Local Government:City of Los Angeles, California
Project:Red Cloud Wind Project
Category:Off-Site Physical PPA
To purchase 331 megawatts (MW) of wind energy from a New Mexico wind farm through the Los Angeles Department of Water and Power (LADWP) in the largest wind deal ever completed by LADWP and possibly the largest ever by a US city.
In October 2020, the City of Los Angeles announced it would purchase 331 MW of renewable energy from a new wind farm, the Red Cloud Wind Project in New Mexico. The transaction is the single largest wind deal completed by a US city since at least 2015 (based on data from the Local Government Renewables Action Tracker)—and possibly the largest ever. The Red Cloud Wind Project is being developed by Pattern Energy. Construction began in December 2020 and the project is expected to be operational by December 2021.
LADWP’s Red Cloud Wind Project is one of four distinct wind projects, totaling 1,051 MW of generation capacity, that make up the Western Spirit Wind (WSW) program in New Mexico. WSW, currently under construction, is the largest single-phase wind construction effort in the history of the United States. In addition to constructing Red Cloud and the three other wind projects, Pattern Energy will also build the 345 kilovolt (kV) Western Spirit Transmission Line. The 150-mile line will connect Red Cloud to the Public Service Company of New Mexico (PNM) in one of the largest transmission projects in the West.
In total, the five WSW wind and transmission projects will create more than 1,000 jobs this year approaching a joint commissioning in December 2021. More than 100 permanent jobs in underserved rural communities will be in place for decades to come.
The announcement of the Red Cloud deal came about a year and a half after Los Angeles Mayor Eric Garcetti released the City’s ambitious Green New Deal in 2019. That plan lays out aggressive climate and energy targets that will put the City on a course to be carbon neutral by 2050.
The 331 MW deal involves a power purchase agreement (PPA) entered into by the Southern California Public Power Authority (SCPPA) and the new Red Cloud Wind Project. SCPPA, a joint powers authority made up of 11 municipal utilities and one irrigation district, will be responsible for selling the renewable energy generated from the wind project to LADWP through a power sales agreement.
SCPPA administered a competitive process to choose a renewable energy project and considered 105 proposals before signing a 20-year PPA with the Red Cloud Wind Project. The LADWP Board of Commissioners initially approved the plan to buy power from SCPPA’s 20-year contract before it was formally adopted by the Los Angeles City Council in October 2020. The PPA also allows two five-year options to extend the PPA at the end of its term.
How was the deal structured?
Pattern Energy will design, engineer, construct, own, and operate the Red Cloud Wind Project.
The PPA’s very competitive price of $43.00 per megawatt-hour (MWh) makes low-cost renewable energy available to LADWP’s customers with minimal impact to their electricity bills.
Existing LADWP transmission infrastructure located at the Navajo Generating Station—a decommissioned coal plant near Page, Arizona—will deliver energy generated by the Red Cloud Wind Farm to Los Angeles. LADWP divested its interest from the Navajo Generating Station in 2016, three years ahead of schedule. What remained were LADWP’s interests in the Navajo 500-kilovolt (kV) Switching Station (Navajo 500 kV) and the transmission capacity from Navajo 500 kV to the Crystal Switching Station (Nav-Crystal Line). As part of the PPA, Red Cloud must deliver the renewable energy to Navajo 500 kv, the point of delivery. By using LADWP’s transmission rights at Navajo 500 kV and Nav-Crystal Line, which were originally built for coal-fired generation, LADWP is demonstrating how power companies can transition away from fossil fuels to clean energy without having to completely replace their infrastructure.
What were Los Angeles’s biggest challenges in setting up this project?
Achieving resource diversity: To meet LADWP’s renewable portfolio standard (RPS) goals while also being mindful of grid reliability and cost to its customers, LADWP called for a diversity of renewable resources such as solar-plus-storage, geothermal plants, and wind technology in its Power Strategic Long-Term Resource Plan. Red Cloud’s wind profile complements solar particularly well because solar does not generate energy after the sun sets.
Finding available transmission: Finding enough transmission capacity to deliver the renewable energy also presented unique challenges. As LADWP transitions away from coal generation, more transmission capacity has to become available to carry energy generated from renewable resources, such as Red Cloud, to LADWP’s customers.
What advice would Los Angeles give other local governments as they pursue climate action projects?
Achieve buy-in from all stakeholders: All stakeholders—including the customers, operations group, construction team, regulatory group, management, engineers, board of commissioners, city council members, mayor, and governing bodies—will have to buy in on the massive effort to reach RPS goals. Countless meetings with neighborhood organizations, environmental groups, and city representatives are just the start. From a utility standpoint, the operators and load dispatchers, engineers, and construction groups must understand the goals and milestones. It is only through this collective and focused effort from all these stakeholders that RPS goals can be achieved.
How does this project fit into Los Angeles’s broader climate and community goals?
In 2019, the City of Los Angeles released L.A.’s Green New Deal: Sustainable City pLAn 2019 as a scheduled update to its first Sustainable City pLAn released in 2015. The Green New Deal comprehensively outlines the City’s vision for a sustainable future and how it plans to transition to an equitable economy powered by 100 percent renewable energy. In addition to accelerated targets for decarbonizing buildings, transportation, and more, the updated renewable energy targets in the 2019 plan include LADWP delivering 55 percent renewable energy by 2025, 80 percent by 2036, and 100 percent by 2045.
This 331 MW deal significantly advances the City toward meeting these goals. The deal involves the largest, highest-capacity, and lowest-cost wind farm in LADWP’s clean energy portfolio. The wind farm will provide 1,330,000 MWh of energy per year for more than half a million LADWP customers, saving approximately 464,000 metric tons of carbon emissions annually—the equivalent of keeping nearly 100,000 gas-fueled cars off the road each year.
The Red Cloud Wind deal complements a renewable energy deal from 2019, when the City also approved PPAs to create the Eland Solar and Storage Center. When the center is completed in 2024, LADWP will receive 48% of its power from renewable sources.
Additional Information and Resources
- Mayor Garcetti Celebrates Approval of Red Cloud Wind Farm (City of Los Angeles press release)
- LADWP Presentation to Los Angeles City Council on Red Cloud Wind Farm
- LA’s Green New Deal: Sustainable City pLAn 2019 (City of Los Angeles plan)
- Pattern Begins Construction on 1,050 MW of Wind Capacity in New Mexico (Pattern Energy press release)
- Mayor Garcetti Celebrates Final Approval of Largest Solar and Storage Project in America (City of Los Angeles press release on the Eland Solar and Storage Center)
- San Jose CCA, LADWP Sign Contracts for New Mexico Wind Energy (News story)
- Pattern Energy Closes Financing and Starts Full Construction of Western Spirit Wind Projects in New Mexico (Pattern Energy press release)
- Off-Site Physical Power Purchase Agreement (Renewables Accelerator’s guidance for this type of procurement)
This project was included on the Renewables Accelerator’s list: 10 of the Most Noteworthy Local Government Renewables Deals of 2020.