Xcel Energy said it plans to add 550 megawatts of wind power to its system — because the generation prices are among the lowest the utility has seen.
When the new installations come on line in 2016, about 30 percent of all of Xcel's electricity in Colorado will come from wind, according to the company.
It was price — not environmental considerations or state renewable-energy mandates — that drove the decision, Xcel executives said Thursday.
"The price for this additional wind generation is as low as any wind power currently operating on our Colorado system," David Eves, chief executive of Xcel subsidiary Public Service Co. of Colorado, said in a statement.
The proposed acquisitions must be approved by the Colorado Public Utilities Commission.
" Xcel is the No. 1 wind-energy utility in the country, so this is really in line with everything they are doing," said Tom Darin, western representative for the American Wind Energy Association, a trade group.
Xcel is supplied with electricity from 17 wind farms with 2,177 megawatts of generating capacity.
The charge for electricity from the newest plant — NextEra Energy's Limon wind farms, which went into operation in 2012 — starts at $27.50 a megawatt-hour.
Wind contracts typically lock in a set of prices for 20 years.
Xcel's average purchase cost for wind since 2007 has been $42.16 a megawatt-hour, according to the company.
The cost of electricity from a new conventional combined-cycle natural-gas plant is about $68.60 a megawatt-hour, according to a federal Energy Information Administration study.
"For new construction, wind is competitive with just about every type of generation," the wind association's Darin said.
"When it comes to an existing plant where you are just counting fuel charges, it is another story," Darin said.
Xcel put out a request for proposals in February to take advantage of the renewal of the federal wind-production tax credit, or PTC.
The tax credit — equal to about $22 for each megawatt-hour that a wind farm produces — expired at the end of 2012 and crippled the industry.
The credit was extended in January for any project begun in 2013.
While the tax credit is still important, as the industry gains greater scale and efficiencies, it will not be needed, Darin said.
"Wind is a good deal, with a low price, and it's on sale right now because of the PTC," Darin said.
Mark Jaffe: 303-954-1912, email@example.com or twitter.com/bymarkjaffe