ALLETE, Grid United sign development agreements for advancing new HVDC transmission line in North Dakota and Montana

Rhea-AI Summary

ALLETE, Inc. (NYSE:ALE) and North Plains Connector LLC, a subsidiary of Grid United LLC, signed development agreements for the North Plains Connector project, a 400-mile high-voltage direct-current (HVDC) transmission line linking three regional U.S. electric energy markets. The project represents a $3.2 billion investment in Montana and North Dakota, creating 3,000 megawatts of transfer capacity across all three energy markets.

Insights

Energy Market Analyst

The North Plains Connector project represents a strategic infrastructure development with significant implications for the energy sector. By facilitating the connection of three regional U.S. electric energy markets, the project aims to enhance the transmission system's capacity and reliability. This is particularly relevant as the energy market is increasingly integrating renewable energy sources, which often necessitate improved grid infrastructure to manage their variable output.

From an investment perspective, the project's estimated \$3.2 billion investment signals a considerable capital expenditure that could affect financial performance in the short term due to the costs involved. However, the long-term benefits, such as potential revenue from increased transfer capacity and reduced congestion, could justify the initial outlay. ALLETE's pursuit of up to 35% ownership in the project also indicates a significant commitment to the project's success and future profitability.

For stakeholders, including investors and regional energy consumers, the implications are multifaceted. The project promises enhanced energy resiliency, especially pertinent given the increasing frequency of extreme weather events. Additionally, the creation of jobs and the potential for economic growth in Montana and North Dakota are notable benefits.

Environmental Policy Expert

The North Plains Connector is poised to play a pivotal role in the transition towards a clean-energy future. By providing a high-capacity conduit for electricity, it enables a more efficient distribution of renewable energy across a broad geographic area. This is in line with national and global trends towards decarbonization and could have implications for regulatory support and environmental policy.

Environmental stakeholders are likely to scrutinize the project for its potential to reduce carbon emissions by facilitating the use of renewable energy. However, the environmental impact of the construction itself, including land use and potential disruption to local ecosystems, will also be a consideration. The project’s alignment with ALLETE's 'Sustainability-in-Action' growth strategy suggests a focus on sustainable development practices, which could influence public perception and policy favorability.

Regulatory Compliance Specialist

The regulatory landscape for large-scale energy infrastructure projects like the North Plains Connector is complex and multifaceted. Achieving regulatory and other necessary approvals by the projected in-service date of 2029 will require navigating a web of local, state and federal regulations. This includes environmental assessments, public consultations and potentially contentious land acquisition processes.

Grid United's engagement with landowners and regional stakeholders is crucial in this regard, as it can facilitate the permitting process and mitigate the risk of delays. For investors, regulatory progress is a key indicator of project viability and timelines. Delays or significant hurdles could impact projected costs and returns, while smooth progress could enhance confidence in the project's management and future cash flows.

North Plains Connector will link three regional energy markets

DULUTH, Minn.--(BUSINESS WIRE)-- ALLETE, Inc. (NYSE:ALE) and North Plains Connector LLC, a subsidiary of Grid United LLC, this week signed development agreements for the North Plains Connector project, a new, approximately 400-mile high-voltage direct-current (HVDC) transmission line from central North Dakota to Colstrip, Montana.

The agreements outline each company’s roles and responsibilities as development of the North Plains Connector accelerates. ALLETE and Grid United had previously signed a memorandum of understanding in January 2023 to explore development opportunities for the North Plains Connector.

The North Plains Connector will be the nation’s first HVDC transmission connection between three regional U.S. electric energy markets—the Midcontinent Independent System Operator, the Western Interconnection and the Southwest Power Pool. Open to all sources of electric generation, the project will create 3,000 megawatts of transfer capacity across all three energy markets, easing congestion on the transmission system, increasing resiliency and reliability, and enabling fast sharing of energy resources across a vast area with diverse weather patterns.

“The North Plains Connector is a much-needed link for a resilient and reliable energy grid from the Pacific coast to the Upper Midwest to support the clean-energy future,” said ALLETE Chair, President and CEO Bethany Owen. “Since signing the memorandum of understanding with Grid United in January, we’ve been impressed by their dedicated and thoughtful work on this project. These agreements cement our relationship with Grid United and provide a strong foundation as we pursue this major transmission investment, part of our ‘Sustainability-in-Action’ growth strategy at ALLETE, and we look forward to working collaboratively with others to bring this important project to fruition.”

The project represents an approximately $3.2 billion investment in Montana and North Dakota and will be a long-term energy infrastructure asset for those states. Connecting the North Dakota and Montana grids will help mitigate the impact of extreme weather events and accommodate the growing demand for electricity. ALLETE expects to pursue up to 35% ownership and would oversee the line’s operation.

“We are excited to move the North Plains Connector forward with ALLETE, which brings considerable transmission expertise and experience to this important project,” said Grid United CEO Michael Skelly. “Connecting regional energy markets through new HVDC transmission lines is a critical need as more energy sources are brought online. This project will safeguard resilience and reliability across a wide area of the country by moving electricity from where it is generated to where it is needed.”

Grid United has been engaging landowners and regional stakeholders throughout 2023 to refine and study the proposed route for the North Plains Connector to support the permitting and development activities ahead. The companies will work together on development activities and an in-service date as early as 2029, pending regulatory and other necessary approvals. For more project information, visit northplainsconnector.com.

Grid United is an independent transmission company aiming to develop next-generation energy infrastructure to create a more resilient and efficient electric system to the benefit of all consumers. For more information, visit www.gridunited.com. Media contact: Ashley McGeary at ashley.mcgeary@gridunited.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, N.D.; 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

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/20231221076735/en/

Investor Contact:

Vince Meyer

218-723-3952

vmeyer@allete.com



Media Contact:

Amy Rutledge

218-723-7400

arutledge@allete.com

Source: ALLETE, Inc.

FAQ

What is the North Plains Connector project?

The North Plains Connector project is a 400-mile high-voltage direct-current (HVDC) transmission line linking three regional U.S. electric energy markets, representing a $3.2 billion investment.

Who are the companies involved in the North Plains Connector project?

ALLETE, Inc. (NYSE:ALE) and North Plains Connector LLC, a subsidiary of Grid United LLC, are the companies involved in the North Plains Connector project.

What is the investment amount for the North Plains Connector project?

The North Plains Connector project represents a $3.2 billion investment in Montana and North Dakota.

How much transfer capacity will the North Plains Connector project create?

The North Plains Connector project will create 3,000 megawatts of transfer capacity across all three energy markets.

When is the expected in-service date for the North Plains Connector project?

The companies aim for an in-service date as early as 2029, pending regulatory and other necessary approvals.