Project will enhance turbine performance and reliability, generate tax
DULUTH, Minn.--(BUSINESS WIRE)--
ALLETE Clean Energy, a wholly-owned subsidiary of ALLETE Inc. (NYSE:
ALE), today announced a strategic initiative to refurbish 385 wind
turbines at three wind farms in Minnesota and Iowa.
The project includes replacing select blades, gearboxes and generators
on turbines at the Lake Benton wind site in Lincoln County, Minnesota,
and the Storm Lake I and II wind sites in Buena Vista and Cherokee
counties, Iowa. The project will improve turbine performance and
reliability, generate federal production tax credits at each site and
support the renewal of power sale agreements at the Storm Lake sites.
"As a central part of ALLETE Clean Energy's multifaceted growth
strategy, this $80 million reinvestment will contribute to future
earnings growth," said Allan S. Rudeck Jr., president of ALLETE Clean
Energy. "Revenue from our existing wind sites such as Lake Benton and
Storm Lake is the foundation for ALLETE Clean Energy's momentum and
growth. Neighboring communities also benefit by keeping these older
sites viable and valuable, which maintains jobs and landowner lease
The refurbishment will be staged from 2017 through 2020 to minimize
turbine downtime and maximize safe energy production at each site. In
total, the sites produce approximately 700,000 megawatt hours of energy
per year, representing about 50 percent of ALLETE Clean Energy's current
In addition to the turbine refurbishments, the project includes
installing new communications infrastructure at the sites to better
integrate them into ALLETE Clean Energy's corporate operations
structure. New fiber optic connections, servers, and data acquisition
and management systems will improve the operation of each site and
secure the best performance.
Energy from the Lake Benton site is fully contracted through 2028, and
approximately 8 megawatts of Storm Lake I production is contracted
through 2032. ALLETE Clean Energy is working to recontract the balance
of the Storm Lake I and II power sale agreements which expire in 2019.
The turbine refurbishment project follows ALLETE Clean Energy's December
2016$100 million investment in wind turbine components that meet the
standards for the production tax credit "safe harbor" provision. The
investment in safe harbor turbines allows ALLETE Clean Energy to pursue
a three-pronged production tax credit strategy before the 2020 federal
production tax credit phase-out. The strategy includes building and
operating new wind farms based on long-term power sale agreements,
building wind farms for other companies for a development fee, and
refurbishing its existing wind farms while extending power sale
As part of that strategy, ALLETE Clean Energy announced in March its
plan to build, own and operate a 100-megawatt wind farm in Morton and
Mercer counties in North Dakota that will supply electricity to Xcel
Energy under a signed 20-year power sale agreement. Construction is
expected to begin in 2018 and be complete in 2019.
The company also announced an agreement with Montana-Dakota Utilities
(MDU) in January to expand the Thunder Spirit wind farm in Hettinger,
North Dakota. MDU signed a 25-year power sale agreement with ALLETE
Clean Energy to purchase energy from the expansion. Under the agreement,
MDU also has an option to buy as it did with the first phase of Thunder
ALLETE Chairman, President and CEO Al Hodnik said ALLETE Clean Energy
has grown to be the company's second-largest source of net income, and
is helping ALLETE do its part to answer the call to transform the
nation's energy and water landscape.
"ALLETE Clean Energy is consistently building shareholder value as it
executes a thoughtful growth strategy," Hodnik said. "Maintaining and
enhancing the Lake Benton and Storm Lake sites, along with extending
power sales agreements, provide a cost-effective platform for the
strategy that is already bearing fruit as the safe harbor turbines
connect ALLETE Clean Energy with new industry partners nationwide."
ALLETE Clean Energy was established in 2011 to acquire or develop
capital projects to create energy solutions by way of wind, solar,
biomass, hydro, natural gas, shale resources, clean coal technology and
other emerging innovations.
ALLETE Inc. is an energy company with headquarters in Duluth, Minnesota.
In addition to its electric utilities, Minnesota Power and Superior
Water, Light and Power of Wisconsin, ALLETE owns ALLETE Clean Energy,
based in Duluth; BNI Energy in Bismarck, North Dakota; U.S. Water
Services in St. Michael, Minnesota; and has an 8 percent equity interest
in the American Transmission Co. More information about ALLETE is
available at www.allete.com.
The statements contained in this release and statements that ALLETE
may make orally in connection with this release that are not historical
facts, are forward-looking statements. These forward-looking statements
involve risks and uncertainties and investors are directed to the risks
discussed in documents filed by ALLETE with the Securities and Exchange
View source version on businesswire.com: http://www.businesswire.com/news/home/20170802006106/en/
Amy Rutledge, 218-723-7400
Manager - Corporate
Source: ALLETE Inc.
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