.S. Army and Apex Clean Energy will host a ribbon-cutting ceremony at Fort Hood on June 2 to commemorate the start of operations. More information will be provided as the date approaches.

###

About Apex
Apex Clean Energy builds, owns, and operates utility-scale wind and solar power facilities. Apex was the U.S. market leader in 2015 and has brought nearly 1,700 MW online over the past two years.

With a team of over 200 professionals and the nation’s largest wind energy project pipeline, Apex is a leader in the transition to a clean energy future. For more information, visitwww.apexcleanenergy.com.

About Northleaf Capital Partners
Northleaf Capital Partners is a leading independent global private equity, infrastructure and private credit manager, with more than $9 billion in commitments under management on behalf of public, corporate and multi-employer pension plans, university endowments, foundations, financial institutions and family offices. Northleaf’s global infrastructure program pursues direct investments in mature, conservatively-positioned infrastructure assets in developed markets.

Northleaf’s 85-person team, located in Toronto, London, Chicago, and Menlo Park, is focused exclusively on sourcing, evaluating and managing private markets investments globally. Northleaf currently manages seven global private equity funds, two specialist private equity secondary funds, two infrastructure funds, a private credit fund and a series of customized investment mandates tailored to meet the specific needs of institutional investors and family offices. For more information on Northleaf, please visitwww.northleafcapital.com.

Natural Gas and Renewables, A Partnership With Which Coal Can’t Compete

By Jeffrey Clark
http://eecn.johnshopkins.edu/index.php/2016/11/15/1512/#ixzz4VtCXZCTF

In an ugly weekend for Texas football fans, the Longhorns were defeated by the West Virginia Mountaineers.  Sitting in the stadium, I reflected on our just-ended Presidential election in which energy issues – particularly the promise of a coal renaissance – played a major role.  I was struck by the bigger battle between these two states currently unfolding off the gridiron.  That competition is for the future of American electric power generation and, campaign rhetoric aside, it is one in which natural gas, wind, and solar from states like Texas and Oklahoma will resoundingly defeat the dirtier and increasingly more expensive coal from the mines of states like West Virginia.

Peaking in 2007 when it was used to generate half of the United States’ electric power, coal use has been declining steadily while the use of low-priced natural gas has been on the rise.  By 2015, coal’s share had fallen dramatically, with each fuel then providing about one-third of our nation’s power generation.  In coal country, this shift is often blamed on environmental policies, overregulation, and the growth of renewable energy.  In reality, the causes are more complicated.  While new regulations reducing harmful emissions from coal power plants have increased their cost of operations, the reduction in our use of coal is driven by economics, attributable primarily to the arrival of inexpensive and abundant natural gas.

Fuel switching by power generators is becoming common, with low natural gas prices the primary driving force.  A study by BTU Analytics concluded that natural gas priced near $2.50/MMBtu provides sufficient economic justification for shutting down coal plants and replacing them with newer gas generation.  This switching is also driven by the flexibility of natural gas generation, which allows it to work in concert with other low or no emission generators, especially renewables.

Unlike coal power plants which cannot be efficiently started and stopped, new gas generation units can ramp quickly, meaning that they can serve to balance generation fluctuations from variable generation resources like wind and solar.  A recent study published by the National Bureau of Economic Research found that a 1% rise in fast reacting natural gas generation was associated with a 0.88% rise in renewable generation.  The authors, analyzing data from 26 OECD countries, concluded “that renewables and fast-reacting fossil technologies appear as highly complementary and that they should be jointly installed to meet the goals of cutting emissions and ensuring a stable supply.”

That “highly complementary” relationship is a simple one. Natural gas power plants provide power with reduced emissions, high reliability, and some price volatility; while renewables offer emission-free, low cost, fixed-priced power with variability in generation output.  Married together, they offer high reliability, lower prices, moderate price stability, and reduced emissions.

There is irony in the fact that many of America’s most energy-rich states import the fuels currently essential to powering their lives and economies.  The symbiotic partnership between natural gas and renewables is helping these states, including Texas, break their addiction to imported coal bringing wide-ranging economic benefits including energy independence, consumer savings on power, emissions reductions, rural economic development, and new tax revenue for governments and schools.

President-Elect Donald J. Trump has promised much to energy producers, leaving constituencies in the natural gas and coal producing communities hoping that their fortunes are about to rise.  But, unlike the annual battle that plays out on the football field, the contest between West Virginia coal and Texas natural gas is already in the fourth quarter and fans are walking out of the stadium.  Coal is not clean enough, affordable enough, or flexible enough to compete in the clean energy market of the future.  Instead, the future will be dominated by a new group of states harnessing new technologies, their infinite renewable energy resources, and their vast supplies of cleaner-burning natural gas.

Other Reading:

How Renewables Can Save Natural Gas – Bloomberg

How the FORTUNE 500 Are Driving New Markets for Clean Energy

More Companies are Choosing to Power Their Operations with Renewable Energy

From AWEABlog, by Evan Vaughn

What brings diverse companies like Amazon, Disney, General Motors, Microsoft, Nike, Starbucks and Walmart together? They’re all buying renewable energy or want to get in the market for it.

From tech giants to household names, corporate America is shopping for clean, renewable energy that is increasingly cheaper than conventional alternatives. Leading companies are seizing the opportunity to reduce their environmental footprint with wind and solar while simultaneously locking-in low, predictable energy prices for a decade or more.

corporate-buyer-graphic

These companies and many others recently gathered for a summit of the newly created Renewable Energy Buyers Alliance (REBA), which has a goal of facilitating 60 gigawatts (GW) of new corporate renewable energy capacity by 2025.

I attended the summit and noticed a few trends emerging that could shape the future of corporate renewable energy deals. More on that in the second installment of this series, but first let’s examine why corporate buyers purchase renewables and how they’re doing it.

Why does it matter that big companies are buying wind power?
You might reasonably ask why dozens of large corporations need to get together and discuss energy purchasing. Most of us pay our electric bills without much fuss (unless they go up). For customers with large electricity needs, which are orders of magnitude greater than any household, buying energy involves more negotiation and planning – as befits these companies’ substantial buying power and demand.

Why does this matter? Big energy bills mean corporate buyers hold significant sway with the utilities who supply them – if they push for renewable energy, it ends up benefitting everyone.

Nearly three-quarters of Americans think the U.S. should “emphasize alternative energy such as wind and solar,” according to a 2016 Gallup poll, while 91 percent of likely voters support growing wind energy, according to a survey from Wall Street investment firm Lazard, Inc. Large corporate customers with their substantial buying power help new renewable energy projects get financing and make a compelling argument for utilities to speed up their procurement and delivery of renewable energy. This gives Americans more of the emission-free electricity and cleaner air they want.

How do corporate buyers purchase renewable energy?
Companies may pursue a number of options when purchasing renewable energy. Some build wind and solar projects onsite, others – including IKEA – own utility-scale wind projects.

Long-term contracts called power purchase agreements (PPAs) are the most common way to do it. The company may sign a physical PPA, where the energy is physically delivered to the company, or they may sign a virtual PPA, where the energy produced continues to be delivered into its local energy market. When a company signs a PPA for renewable energy, they agree to pay a fixed price over a period of time for the electricity produced from a wind or solar project, which comes bundled with renewable energy credits (REC).

RECs exist to quantify the value of renewable energy’s environmental and societal benefits, which our economic system doesn’t factor in – reduced air pollution, the preservation of natural resources and improved public health. The PPA typically grants the purchasing company the right to claim the RECs, and that is how a corporation can claim to be carbon neutral or powered by 100 percent renewable energy.

Obtaining a long-term contract is often the make-or-break requirement for a new wind or solar project to secure financing from investors. By providing a renewable project developer with a measure of certainty on future electricity sales, corporate PPAs help drive additional project development, and ultimately add more clean power onto the grid.

Corporate deals so far total over 5.4 GW of capacity, and the stream of new deals has grown exponentially over the last three years.

Wind power has historically been the energy source of choice for corporate purchasers because of its low costs.

For wind, corporate PPAs have become a major new market opportunity. 2015 was the first year that corporate and other emerging buyers of wind power signed for more than half of newly contracted wind capacity, and these players have continued buying wind power throughout the first half of 2016. Target, Digital Realty, Dow Chemical and Google Energy are just a few examples of customers driving demand this year.

Hear Ikea and Yahoo! explain why they were attracted to wind power’s potential.

Koch-Funded Professor Strikes Out on Wind Energy

Please note that Newsweek did later provide a disclaimer, noting Mr. Simmons’ clear bias and conflicts of interest.

Newsweek recently did a major disservice to its readers by publishing – apparently without any fact checking – an error-ridden opinion piece by Randy Simmons, the “Charles G. Koch Professor” at Utah State University. Newsweek also failed to disclose that Simmons is a major recipient of funding from the fossil fuel industry billionaires, and that this attack follows Simmons’s two other thoroughly discredited attacks on wind energy in the last month. Below I go line-by-line to point out the false claims and obvious factual errors in the Koch professor’s latest attack.

1. Fact checking: The attack piece begins with an obvious factual error: “…wind energy – which supplies just 2 percent of US electricity….” A quick glance at Department of Energy data reveals that wind energy provided 4.44 percent of electricity last year. Moreover, that figure that is expected to grow to around 6 percent once under construction and recently completed wind projects produce power for a full year. Wind energy is growing quickly and is making major contributions to providing America with a cleaner, more diverse portfolio of energy resources.

2. Wind’s incentives are a drop in the bucket compared to those for other energy sources: The Koch professor next paints a very misleading picture of federal energy incentives by ignoring the far larger subsidies for conventional energy sources. The nuclear industry’s own tally shows that all renewable resources accounted for less than 10 percent of federal energy incentives provided over the period 1950-2010, with fossil resources receiving more than 70 percent. Additional data from other sources is provided here.

Simmons’s next line of attack is inconsistent with basic economic principles, with his criticism that some wind project development is done by U.S. subsidiaries of multinational corporations particularly peculiar for an economist who claims to support free markets. The reality is that the federal renewable production tax credit (PTC) directly reduces the cost of wind energy sold to U.S. consumers, with expert analysis confirming that virtually the full value of the credit is reflected in lower consumer electricity costs. The same could not be said for incentives for other energy sources whose price is set on the global market. Moreover, the majority of the economic development and job creation associated with wind project development occurs in the U.S.

Finally, Simmons attempts to greatly exaggerate the number of federal programs that are benefitting wind energy by rehashing a misleading attack that has been used by other fossil-funded groups.

3. Technology improvements have reduced wind’s costs below what Simmons claims: Before incorrectly adding a number of supposed costs onto the cost wind energy, Simmons compounds that error by starting with a cost that is too high by putting words in the mouths of wind “proponents” about what wind energy actually costs. He writes: “[Wind] proponents tend to claim it costs as little as $59 to generate a megawatt-hour of electricity from wind.” Later, he writes: “On the low end, the financial advisory firm Lazard claims wind costs $59 per megawatt-hour.” [link in original] First, Lazard actually states that the lowest cost wind projects come in at a cost of $37/MWh. Second, Lazard is not a “wind energy proponent,” but rather a “financial advisory firm” as Simmons himself admits later in his attack piece.

Regardless, the best information on what wind energy costs can be obtained from market data. Once again, it is peculiar for someone who purports to be a free market economist to use cost estimates instead of market price data. Data on the price of utility contracts to purchase wind energy, compiled by the Department of Energy (DOE), show that the average price was $22/MWh in 2013, which if the PTC were not in place would correspond to a cost of just over $40/MWh. In short, Simmons is behind the times on both wind’s share of the electricity mix as well as wind energy’s technology improvements.

More perplexing is that Simmons references Lazard’s analysis, but fails to use its results when they contradict his claims. Simmons states that “For the studies we examined, capital costs ranged from $48 to $88 per megawatt-hour, while O&M costs ranged from $9.80 to $21 per megawatt-hour.” However, Lazard’s analysis shows wind’s capital cost at between $30/MWh and $66/MWh, and O&M costs at between $8-15/MWh, significantly below the range claimed by Simmons. DOE’s data also indicate an average O&M cost of $9/MWh for recently installed wind projects.

4. Wind energy’s grid integration cost is actually lower than that of conventional generation: Next, Simmons runs through a series of thoroughly debunked claims about how wind energy is integrated onto the power system, essentially regurgitating the discredited line of attack used by another Koch-funded group back in 2013. The reality (as explained in Chapters 3 and 5 here) is that all power plants are backed up by other plants. Moreover, grid operator data indicate that the cost of integrating wind is actually lower than the cost of integrating large conventional power plants. This is because changes in wind output are gradual and predictable, while large fossil and nuclear plants fail instantaneously and without warning. Calculations made using data from the Texas grid operator indicate that the cost of integrating wind energy is only about $0.37/MWh, while the cost of integrating conventional power plant failures is nearly twice as high on a per-MWh basis, and more than 17 times higher on a total cost basis. Based on the Texas data, wind’s actual integration cost is 6-70 times lower than claimed by Simmons, and he totally ignores the larger integration costs for fossil and nuclear power plants.

Simmons then gets even more confused about how the power system operates, claiming that using a power plant to provide reserves requires the plant to be operating and therefore affects emissions. The reality is that any increase in reserve need caused by wind is often met by power plants that are not online but can start up quickly in the rare event they are needed, as changes in wind output are gradual and predictable. Regardless, any energy provided by any power plant providing reserves must directly displace energy that would have been provided by another power plant, as the laws of physics dictate that energy cannot be destroyed.

Simmons also repeats the conclusively rejected myth that wind affects the efficiency of power plants by causing them to change their output. Real-world emissions data confirm that wind energy produces 99.8% of the expected emissions reductions. Simmons claims an earlier study found a different result, but that analysis was a simple modeling effort that failed to use wind’s true impact on system reserve needs, which are a fraction of what it assumed as most changes in wind output are canceled out by opposite changes in electricity demand or deviations at other power plants. For more detailed discussion of this topic and citations to the studies that have debunked this myth, see Chapter 14 here.

Next, Simmons misunderstands that transmission upgrades that help integrate wind have a number of other benefits, so these lines more than pay for themselves and should be viewed as a benefit, not a cost. In addition to saving consumers money, these upgrades improve electric reliability, make electricity markets more competitive, protect consumers against fuel price fluctuations, and other benefits. For example, transmission lines primarily added to help integrate wind in Texas have improved electric reliability around Dallas and San Antonio, while also facilitating the development of oil and gas production in West Texas. Regardless, DOE calculates that even if transmission is viewed as a cost that should be attributed to wind, it would only be a cost of $3.2/MWh, which is not drastically higher than the transmission cost for other energy sources.

In sum, each of Simmons’s attempts to add a cost to wind has actually highlighted a benefit of wind. Wind energy’s integration cost is actually lower than that for conventional generators, and transmission added to primarily integrate wind more than pays for itself by providing large net benefits.

5. Wind energy benefits consumers: Next, Simmons tries to use obsolete analysis from another Koch-funded group to claim that states with pro-renewable policies have higher electricity prices. While many factors affect the price of electricity so correlation does not prove causality, regardless the data actually support the opposite conclusion if one uses data that is more current than the outdated data used by the Koch group that Simmons cites. Last month, independent expert DBL Investors analyzed the data and found that states with the most use of renewable energy have lower electricity prices, while also observing that states with pro-renewable policies have seen lower electricity price increases than other states. Such a finding makes sense, as stably-priced wind energy helps to protect consumers against increases in the price of other fuels.

Simmons then seemingly contradicts himself by claiming that wind energy is reducing electricity prices so much that it is making it harder for other energy sources to compete. The claim that wind energy is having an undue impact on other energy sources has been thoroughly rejected by a number of experts, including former Federal Energy Regulatory Commissioner John Norris.

6. Once errors are corrected, Simmons’s math shows wind provides major net benefits: Each time Simmons attempts to attack wind energy, he actually highlights a benefit of wind. Whether it is the fact the total incentives received by wind energy are far smaller than those that have been given to fossil and nuclear energy, or wind’s lower grid integration cost, or wind’s actual cost, Simmons’ arguments fall flat when the full comparative picture is revealed. Of course, had Simmons looked at metrics such as impact on public health and the environment, or protection against fuel price increase risk, he would have found even more reason to like wind energy. Simmons claims that his article is “part of a study I’m doing of other energy sources including solar, natural gas, and coal to determine how much each one actually cost us when all factors are considered.” If you think the Koch professor will actually take a fair look at the negative externalities for public health costs for each resource, or the total incentives that each has received, or the value of fuel price stability, or the cost of integrating each resource onto the grid, or even what each energy source actually costs, don’t hold your breath.