The Iowa Utilities Board on Tuesday approved plans by NextEra Energy to build 200 MW of solar and a 75-MW/300-MWh battery storage facility through two subsidiaries at the site of its shuttered Duane Arnold nuclear plant.
NextEra, which expects to bring the facilities online in Palo, Iowa, by December 2024, must also get county approval for the projects. The company has a deal to sell the facilities to Alliant Energy’s Interstate Power and Light when the projects are completed.
Separately, IPL in November asked the state regulators to pre-approve key ratemaking criteria for the facilities as well as for an additional 200 MW of solar the utility aims to develop or acquire. IPL proposed a $1,575/kW, or $748 million, cost cap for its renewable energy plan, but in April asked to increase it 23% to $1,934/kW, or $918.7 million, to reflect supply chain problems and changes in the solar market.
The IUB decision, which is conditioned on the county approval, helps advance Alliant’s effort to shift towards renewable energy, a key element of the Madison, Wisconsin-based company’s growth plan, according to a June investor presentation.
Earlier this year, Wisconsin regulators approved a proposal by Alliant’s Wisconsin Power and Light to add 414 MW of solar next year, on top of 325 MW set to begin operating this year and 350 MW slated to be online in 2023.
Including IPL, Alliant expects to add 1.5 GW of solar, plus 375 MW of battery storage, while retiring or fuel switching 1.6 GW of coal-fired generation by 2025. However, the coal plant retirements may be delayed because of a capacity crunch in the Midcontinent Independent System Operator’s region.
IPL plans to find tax equity partners for the projects so it can take advantage of the 26% federal investment tax credit for projects that start construction this year, according to the utility’s application with the IUB.
The utility asked for an 11.4% return on equity with a 51% equity structure.
NextEra’s project takes advantage of transmission lines at the Duane Arnold site so limited interconnection upgrades are needed, according to IPL.
“Combined with IPL’s innovative proposal to leverage tax equity financing, re-purposing the interconnection capacity at [Duane Arnold] will allow IPL to diversify its generation fleet with utility-scale solar generation and energy storage, avoid transmission costs typically associated with new energy projects in Iowa, and support the local community and Iowa as a whole with added economic development,” the utility said in its application.
However, elements of IPL’s “advanced ratemaking” proposal at the IUB are being challenged by parties in the case. The Iowa Office of Consumer Advocate, for example, contends IPL failed to adequately explain why it should be allowed to own the NextEra solar and battery facilities instead of entering into power purchase agreements for their output.
IPL expects the utilities board to make a decision on its ratemaking proposal by the end of the year.