Minnesota Power, an operating division of ALLETE, Inc. (ALE) and Minnesota National Guard have entered into a memorandum of understanding to construct a 10-megawatt (MW) utility-scale solar energy project at the latter’s military base in Camp Ripley, MN. The cost of the project is pegged at $25 million and is expected to be completed in the 2015-2016 time span.
Minnesota Power has a long alliance with Minnesota National Guard and has been providing energy to Camp Ripley for around 10 years. Post completion, the Camp Ripley solar energy system will be the largest installation on a military property in the state of Minnesota and one of the largest single-site solar arrays in the state.
Upon regulatory approval, the solar energy project will be built on around 100 acres of government property at Camp Ripley. Minnesota Power will utilize photovoltaic panels on racks at the project. The company may fit either diesel or natural gas-fired engines at the project site, which will serve a double purpose. Firstly, the engines will offer capacity and peaking energy to Minnesota Power. It will be activated via remote transmit when energy market conditions call on it. And secondly, the backup generation will supply emergency power to the camp.
Both Minnesota Power and Minnesota National Guard will benefit from the latest project. The completion of the solar venture will enable Minnesota Power to progress on its EnergyForward goal, offering a mix of one-third renewable, one-third coal and one-third natural gas energy sources reliably and affordably.
The 10-MW solar project will allow the Minnesota National Guard to achieve energy conservation objectives rolled out by the U.S. Department of Defense. The project will enable Camp Ripley to utilize the power from the farm when the electric grid is down.
As the farm will produce power over and above the requirement of the military base, Minnesota Power can utilize the output at its service territory in central and northern Minnesota. In addition, the project will create additional employment opportunity in the region.
ALLETE continues to expand its renewable asset base through developing new projects. In 2014, the company intends to invest $285 million in renewable ventures. ALLETE plans to spend $345 million on its 205-MW Bison 4 Wind Project, also in Minnesota, with completion slated for 2014. A steady focus on expansion of renewable properties will aid the company to achieve the government’s renewable mandate.
Apart from ALLETE, other utility providers like DTE Energy Company (DTE), NRG Energy, Inc. (NRG) and Exelon Corporation (EXC) are investing considerably in renewable utility infrastructure to comply with stringent regulations.
In Jun 2014, the Obama administration rolled out its plan to curtail carbon emissions from coal-fired power plants by 30% by 2030. The rule is expected to come into effect next year. This is not to affect ALLETE so much considering its stepped up investments in renewables.
ALLETE also maintains a favorable liquidity position backed by stable cash generation capacity. As of Jun 30, 2014, the company had $401 million available under consolidated bank lines of credit and cash and cash equivalents of $83.6 million. During the first half of 2014, the company’s operating cash flow was $126.1 million. A steady financial position enables ALLETE to pursue systematic investments in renewable projects.
ALLETE currently holds a Zacks Rank#2 (Buy).
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