After soaring during the global energy crisis triggered by the Covid pane3dmic and Russia’s war in Ukraine, the renewable energy sector has fallen back to earth, with high interest rates and a weaker global economy acting as headwinds for clean energy equities.
The sector’s favorite benchmark, iShares Global Clean Energy ETF (NASDAQ:ICLN), is deeply in the red, with a -18.2% return in the year-to-date, compared to a 6.6% gain by its fossil-fuel equivalent, the Energy Select Sector SPDR Fund (NYSEARCA:XLE) and 12.1% return by the S&P 500. Thankfully, the clean energy revolution does not appear to be running out of steam.
To wit, with just a few months left of its term, the Biden administration has managed to scoop $93 million from offshore wind developers, a big improvement from a year ago. According to the Bureau of Ocean Energy Management’s preliminary results, wind lease off the coast of Delaware netted $75 million from Equinor (NYSE:EQNR), while a second lease area, off the coast of Virginia Beach, was scooped up for almost $18 million by Dominion Energy (NYSE:D). The Dominion lease lies adjacent to the 176-turbine Coastal Virginia Offshore Wind farm that the company is currently building. Whereas that might not seem like much, consider that last year, the first ever Gulf of Mexico offshore wind lease sale brought in a high bid of just $5.6 million from RWE Offshore US Gulf, the sole bidder.
Both federal and private renewable energy developers appear equally unfazed by the industrywide challenges, with the development of dozens of massive clean energy projects currently underway in various parts of the United States. Here are 3 of the biggest and most impressive.
SunZia Wind Project
After more than 17 years awaiting permits and approvals, Pattern Energy Group has finally kicked off the full construction of what is billed as the largest renewable energy project in the United States: SunZia Transmission and SunZia Wind, at a grand cost of $11 billion.
SunZia Transmission is a 550-mile ± 525 kV high-voltage direct current (HVDC) transmission line that will run between central New Mexico and south-central Arizona, with a capacity to transport 3,000 MW across Western states. The giant transmission line will deliver power generated by Pattern Energy’s 3,515 MW SunZia Wind facility, the largest wind project not only in the U.S. but the entire Western Hemisphere. SunZia Wind and Transmission will employ more than 2,000 workers on-site during construction.
Quanta Infrastructure Solutions Group, Hitachi Energy, Blattner Energy, GE Vernova and Vestas are the main contractors of the twin projects. The project’s financing includes an integrated construction loan and letter of credit facility, an operating phase letter of credit facility, a tax equity term loan facility, and a holding company loan facility.
“Our hope is this successful financing of the largest clean energy infrastructure project in American history serves as an example for other ambitious renewable infrastructure initiatives that are needed to accelerate our transition to a carbon-free future. We are very grateful to all of our financial partners who are backing SunZia as part of this record-setting project financing. Construction is well underway on this historic project that will deliver clean power with a generation profile that complements abundant solar generation available across the Western United States,” said Hunter Armistead, CEO of Pattern Energy in a press release.
Construction began on the project in late 2023, after the Bureau of Land Management, U.S. Department of the Interior issued its Notice to Proceed and is expected to start commercial operation in 2025.
Champlain Hudson Power Express
New York’s Champlain Hudson Power Express (CHPE) is an innovative hydroelectric megaproject that will deliver power from Canada to New York City. This 1,250 MW project involves the construction of a 333-mile, fully buried transmission line, which the project’s website says is already complete. New York’s Climate Leadership and Community Protection Act (CLCPA) requires that New York be powered by 70 percent renewable energy by 2030. The CHPE is expected to be fully operational in spring of 2026, delivering low-cost renewable power directly into the New York Metro area. New York City has committed to sourcing 100% of its electricity from renewable sources by 2040.
Gemini Solar Project
Nevada’s Gemini Solar Project is currently one of the largest solar farms under construction in the U.S. Located 30 miles northeast of Las Vegas, this ground-mounted 690 MW photovoltaic power plant will supply clean energy to over 400,000 homes. The giant project also includes a significant energy storage component with a 1,400 MWh battery storage system, allowing power transmission to continue uninterrupted when the sun is not shining.
Primergy Solar and APG Asset Management own a 51% and 49% stake in Gemini Solar, respectively. The power generated from the project will be sold to NV Energy under a power purchase agreement (PPA) at a rate of $0.038kWh for a period of 25 years.
By Alex Kimani for Oilprice.com
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