Duluth, Minn.: Minnesota Power and Manitoba Hydro have signed a long-term power purchase agreement that will reduce carbon emissions for the utility division of ALLETE, provide the lowest-cost energy resource for consumers and introduce a unique way to “store” wind energy generated in North Dakota. Manitoba Hydro, the crown utility owned by the province of Manitoba, produces most of its power from hydroelectric stations in the northern reaches of the province. For Minnesota Power, the purchase fits the Duluth-based utility’s strategy of lessening its dependence on carbon-based generation. Buying hydroelectric power from Manitoba Hydro is the lowest-cost option for meeting the electric demands of its customers in the 2020 timeframe.
The agreement, subject to regulatory approval, calls for Manitoba Hydro to sell 250 megawatts of electricity to Minnesota Power for 15 years beginning in 2020. A unique aspect of the power purchase agreement is the inclusion of a “wind storage” provision that entitles Minnesota Power to transmit electric energy northward from its wind farms in North Dakota when wind production is high or electric loads are low.
When Minnesota Power transmits power northward, Manitoba Hydro will absorb it into its system – in essence storing the wind power, using the Manitoba system as a rechargeable battery. This wind storage provision will allow Minnesota Power to balance its energy position and maximize the value of its wind resources. The company, which will complete the second phase of its 82MW Bison 1 Wind Energy Center this fall, recently announced its intent to build Bison II, an additional 105MW, $170 million wind farm in North Dakota.
“Our partnership with Manitoba Hydro is an example of two organizations reaching across geographic boundaries to bolster transmission system capacity while further transforming North America’s energy landscape,” said ALLETE President and CEO Alan Hodnik.
The agreement provides for construction of additional transmission capacity between Manitoba and the U.S. Investing in transmission infrastructure is a key strategic element for ALLETE, which has an eight percent ownership interest in the American Transmission Company and is actively involved in the CapX2020 transmission initiative in the Upper Midwest. “The Canada-U.S. transmission addition will provide a vital link to renewable resources in both countries,” Hodnik said, “and increase the value of wind and hydro power in an innovative way.”
As part of the overall arrangement, Minnesota Power has primary rights to new transmission with Manitoba Hydro for the delivery of the capacity and energy under the purchase agreement. Discussions on various transmission configurations are underway between the two utilities and the Midwest Independent System Operator (MISO).