Otter Tail Power Company Advances Plans to Add 345 Megawatts of Solar

Rhea-AI Summary

Otter Tail Power Company (Nasdaq: OTTR) has announced plans to expand its solar generation capacity with two new facilities. The company will develop the 50-megawatt Solway Solar facility in Minnesota, expected to be operational by 2026, and the 295-megawatt Abercrombie Solar facility in North Dakota, targeted for completion in 2028.

The Solway project is estimated to generate $4.2 million in local and state tax benefits over 35 years, creating approximately 70 construction jobs. The Abercrombie project is expected to provide $23.8 million in tax benefits over its 35-year lifespan and create about 300 peak construction jobs.

According to the company's Integrated Resource Plan, 57% of its energy generation will come from renewable resources by 2030. The company has requested Minnesota Public Utilities Commission determination for cost recovery eligibility for both projects.

Positive

• Adding 345 MW of total solar generation capacity
• Expected $28 million in combined tax benefits over 35 years
• Creation of approximately 370 construction jobs
• Utilizing existing transmission infrastructure for Solway Solar, reducing costs

Negative

• None.

Insights

Financial Analyst

The planned 345MW solar expansion represents a significant strategic investment for Otter Tail Power Company. The two projects - Solway Solar (50MW) and Abercrombie Solar (295MW) - will generate substantial local economic benefits, with combined tax revenues of $28 million over their 35-year lifespans. This expansion aligns with the company's Integrated Resource Plan and positions OTTR to achieve 57% renewable energy generation by 2030. While capital investment figures aren't disclosed, the projects' cost-effectiveness is enhanced by utilizing existing transmission infrastructure at Solway. The phased implementation (2026 and 2028) allows for measured capital deployment while maintaining the company's strong utility business model. The regulatory recovery mechanism request suggests a prudent approach to protecting shareholder interests while expanding renewable capacity.

Energy Market Analyst

This solar expansion demonstrates Otter Tail's strategic positioning in the evolving utility landscape. The projects' timing aligns with broader industry trends toward renewable integration while maintaining grid reliability. The Solway Solar's use of existing transmission infrastructure is particularly noteworthy, as it addresses one of solar development's key challenges - interconnection costs and timeline constraints. The 345MW addition represents a material capacity increase for OTTR and the regulatory approach through state-by-state determinations indicates a methodical implementation strategy. The focus on cost-effectiveness while pursuing renewable goals shows a balanced approach to the energy transition, potentially providing a competitive advantage in future rate cases.

Continues to deliver reliable, low-cost power

FERGUS FALLS, Minn.--(BUSINESS WIRE)-- Otter Tail Power Company, a wholly-owned subsidiary of Otter Tail Corporation (Nasdaq: OTTR), plans to add two solar facilities to its energy generation fleet to meet customers’ future energy needs. On December 9, 2024 the company requested Minnesota Public Utilities Commission determination that the costs associated with Solway Solar and Abercrombie Solar are eligible for cost recovery.

“These economic solar facilities fit the requirements of our recently approved Minnesota Integrated Resource Plan,” said Otter Tail Power President Tim Rogelstad. “Combined with our existing low-cost generation resources, they’ll help us continue to provide cost-effective, reliable electricity to our customers.”

Building 50 MW of solar in Minnesota

Solway Solar is a 50-megawatt (MW) solar generation facility the company plans to build in Lammers Township near Solway, Minnesota. Depending on the timing of project approvals, Otter Tail Power anticipates Solway Solar to be fully operational in 2026. “This location offers an opportunity to add solar generation where transmission interconnection facilities already exist, which helps keep costs low for our customers,” said Rogelstad.

Otter Tail Power estimates $4.2 million in local and state tax benefits over the 35-year life of the facility, with approximately 70 construction jobs during the peak of the 9-month construction period.

Constructing 295 MW of solar in North Dakota

Abercrombie Solar, currently known as the Flickertail Solar Project, is a 295-MW solar generation facility under development in Abercrombie Township northwest of Wahpeton, North Dakota. Otter Tail Power has signed an agreement with Flickertail Solar Project, LLC to buy the development assets—once permits and regulatory approvals are received and other contractual requirements are met—with the intention to build the project. “We’re looking forward to adding this significant energy resource that’s cost effective for our customers,” said Rogelstad.

Expected to be complete in 2028, the company estimates the project to provide $23.8 million in local and state tax benefits over the 35-year life of the facility and create approximately 300 construction jobs at peak construction.

Powering the future

Otter Tail Power’s Integrated Resource Plan outlines the combination of resources the company will use to meet its customers’ energy needs during the next 15 years. “We expect that 57 percent of our energy generation will come from renewable resources by 2030, while ensuring electric service continues to be safe, reliable, and economical,” said Rogelstad.

The company is following necessary regulatory steps in each state it serves to determine final facility sizes, total capital investments, and how facility costs and benefits will be allocated to customers.

Forward-Looking Statements

Except for historical information contained here, the statements in this release are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words “anticipate,” “believe,” “can,” “could,” “estimate,” “expect,” “future,” “goal,” “intend,” “likely,” “may,” “outlook,” “plan,” “possible,” “potential,” “predict,” “probable,” “projected,” “should,” “target,” “will,” “would” and similar words and expressions are intended to identify forward-looking statements. Such statements are based upon the current beliefs and expectations of management. Forward-looking statements made herein, which may include statements regarding 2024 earnings and earnings per share, long-term earnings, earnings per share growth and earnings mix, anticipated levels of energy generation from renewable resources, anticipated reductions in carbon dioxide emissions, future investments and capital expenditures, rate base levels and rate base growth, future raw materials costs, future raw materials availability and supply constraints, future operating revenues and operating results, and expectations regarding regulatory proceedings, as well as other assumptions and statements, involve known and unknown risks and uncertainties that may cause our actual results in current or future periods to differ materially from the forecasted assumptions and expected results. The Company’s risks and uncertainties include, among other things, uncertainty of future investments and capital expenditures; rate base levels and rate base growth; risks associated with energy markets; the availability and pricing of resource materials; inflationary cost pressures; attracting and maintaining a qualified and stable workforce; changing macroeconomic and industry conditions that impact the demand for our products, pricing and margin; long-term investment risk; seasonal weather patterns and extreme weather events; counterparty credit risk; future business volumes with key customers; reductions in our credit ratings; our ability to access capital markets on favorable terms; assumptions and costs relating to funding our employee benefit plans; our subsidiaries’ ability to make dividend payments; cybersecurity threats or data breaches; the impact of government legislation and regulation including foreign trade policy and environmental; health and safety laws and regulations; changes in tax laws and regulations; the impact of climate change including compliance with legislative and regulatory changes to address climate change; expectations regarding regulatory proceedings, including state utility commission approval of resource plans, assigned service areas, the siting and construction of major facilities, capital structure, and allowed customer rates; actual and threatened claims or litigation; and operational and economic risks associated with our electric generating and manufacturing facilities. These and other risks are more fully described in our filings with the Securities and Exchange Commission, including our most recently filed Annual Report on Form 10-K, as updated in subsequently filed Quarterly Reports on Form 10-Q, as applicable. Forward-looking statements speak only as of the date they are made, and we expressly disclaim any obligation to update any forward-looking information.

About the Corporation

Otter Tail Corporation, a member of the S&P SmallCap 600 Index, has interests in diversified operations that include an electric utility and manufacturing businesses. Otter Tail Corporation stock trades on the Nasdaq Global Select Market under the symbol OTTR. The latest investor and corporate information is available at www.ottertail.com. Corporate offices are in Fergus Falls, Minnesota, and Fargo, North Dakota.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241209566624/en/

Media Contact: Stephanie Hoff, Director of Corporate Communications, (218) 739-8535

Investor Contact: Beth Eiken, Manager of Investor Relations, (701) 451-3571

Source: Otter Tail Corporation

FAQ

What is the total solar capacity being added by Otter Tail Power Company (OTTR)?

Otter Tail Power Company is adding 345 megawatts of solar capacity through two facilities: the 50-megawatt Solway Solar facility in Minnesota and the 295-megawatt Abercrombie Solar facility in North Dakota.

When will Otter Tail Power's (OTTR) new solar facilities be operational?

The Solway Solar facility is expected to be operational in 2026, while the Abercrombie Solar facility is planned for completion in 2028.

What percentage of Otter Tail Power's (OTTR) energy generation will be renewable by 2030?

Otter Tail Power Company expects 57% of its energy generation to come from renewable resources by 2030.

How many jobs will Otter Tail Power's (OTTR) new solar projects create?

The projects will create approximately 370 construction jobs combined - 70 jobs for Solway Solar and 300 jobs for Abercrombie Solar during peak construction.