The winds of change will continue to favor WEC Energy Group after a strong 2019 performance, the company indicated last week.
“In 2019, we benefited from additional capital investment, production tax credits and continued emphasis on cost control,” CFO Scott Lauber said during an earnings call Thursday that largely focused on the company’s growing investments in wind generation.
Executive Chairman Gale Klappa reported on the list of projects, including the 97-MW Coyote Ridge Wind Farm in South Dakota, which is now in service and “will contribute a full year of earnings in 2020,” he said, particularly from the project’s tax credits.
“We invested approximately $145 million for our 80% share of the wind farm, and we’re entitled to 99% of the tax benefits,” Klappa said. He also noted that the project has a 12-year offtake agreement with Google Energy for all energy produced.
Klappa pointed out that WEC also will acquire an 80% ownership interest in Invenergy’s Thunderhead Wind Energy Centre in Nebraska for $338 million. The 300-MW project is expected to be in service at the end of the year. Klappa said he expects it will qualify for PTCs, and it also comes with a “long-term” offtake agreement with AT&T for all its output.
WEC also expects to earn PTCs from its 80% ownership in Invenergy’s 250-MW Blooming Grove Wind Farm in Illinois for $345 million. Commercial operation is also expected by the end of 2020.
“Blooming Grove has a 12-year offtake agreement with affiliates of two multinational companies that are investment grade,” Klappa said. “Overall, we’re very encouraged about these investments in renewable energy, which will serve strong businesses for years to come. We expect the return on these investments to be higher than our regulated returns. Of course, we’re being very selective as we vet future projects. We’re only interested in projects that achieve our financial return metrics and do not change our risk profile.”
And a little sunshine was mixed in with the long list of wind topics.
WEC CEO Kevin Fletcher reported the utility has broken ground in Wisconsin on two solar projects for subsidiary Wisconsin Public Service: Two Creeks and Badger Hollow 1.
“Our share will total 200 MW with an expected investment of approximately $260 million. Both projects are scheduled to begin producing energy by the end of this year,” Fletcher said.
He also noted that subsidiary We Energies in August filed with the Wisconsin Public Service Commission to acquire 100 MW of capacity at the Badger Hollow II Solar Park for a $130 million investment. He said he expects the commission’s decision in spring.
Finally, Fletcher reported that in early 2019, the utility completed construction on two new natural gas-fired power plants in Michigan’s Upper Peninsula. The projects were “on time and on budget,” Fletcher said.
“These plants are now providing a cost-effective, long-term power supply for our customers in the Upper Peninsula. With these new units operating, we were able to retire our older, less efficient coal-fired plant at Prescott. This resulted in significant operations and maintenance savings and reduced CO2 emissions,” he said.
– Amanda Durish Cook
