Plans to link New Mexico’s abundant wind energy resource to bigger markets in California continue to come together, with utility group PNM Resources announcing it will buy Pattern Development’s Western Spirit transmission project, designed to connect more than 800 megawatts of future wind capacity.
Pattern acquired Western Spirit and the affiliated Mesa Canyons wind project last year from Clean Line Energy Partners, as part of its multi-gigawatt wind development push in central and eastern New Mexico.
Pattern is developing the roughly 165-mile Western Spirit project in partnership with New Mexico Renewable Energy Transmission Authority, a state-backed authority focused on getting transmission lines built to tap the state’s underutilized wind resource.
PNM Resources, owner of two regulated utilities in the Southwest, has now agreed to buy Western Spirit for $285 million once the project is completed. The investment by a utility will be seen as a vote of confidence in Western Spirit and more broadly in the concept of exporting New Mexico wind energy westward.
A spokesperson for Pattern says a portion of Western Spirit will be completed in 2020, allowing the connected wind farms to take maximum advantage of the fading wind Production Tax Credit (PTC). The entire transmission line will be finished in 2021.
Half of the 800 MW of future wind capacity on Western Spirit already has power-purchase agreements in place with community-choice aggregators in California, while the other half is being actively marketed throughout the West.
The Western Spirit acquisition remains subject to regulatory approvals.
“While sunshine and wind may be plentiful in New Mexico, the ability to deliver the clean energy they can produce is limited by the capacity of transmission lines,” Pat Vincent-Collawn, PNM Resources’ CEO, said in a statement. “Expansion of the PNM transmission grid makes it possible for Pattern Development to invest in wind energy resources in New Mexico.”
Pattern Development, an affiliate of publicly listed renewables operator Pattern Energy, has bet big on New Mexico, among the most promising states for onshore wind development in the U.S. — albeit one with limited demand for the power and severe transmission constraints.
In addition to the wind capacity that would feed into Western Spirit, Pattern has a 2.2-gigawatt multi-project portfolio known as Corona under development in eastern New Mexico.
The Corona projects were approved by New Mexico regulators late last year, but their future hinges on a separate transmission project known as SunZia that does not yet have all of its necessary permits. Time is ticking for SunZia given the phaseout of the wind PTC, which falls to 80 percent of its value for qualified projects that do not reach completion by 2020 — and continues downward from there.