Wind project to double Tucson Electric’s renewable energy generation

Tucson Electric Power is building its biggest renewable-energy project yet — a massive wind farm in southeastern New Mexico that will help the company more than double its use of renewable energy by 2021.

The planned Oso Grande Wind Project will generate up to 247 megawatts of power, enough to power nearly 100,000 homes, TEP said. Currently, the biggest renewable-energy project TEP owns or buys energy from is the 72-MW Red Horse wind and solar project near Willcox.

Combined with other existing and planned wind and solar projects, Oso Grande will give TEP enough clean energy to power more than two-thirds of Tucson homes. The company has about 425,000 customers.

“This cost-effective system will become TEP’s largest renewable energy resource, accelerating our progress toward our clean energy goals while allowing us to help customers achieve their own sustainability objectives,” said David Hutchens, TEP president and CEO.

San Diego-based EDF Renewables North America will develop the system for TEP, but the utility will end up owning the project through a “build and transfer agreement” for a cost of about $370 million, TEP said.

When the project is complete, TEP’s renewable energy production is expected to top 28 percent of its retail sales, more than double the state requirement for 2021 and approaching the 30 percent goal TEP has planned to achieve by 2030.

TEP originally issued a request for proposals for a wind farm with a capacity of up to 150 megawatts, but wind farms benefit greatly from economies of scale and the EDF project was too attractive to pass up, Hutchens said, noting that EDF already had planned the project.

“We’re being opportunistic here,” said Hutchens, adding that TEP is now looking to aim higher with its renewable-energy goals.

Another factor that added urgency to the deal, Hutchens said, was the scheduled phaseout of a lucrative federal production tax credit for renewables in the next few years.

As owner of Oso Grande — which means “big bear” in Spanish — TEP figures it will be eligible to reap about $250 million in tax credits, allowing the utility to recoup more than two thirds of its cost over its first 10 years of operation.

Those savings will be passed along to TEP’s customers.

TEP estimates that energy from Oso Grande will cost the company about 3 cents per kilowatt hour, delivered to its transmission system.

TEP’s system operations chief said the wind farm will help provide renewable power when the sun goes down and solar farms stop producing.

“This new wind farm will complement our many solar arrays, producing some of its strongest output during the morning and evening hours when we have little or no solar production,” said Erik Bakken, Vice President of System Operations and Environmental. “We’re building a balance of solar and wind resources that better matches our customers’ energy use patterns, helping us deliver more clean energy for less money.”

The Oso Grande project will include 61 highly-efficient turbines installed on 24,000 acres southeast of Roswell, New Mexico. Construction is expected to begin later this year, and the system should be online by the end of 2020.

The system’s output will be delivered to Tucson through existing transmission lines that connect to TEP’s transmission system in eastern Arizona.

TEP’s renewable energy portfolio currently includes 277 MW of community-scale solar resources and 80 MW of wind systems, complemented by 232 MW of rooftop solar arrays installed by customers. Those resources produced energy equivalent to about 13 percent of TEP’s retail sales in 2018 – enough to power more than 117,000 homes for a year.

Over the next two years, two other large new projects are expected to come online in 2020:

  • The 99-MW Borderlands Wind Project in western New Mexico. This project is being developed through a power purchase agreement with Borderlands Wind LLC, a subsidiary of NextEra Energy.
  • The Wilmot Energy Center in southeast Tucson, which will include a 100-MW solar array and a 30-MW battery storage system being developed through a power purchase agreement with NextEra Energy.
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