At a time when the U.S. renewables market is tilting increasingly toward solar, offshore wind and battery storage, newly launched developer Triple Oak Power is going old-school with a bet on the future of onshore wind.
Triple Oak, based in Portland, Oregon and co-founded by former Avangrid Renewables executives, announced Tuesday that it has secured a capital commitment from EnCap Investments L.P., a Houston-based private-equity firm that has historically focused on fossil fuels. The details were not disclosed.
Triple Oak will develop early-stage onshore wind farms with an initial focus on the 2022-2025 period when the current wind boom fueled by the federal Production Tax Credit (PTC) is expected to recede.
“We think there’s going to be a shortage in the market as relates to what onshore wind [projects are] available,” CEO Jesse Gronner said in an interview.
There are not many new onshore wind developers being launched these days in the U.S., but Triple Oak is bucking the trend. While onshore wind farms are the country’s largest source of renewable power, solar is catching up rapidly, and many former wind developers have shifted their focus to PV for the 2020s.
According to Wood Mackenzie, the U.S. solar market could be more than three times larger than onshore wind on an annual deployment basis by the mid-2020s, and by the end of the decade, a large chunk of the country’s new wind capacity will be built offshore.
Developers are drawn to solar’s falling costs, rapid construction timelines and midday generation peak, Gronner said. “But you can have too much of it, which, as we’ve seen with California, can lead to problems if it reaches saturation.”
Solar power peaks at midday and then falls off in the late afternoon and into the evening — at the same time as many homes and some businesses are increasing their electricity consumption.
In markets with high penetrations of solar energy, “you end up where your peak has now shifted, and that’s where onshore wind can start to fill in,” Gronner said. “We can’t just do everything with solar, and batteries aren’t going to solve all of the problems.”
All the attention on solar and storage has created an opportunity for an independent wind developer to build a pipeline of projects and bring them through the early, higher-risk stages of development, Gronner said. “We’re intentionally trying to fill a gap with respect to utility-scale developers’ pipelines over the next few years.”
Retiring coal plants opening up transmission capacity
One big challenge for onshore wind is a scarcity of interstate transmission lines capable of bringing the power from the windy American heartland to distant population centers. With that intractable reality in mind, Triple Oak will target areas where coal-fired plants are retiring, which could open up existing transmission lines for new generation resources.
“There are [transmission] lines in areas with great wind resources, and 10 years ago you weren’t going to be able to connect a wind farm there because a coal plant was running [as] baseload,” Gronner said. “Once those plants start retiring and that transmission becomes available, you can do some large-scale wind development…that’s a real opportunity for us.”
Gronner pointed to the West and Midwest as markets where that dynamic is in play. He also noted that the larger, more advanced wind turbines released into the market over the past few years have unlocked regions with lower wind speeds for development. “We’re able to commercialize wind resource that historically maybe wasn’t quite up to snuff.”
“It’s not just about capacity factor; it’s about capacity value. Sometimes while a [project] might not have the highest [net capacity factor], it may produce at hours at that are more interesting to the market or the system.”
The upcoming election could have a big impact on the country’s approach to climate and energy policy, and there is plenty for the wind sector to hope for — from streamlined transmission permitting to a leveling of the playing field with solar’s Investment Tax Credit, which, unlike the PTC, is not scheduled to phase down to zero.
But Gronner said the launch of Triple Oak is not a bet on the election or future policy decisions. “We are agnostic [on the election’s outcome]; our business model is set up to not need anything different at this point than the momentum we’ve already got.”
In addition to its underlying capital commitment from EnCap, Triple Oak will receive growth capital from Yorktown Partners, a private-equity firm, and Mercuria Energy, a Cyprus-based energy and commodities group.
EnCap, which directed nearly $40 billion into oil and gas investments over the past three decades, has recently embraced clean energy, including establishing an energy transition team led by former First Solar CEO James Hughes. Last month saw the launch of Catalyze, an EnCap-backed energy storage developer focused on the commercial and industrial market.
Gronner, who spent more than a decade at Avangrid Renewables (formerly Iberdrola Renewables), said Triple Oak’s backers reflect the new reality for renewables investment.
Clean energy “isn’t a small part of their program; this is the growth part of their program,” he said. “They’re doing this not to green up but to position themselves to stay competitive in the energy landscape.”