Avangrid and CPS Energy Extend and Expand Relationship with Power Purchase Agreement (PPA) for Energy from Texas Wind Farm

Rhea-AI Summary

Avangrid (NYSE: AGR), a leading sustainable energy company, has signed an expanded Power Purchase Agreement (PPA) with CPS Energy for its Peñascal I wind farm in Texas. The agreement increases CPS Energy's power offtake from 77 MW to 161 MW, enough to supply 41,000 homes. This represents nearly 80% of Peñascal I's output. This move supports CPS Energy’s Vision 2027 and aligns with San Antonio’s Climate Action & Adaptation Plan aiming for carbon neutrality by 2050. The Peñascal I project, operational since 2009 with 84 turbines generating 202 MW, has contributed nearly $30 million in property taxes and supports 16 permanent employees.

Positive

• The PPA agreement between Avangrid and CPS Energy has doubled from 77 MW to 161 MW.
• CPS Energy will now receive almost 80% of the power generated by Peñascal I.
• The additional 84 MW of wind power supports CPS Energy's Vision 2027 plan.
• Peñascal I provides enough energy to power approximately 41,000 Texas homes.
• Peñascal I has paid nearly $30 million in property taxes since its inception.
• The project supports 16 permanent employees.

Negative

• No specific financial data on revenue impact or profit margins due to the agreement.
• Environmental impact assessments required significant investment and time, with over 4,000 hours of field studies.

Insights

Energy Market Analyst

The extension and expansion of the Power Purchase Agreement (PPA) between Avangrid and CPS Energy marks a significant move in the renewable energy sector. Increasing the power offtake from 77 MW to 161 MW is notable for its size and impact. For investors, this signals increased steady revenue streams for Avangrid, enhancing its financial stability and predictability.

Additionally, this deal aligns with broader trends towards renewable energy and carbon neutrality. Given that CPS Energy aims to be carbon neutral by 2050 and has interim goals for 2040, the expanded PPA not only strengthens the relationship between the two entities but also reflects a growing demand for renewable energy sources. Long-term investors might find this attractive as it aligns with global sustainability goals, potentially resulting in favorable regulatory and public support.

However, it's important to note the risks associated with renewable energy projects, such as dependency on weather conditions and potential regulatory changes. While the expansion is a positive step, investors should remain aware of these factors.

Environmental Policy Expert

The environmental implications of this expanded agreement are substantial. The Peñascal I Wind Power Project has already demonstrated its commitment to environmental stewardship, having minimal impacts on birds, wildlife and wetlands. This aspect is important given the increasing scrutiny on renewable projects to ensure they truly benefit the environment.

The partnership and studies conducted with wildlife biologists prior to construction establish a strong precedent for future projects. This could serve as a model for other renewable energy companies looking to mitigate environmental impact.

Furthermore, CPS Energy’s Vision 2027 and the alignment with the City of San Antonio’s Climate Action & Adaptation Plan (CAAP) highlight a dedicated approach to reducing greenhouse gas emissions. Investors interested in environmentally sustainable investments will find this development encouraging, as it underscores a clear, actionable commitment to reducing carbon footprints.

CPS Energy to receive enough energy from Peñascal I Wind Power Project to power about 41,000 Texas homes on a hot summer day

PORTLAND, Ore.--(BUSINESS WIRE)-- Avangrid, Inc. (NYSE: AGR), a leading sustainable energy company and member of the Iberdrola Group, today announced the signing of a Power Purchase Agreement (PPA) with CPS Energy, the nation’s largest community-owned provider of electric and natural gas services, for a 161-Megawatt (MW) portion of Avangrid’s Peñascal I wind farm in Kenedy County, Texas south of Baffin Bay.

This represents an extension and expansion of a previous 15-year agreement between the two companies for energy from Peñascal I. CPS Energy more than doubled its power offtake from the project – increasing from 77 MW to 161 MW – and will now receive almost 80% of the power generated there. Avangrid is supplying CPS Energy with enough energy from Peñascal I to power about 41,000 Texas homes.

“This is another great example of Avangrid working closely with our partners to continue delivering clean, reliable energy to customers,” said Pedro Azagra, Avangrid CEO. “In this case, we are growing our already strong relationship with CPS Energy to support their growing customer base while managing merchant risk at one of our existing wind facilities. Partnerships like this are critical to supporting a clean energy transition in Texas and beyond.”

“Growing our portfolio of renewable energy brings us closer to realizing our Vision 2027 goals,” said Rudy D. Garza, President and CEO of CPS Energy. “This expansion is an exciting step in our renewable energy commitments and is well-aligned with our approved generation plan.”

The additional 84 MW of wind power supports CPS Energy’s Vision 2027 plan that contemplates the retirement of 2,249 MW of older generation capacity before 2030. These efforts also align with CPS Energy’s commitment to the City of San Antonio’s Climate Action & Adaptation Plan (CAAP), which includes a resolution by the CPS Energy Board of Trustees to support the CAAP’s goal to become carbon neutral by 2050, and the interim goals of reducing greenhouse gas emissions by 41% from 2016 levels and 71% by 2040.

Peñascal I was the first wind power project on the Texas coast, reaching commercial operations in 2009. It includes 84 turbines that generate a total of 202 MW of renewable energy and supports 16 permanent employees in the community. Additionally, Peñascal I has paid nearly $30 million in property taxes since being built, which is used for public services like education.

Avangrid developed this project in a way that minimizes environmental impacts on birds, wildlife and wetlands. Before construction began, Avangrid partnered with wildlife biologists who spent more than 4,000 hours in the field studying the site and avian patterns during a wide variety of weather conditions. Information gleaned from the studies showed that Peñascal I has minimal impact on the environment and wildlife.

About Avangrid: Avangrid, Inc. (NYSE: AGR) aspires to be the leading sustainable energy company in the United States. Headquartered in Orange, CT with approximately $45 billion in assets and operations in 24 U.S. states, Avangrid has two primary lines of business: networks and renewables. Through its networks business, Avangrid owns and operates eight electric and natural gas utilities, serving more than 3.3 million customers in New York and New England. Through its renewables business, Avangrid owns and operates a portfolio of renewable energy generation facilities across the United States. Avangrid employs approximately 8,000 people and has been recognized by JUST Capital as one of the JUST 100 companies – a ranking of America’s best corporate citizens – in 2024 for the fourth consecutive year. In 2024, Avangrid ranked first among utilities and 12 overall. The company supports the U.N.’s Sustainable Development Goals and was named among the World’s Most Ethical Companies in 2024 for the sixth consecutive year by the Ethisphere Institute. Avangrid is a member of the group of companies controlled by Iberdrola, S.A. For more information, visit www.avangrid.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240604807021/en/

Keaton Thomas

Keaton.thomas@avangrid.com

503-956-9621

Source: AVANGRID, Inc.

FAQ

What is the significance of the expanded PPA between Avangrid and CPS Energy?

The expanded PPA increases CPS Energy's power offtake from 77 MW to 161 MW, providing enough energy to power approximately 41,000 Texas homes.

How much power will CPS Energy receive from the Peñascal I wind farm?

CPS Energy will receive 161 MW from the Peñascal I wind farm, which is nearly 80% of its output.

What is CPS Energy’s Vision 2027 plan?

CPS Energy's Vision 2027 plan aims to retire 2,249 MW of older generation capacity before 2030, aligning with goals for increased renewable energy usage.

How does the Peñascal I project contribute to San Antonio’s Climate Action & Adaptation Plan?

The project supports the plan's goal to become carbon neutral by 2050 and interim goals of reducing greenhouse gas emissions by 41% from 2016 levels and 71% by 2040.

What are the economic benefits of the Peñascal I wind farm?

Peñascal I has paid nearly $30 million in property taxes and supports 16 permanent employees.