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The largest proposed wind energy project in Iowa’s history appears to be back on track this week after a tense period when it seemed the deal might fall apart over differences between a utility and large energy users.
On Tuesday, MidAmerican Energy — the utility pursuing the $3.6 billion Wind XI project — reached an accord with several major customers that objected to the plan, including tech giants Google, Microsoft and Facebook and a group of large industrial customers known as the Iowa Business Energy Coalition (IBEC).
MidAmerican President Bill Fehrman said in testimony filed with state regulators that, based on the companies’ objections, he found it “hard to conclude that the Data Centers and IBEC want MidAmerican to develop Wind XI.”
The large customers testified about a range of concerns with the proposal, including MidAmerican’s approach to modeling, the amount of power the utility projected its turbines would produce, the return on equity that MidAmerican was requesting and the treatment of environmental credits resulting from the production of renewable energy.
In the settlement, the customers and MidAmerican agreed to an 11 percent return on equity, slightly less than the 11.5 percent that MidAmerican initially had requested. The customers wanted a 9.5 percent return. And the two sides agreed to assign the environmental benefits of Wind XI to the various classes of customers, based on each class’ kilowatt-hour sales.
Like MidAmerican, the Iowa Environmental Council had expressed concerns that the changes proposed by the industrial customers and data centers could prove fatal to the project.
In a blog post late last month, the council’s energy program director, Nathaniel Baer, wrote: “While no party appears to have explicitly opposed Wind XI, the changes recommended by several interveners, including the data centers and IBEC, could cause Wind XI to be smaller or, at worst, not to be built at all.”
In written testimony, Fehrman said he was surprised that large customers challenged the project, given that they never expressed opinions in any of the 10 previous wind projects developed by MidAmerican.
The objections also appeared to fly in the face of the companies’ history of supporting renewable energy. All three companies have made significant investments in renewable power, including in Iowa, and have indicated they eventually intend to power all of their operations with renewable electricity.
In 2014, Google signed a deal with MidAmerican to purchase 407 megawatts of wind energy to power a new data center in Iowa. A year ago, Facebook announced that it was expanding with a third data center in Altoona, Iowa. The company cited several reasons for the decision, including access to wind energy.
In April, Iowa Gov. Terry Branstad attended the announcement of the 2,000-MW Wind XI installation, which MidAmerican claims is the biggest economic development project in the state’s history.
Wind XI would increase MidAmerican’s substantial wind portfolio to the point that wind would provide energy equal to 85 percent of the electricity sold by the company in a year’s time.
A final decision from state regulators is expected in September. MidAmerican has said it would need to start construction on the project before Dec. 31 in order to receive the maximum amount of federal production tax credits. The credit will gradually decrease over several years, beginning on Jan. 1, 2017.