Favorable Winds Behind Cummins Strategy to Expand Low Carbon Energy
Cummins’ environmental officials celebrated American Wind Week in a big way Tuesday, touring the beginning of construction of the Meadow Lake VI wind farm in northwest Indiana (USA). The company is supporting the expansion through a financial arrangement known as a Virtual Power Purchase Agreement (VPPA).
The first turbine towers and blades are beginning to go up some 500 feet into the air, although the potential for storms and windy conditions precluded any lifting Tuesday by the two giant cranes on the construction site. Cummins is supporting the wind farm expansion as part of its goal to encourage the development of low carbon energy.
“We’ve been working to make this project happen with EDP Renewables for two years now and it’s finally coming to fruition,” said Mark Dhennin, Cummins’ Director of Energy and Environment, speaking at a small gathering of invited guests and state and local officials at the wind farm. Representatives from Mortenson, the project manager, and Vestas, the manufacturer of the turbines, also attended the event.
“This is a big moment for us," Dhennin added. "This is a huge part of our energy sustainability plan at Cummins and it was really important to do it right, with the right project, in the right location, with the right developer.”
The Meadow Lake VI expansion will eventually generate about 200 megawatts (MW) of renewable energy, enough electricity to power about 52,000 Indiana homes. Cummins’ support covers about 75 MW. Nestle and the Wabash Valley Power Association are also purchasing energy generated by Meadow Lake VI.
The first phase at Meadow Lake was built in 2009. With the completion of Meadow Lake VI in early 2019, the capacity of all six phases will exceed 800 MW, making it the largest wind energy project in the state with enough capacity to power more than 200,000 Indiana homes.
The electricity generated by Cummins’ share of the expansion is roughly equivalent to all of the power used at Cummins’ facilities in Indiana and about 50 percent of the electricity consumption at the company’s U.S. facilities. However, the power will go to the grid and not directly to Cummins. That’s where the VPPA comes in.
Under Cummins’ 15-year agreement with EDP, it guarantees the wind farm a fixed price for its share of the electricity Meadow Lake VI generates, providing some certainty that helped the expansion move forward. Cummins benefits in that the VPPA provides a hedge of sorts against rising energy prices – the company pays or receives the difference between the contract price and the market price of energy. Cummins also receives something called renewable energy certificates (RECs) to demonstrate its greenhouse gas reduction efforts.
Dhennin said EDP’s expertise and strong relationship with state and local officials as well as landowners was critical to the partnership.
“The developer we found through extensive interviews and evaluations has the same values that Cummins has,” he said. “They care about the community, they are responsive to landowner concerns and that was a huge concern to Cummins.”
Kelly Snyder, EDP Renewables Senior Origination Manager, said EDP has a strong team and Meadow Lake is an excellent site for a wind farm. The area is primarily agricultural, which co-exists nicely with harvesting power from wind.
“EDP Renewables is also pleased to partner with Cummins to help in meeting its admirable sustainability goal of reducing greenhouse gas emissions,” Snyder said.
TO LEARN MORE
To learn more about Cummins' strategy to promote the development of low carbon energy through wind, look for a case study to be posted soon by the Rocky Mountain Institute, a member-based group that works to streamline and accelerate corporate procurement of off-site, utility-scale wind and solar energy.