The following questions and answers were taken from the La Plata Electric Association website, regarding the ongoing LPEA negotiations with Crossover Energy Partners.
Why would the LPEA have entered into a 20-year contract with Crossover Energy Partners fixing the energy costs when the big complaint with Tri-State was that the LPEA was locked into a long-term contract with them?
To acquire fixed prices, we need to secure dedicated physical production assets. With physical assets, the longer we engage, the lower the price. The LPEA evaluated a variety of durations ranging from 10 years to 30 years, and it was determined that 20 years offered a good compromise between low cost power and flexibility. The key to running a longer term contract, like the 20 years we envision, is having a contract that offers the ability to change assets with pre-defined early termination fee schedules. This will give us the opportunity to consider alternatives if the price is significantly lower.
What is the current generation mix of Crossover and what will it install for LPEA?
The crossover generation mix is still being finalized and depends on other opportunities. Crossover is considering with other utilities across the state. However, Crossover has several development partners who can complete large-scale wind and solar power projects in the western Colorado region. Crossover’s baseline scenario uses approximately 85 MW of wind capacity, 130 MW of solar capacity and various other generation sources to confirm the obligations of the LPEA agreement.
Crossover is also in talks with LPEA over rooftop solar power and other additions to the mix. These project capacities are currently being assessed and are subject to adjustments. This production mix will provide nearly 75% of renewable energy directly to LPEA members. It’s also important to note that Crossover has extensive experience in various other generation technologies, including battery storage. They have contracted and purchased nearly 3,000 GWh of batteries over the past three years, which will benefit LPEA due to their deep understanding of the costs and benefits that this type of solution brings to the production mix.
Could you tell us more about the local production options?
LPEA will have a provision in its new contract to have the capacity to directly own up to 20 MW of generation. Additional local production beyond 20 MW could be installed if it belongs to Crossover. Several local projects are under consideration and many factors need to be taken into account, such as transmission constraints, prices, benefits for local economies and the use of production technology.
Approximately what percentage of Crossover’s production capacity will go to LPEA?
Crossover proposes to build a portfolio of new regional production resources that will serve LPEA members. The exact percentage of the capacity of these resources used to serve the LPEA is still being finalized. Crossover and KKR are very active and experienced investors in the field of renewable energy infrastructure on a global scale. LPEA’s production portfolio would represent less than 1% of total investments in renewable energy production worldwide.
I don’t see where Crossover or KKR own or operate power generation facilities. They appear to be just a financial entity. How can you be sure what is behind their electricity deals?
Crossover and KKR own and operate power generation facilities. Crossover proposes to build a portfolio of next-generation resources that will be used to meet its obligations to LPEA members. This focus on delivery from physical production assets owned by Crossover, rather than purchases from the market, provides increased assurance that they can meet their long-term obligations. The Crossover team has successfully developed several GW of clean energy and storage projects across the United States, and KKR currently has significant investments in various renewable energy entities that operate multiple generation facilities across the United States. country.
I know you want to add more renewables to our energy mix, but won’t that have a negative impact on the reliability of our electricity?
Each year, the majority of LPEA members experience one or less power outage. This means we keep the lights on in your home or business 99.998% of the time. To achieve this, we closely monitor the frequency and duration of power outages and resolve issues with system upgrades or additional maintenance.
But maintaining LPEA’s transmission and distribution network is only half of the reliability equation. The other half is power because before it can provide electricity to you, it has to be produced. As LPEA explores new power supply options to provide you with affordable, low-carbon power in the future, there is one thing we will never sacrifice: reliability.
You depend on electricity every hour of every day, and LPEA’s future power supply must support that. Renewable resources will play an important role in LPEA’s future power supply mix, but in the short term, other distributable outputs will also be needed. Dispatchable generation typically uses a fuel, such as natural gas, which can be turned on and off as needed to meet your electricity needs.
In order to maximize the use of renewables in LPEA’s future power supply – without sacrificing reliability – we are currently implementing a distributed energy resource management system. Through this system, devices such as electric vehicle chargers, programmable thermostats and water heaters can be managed to align their energy use with times of abundant renewable energy production without disturbing you, our members.
In the future, LPEA will receive part of our electricity from local generation resources connected directly to our system, but LPEA will also receive electricity from the bulk power system to provide the necessary diversification and redundancy for a power supply. reliable. This is necessary to avoid situations, like the one that occurred in California last summer, where the demand for electricity exceeded the production available at the time.
In short, with careful planning and a variety of resources, you will continue to enjoy the same reliability that LPEA is known for, regardless of future power supply selection.