There is a place where you will find a growing, clean energy portfolio bound by a strategic business approach. Southern Power, the wholesale subsidiary of Southern Company, is home to more than 12,600 MW, a third of which are renewable and have been built or acquired over the past few years alone. In that mix is more than 1,400 MW of wind power, a number the company expects to double by 2020.
Southern Power, which was started in 2001 with a primary focus on natural gas, first made the pivot to renewables in 2010 with the acquisition of the 30-MW Cimarron Solar Facility in New Mexico. Until that point, the company’s fleet had consisted of approximately 8,000 MW of natural gas-fired generation in the Southeast. Between 2010 and 2015, the company developed or acquired 17 facilities from coast to coast, representing 1,900 MW and $4.5 billion in renewable investment.
First Wind Asset
Until 2015, Southern Power had primarily focused on utility-scale solar and natural gas projects that fit its business strategy, which is to build or acquire projects with minimal fuel and/or transmission risk that are covered by long-term, bilateral contracts with creditworthy counterparties. Consistent with that approach in March of 2015, Southern Power announced the acquisition of its first wind asset — the 299-MW Kay Wind Facility in Oklahoma.
“With the energy landscape constantly changing, it’s critical for us to remain vigilant and look for strategic opportunities that meet market demands while maintaining our risk profile,” said Buzz Miller, president and CEO of Southern Power. ”Our company believes in the full portfolio of energy resources. At the end of 2014, we began to recognize that wind technology was maturing. The business profile matched Southern Power’s investment criteria, and we were able to further diversify our fleet.”
Between 2015 and 2016, Southern Power added seven wind facilities capable of generating 1,164 MW across Texas, Oklahoma, and Maine.
In addition, at the end of 2016, the company announced a joint development agreement (JDA) with Renewable Energy Systems Americas Inc. (RES) to develop and construct approximately 3,000 MW of wind projects. Southern Power also signed agreements with Siemens and Vestas to supply turbines for the projects.
The strategy behind the JDA was to take advantage of the pivotal point in a time where there was certainty of the production tax credit phase-out in 2020. Southern Power’s experience in other generating technologies, along with strong relationships with partners like RES, allowed the company to secure equipment in a pipeline of wind-development projects expected to be commercial over the next three years.
“With Southern Power being very active on the acquisition front, we identified an opportunity to team with three premier organizations that will allow us to move further up the development chain by co-developing the projects within the JDA,” Miller said.
Applying to Wind
Southern Power is known within the industry as a world-class operator of natural gas generators, with an industry-leading equivalent forced outage rate (EFOR) and safety record. Moving forward, the company plans to take that same approach and experience and apply it to wind generation.
According to SNL energy analysis, there is significant wind growth projected over the next 20 years, and with turbines getting bigger, more efficient, and costs coming down, the wind industry is expected to thrive. If that holds true and the demand is still robust, Southern Power is well-positioned to be a premier owner and operator in the renewable industry, and it will continue to influence policy on behalf of its customers.
“At the end of the day, we’re helping Southern Company build energy for the future,” Miller said. “Wind is definitely a part of that future, and we’re committed to bringing efficient, economic projects to the market that provide value to our customers.”
Southern Power, a subsidiary of Southern Company, is a leading U.S. wholesale energy provider meeting the electricity needs of municipalities, electric cooperatives, investor-owned utilities, and other energy customers. Southern Power and its subsidiaries own or have the rights to 46 facilities operating or under construction in 11 states with more than 12,600 MW of generating capacity in Alabama, California, Florida, Georgia, Maine, Minnesota, Nevada, New Mexico, North Carolina, Oklahoma and Texas.