NorthWestern Energy Enters Contracts for 325 Megawatts of Dispatchable Capacity Resources to Serve Montana Customers
April 20, 2021
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NorthWestern Energy has entered into multiple contracts for projects to acquire 325 megawatts of dispatchable capacity resources: procurement and construction agreements for a 175 megawatt natural gas plant; a pending agreement to purchase capacity from a 50 megawatt battery storage project; and a power purchase agreement for 100 megawatts of predominantly hydroelectric resources. The contracts were entered into after NorthWestern Energy completed its competitive solicitation process for long-term capacity resources issued in January 2020. This will reduce NorthWestern Energy’s capacity deficit, decrease risk associated with market volatility and potential lack of availability, and provide increased reliability for Montana customers. The additional capacity to produce energy will address more than half of NorthWestern Energy’s deficit in its supply portfolio serving Montana. The deficit is becoming more critical as some regional coal plants and other capacity resources are being shut down, compromising reliability during extreme weather conditions, including multi-day events, when energy demand is high. NorthWestern Energy’s independent, third-party request for proposals evaluator, Aion Energy, received 180 proposals representing a wide variety of technologies from 21 bidders. NorthWestern Energy has selected three resources from the proposals submitted in response to the company’s request for proposals: NorthWestern Energy’s Laurel Generating Station will be a new 175 megawatt, reciprocating internal combustion engine (RICE units), natural gas plant in Laurel, Montana. Powerex Corp., a subsidiary of BC Hydro, has entered into a five-year power purchase agreement with NorthWestern Energy for 100 megawatts of capacity and energy products originating predominately from hydroelectric resources. Contract pending on an Energy Storage Project that will be a 50 megawatt battery storage system utilizing lithium-ion technology. The selected resources provide diversity in ownership and technology, including owned and market-based resources and the battery-storage project within Montana. NorthWestern Energy expects to submit an application for approval of the Laurel Generating Station and the 20-year contract for the pending Energy Storage Project to the Montana Public Service Commission on or about May 14, 2021. Anticipate the regulatory process to take approximately 9 months. The $250 millionLaurel Generating Station is expected to be available to serve customers by Jan. 3, 2024. For the 175 megawatt natural gas-fired RICE plant near Laurel, Caterpillar Power Generation Systems, LLC, a subsidiary of Caterpillar Inc. will supply the RICE units and Burns & McDonnell Engineering Company Inc. was selected as the Engineering, Procurement, and Construction (EPC) contractor. Burns & McDonnell has a solid reputation as a superior EPC contractor, particularly for RICE facilities.
The Caterpillar RICE units are highly reliable and efficient with low emissions. The selected engines are capable of rapid ramping and multiple daily starts and stops. These units have the flexibility to provide power on-demand, baseload power, flexible capacity, and regulation services. These characteristics will facilitate the integration of existing and new intermittent renewable energy resources into portfolio. The 50 megawatt battery energy storage system, is expected to be available to serve NorthWestern Energy’s Montana customers by the end of 2023. NorthWestern Energy is still short of the capacity resources needed to produce energy reliably at the times when Montana customers require it the most.
NorthWestern Energy Group, Inc., doing business as NorthWestern Energy, provides essential energy infrastructure and valuable services. The Company operates through two segments: electric utility operations and natural gas utility operations. The electric utility operations segment includes the generation, purchase, transmission and distribution of electricity. The natural gas utility operations segment includes the production, purchase, transmission, storage, and distribution of natural gas. It provides electricity and / or natural gas to approximately 775,300 customers in Montana, South Dakota, Nebraska, and Yellowstone National Park. Its operations in Montana and Yellowstone National Park are conducted through its subsidiary, NorthWestern Corporation, and its operations in South Dakota and Nebraska are conducted through its subsidiary, NorthWestern Energy Public Service Corporation. Its customer base consists of a mix of residential, commercial, and diversified industrial customers.