ALLETE applauds $700 million federal grant for Montana and North Plains Connector transmission project

Rhea-AI Summary

ALLETE (NYSE:ALE) applauds a $700 million federal grant for the Montana and North Plains Connector transmission project. The project, co-developed by ALLETE and Grid United , will create a 415-mile high-voltage direct-current (HVDC) transmission line connecting three regional U.S. electric energy markets. This innovative project will:

• Create 3,000 megawatts of transfer capacity
• Enhance grid flexibility and resilience
• Improve reliability against extreme weather and climate change

The total investment is approximately $3.2 billion, expected to create over 600 jobs during construction. ALLETE aims to pursue up to a 35% ownership share in the project, which is planned to be in service by 2032, pending approvals.

Positive

• Received a $700 million federal grant for the North Plains Connector project
• Project will connect three major U.S. electric energy markets, enhancing grid flexibility and reliability
• Creates 3,000 megawatts of transfer capacity across energy markets
• Total investment of $3.2 billion, creating over 600 construction jobs
• ALLETE pursuing up to 35% ownership share in the project

Negative

• Project completion is subject to regulatory and other necessary approvals
• Long timeline with service expected by 2032

Insights

Energy Infrastructure Analyst

The $700 million federal grant for the North Plains Connector project is a significant boost for ALLETE's transmission infrastructure ambitions. This 415-mile HVDC line connecting three major U.S. energy markets is a game-changer for grid resilience and energy transfer capabilities.

The project's $3.2 billion total investment and 3,000 MW transfer capacity demonstrate its massive scale. For ALLETE, pursuing a 35% ownership stake represents a substantial long-term asset. However, investors should note the 2032 target completion date, indicating a lengthy development period.

While this grant significantly de-risks the project, regulatory approvals and construction challenges remain. The consortium's broad utility participation suggests strong industry support, potentially smoothing the path forward. Overall, this project aligns well with ALLETE's sustainability strategy and positions it as a key player in the evolving U.S. energy landscape.

Financial Analyst

This federal grant significantly improves the financial outlook for ALLETE's involvement in the North Plains Connector project. With a $700 million government contribution towards the $3.2 billion total cost, the project's viability and potential returns are enhanced.

ALLETE's pursuit of a 35% ownership stake could represent an investment of approximately $875 million, based on the total project cost. While substantial, this long-term infrastructure investment could provide stable returns and strategic advantages in the energy market.

Investors should consider the project's long-term nature, with completion not expected until 2032. This extended timeline may impact near-term financial metrics but could provide significant future value. The project's scale and strategic importance may also enhance ALLETE's market position and potential for future growth in the evolving energy sector.

Environmental Policy Expert

The North Plains Connector project aligns strongly with the Biden administration's focus on grid resilience and clean energy transition. The $700 million grant, part of the GRIP program, underscores the government's commitment to modernizing energy infrastructure to combat climate change impacts.

This HVDC line's ability to connect three major energy markets offers significant potential for integrating renewable energy sources and optimizing power distribution across regions. The project's emphasis on mitigating extreme weather impacts and accommodating growing electricity demand addresses critical environmental and energy security concerns.

For ALLETE, this project enhances its sustainability credentials and positions it favorably in the evolving regulatory landscape. However, the company must navigate potential environmental challenges during the construction phase and ensure the project delivers on its promised environmental benefits to maintain stakeholder support.

08/06/2024 - 08:00 AM

DULUTH, Minn.--(BUSINESS WIRE)-- ALLETE (NYSE:ALE), a co-developer of the North Plains Connector transmission project, applauds the U.S. Department of Energy for its support of the Montana Department of Commerce Grid Resilience and Innovation Partnership application and for the planned approximately 415-mile high-voltage direct-current (HVDC) transmission line from central North Dakota to Colstrip, Montana, through a $700 million grant.

The North Plains Connector, a joint project between ALLETE and North Plains Connector LLC, a subsidiary of Grid United LLC, will be the nation’s first HVDC transmission connection between three regional U.S. electric energy markets—the Midcontinent Independent System Operator, the Western Electricity Coordinating Council and the Southwest Power Pool. The line will create 3,000 megawatts of transfer capacity across all three energy markets to ease congestion on the transmission system and increase resiliency and reliability through instantaneous, two-way delivery of energy.

The $700 million DOE grant is part of the Grid Resilience and Innovation Partnerships (GRIP) program to enhance grid flexibility and improve the resilience of the power system against growing threats of extreme weather and climate change. The program is intended to accelerate transformative projects that will help to ensure the reliability of the power sector’s infrastructure and reduce costs for utility customers.

The DOE announced recipients of a second round of GRIP grants today at a news conference. The Montana Department of Commerce applied for the grant on behalf of the North Plains Connector Interregional Innovation Consortium, which includes utilities ALLETE, Avista, Minnkota Power Cooperative, Montana-Dakota Utilities, NorthWestern Energy, Otter Tail Power Co., Portland General Electric and Puget Sound Energy. The consortium also includes North Dakota Transmission Authority and the Standing Rock Sioux Tribe, the latter of which is a co-applicant with the Montana Department of Commerce.

“This grant certainly reinforces the importance of expanding and strengthening our nation’s grid—this innovative project will enhance energy reliability and resilience across a large part of the nation,” said ALLETE Chair, President and CEO Bethany Owen. “We are excited to be part of this historic investment in critical infrastructure as we continue to advance our sustainability in action strategy. We are always stronger when we work together, as shown by this program that unites government, utilities and private industry to benefit the broader region.”

The HVDC transmission project represents an approximately $3.2 billion total investment in Montana and North Dakota and is expected to create over 600 jobs during construction. Connecting the North Dakota and Montana grids will help mitigate the impact of extreme weather events and accommodate the growing demand for electricity. Once built, the transmission line will enable additional energy production in Montana and North Dakota.

ALLETE expects to pursue up to 35% ownership share in the project.

ALLETE and Grid United will work together on development activities and bringing the line into service by 2032, pending regulatory and other necessary approvals. For more project information, visit northplainsconnector.com.

ALLETE, Inc. is an energy company headquartered in Duluth, Minnesota. In addition to its electric utilities, Minnesota Power and Superior Water, Light and Power of Wisconsin, ALLETE owns ALLETE Clean Energy, based in Duluth; BNI Energy in Bismarck, North Dakota; and New Energy Equity, headquartered in Annapolis, Maryland; and has an 8% equity interest in the American Transmission Co. More information about ALLETE is available at www.allete.com.

ALE-CORP

ALLETE calculates and reports carbon emissions based on the GHG Protocol. Details in ALLETE’s Corporate Sustainability Report.

The statements contained in this release and statements that ALLETE may make orally in connection with this release that are not historical facts, are forward-looking statements. Actual results may differ materially from those projected in the forward-looking statements. These forward-looking statements involve risks and uncertainties and investors are directed to the risks discussed in documents filed by ALLETE with the Securities and Exchange Commission.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240806503215/en/

Amy Rutledge

218-348-2961

arutledge@mnpower.com

Source: ALLETE

FAQ

What is the North Plains Connector transmission project?

The North Plains Connector is a 415-mile high-voltage direct-current (HVDC) transmission line project connecting three regional U.S. electric energy markets: MISO, WECC, and SPP. It's co-developed by ALLETE (NYSE:ALE) and Grid United

How much federal funding did the North Plains Connector project receive?

The North Plains Connector project received a $700 million federal grant from the U.S. Department of Energy's Grid Resilience and Innovation Partnerships (GRIP) program.

What are the benefits of the North Plains Connector project for ALLETE (ALE)?

For ALLETE (NYSE:ALE), the project enhances grid flexibility, improves reliability, and creates potential for up to 35% ownership in a $3.2 billion investment. It also aligns with ALLETE's sustainability strategy and expands its presence in the energy transmission sector.

When is the North Plains Connector project expected to be completed?

The North Plains Connector project is expected to be in service by 2032, pending regulatory and other necessary approvals.