The Lafayette Utilities System’s recent announcement that wind will comprise 20 percent of its electricity needs is only the first baby step in the system’s embrace of renewable energy sources.
That, in any case, is how Interim LUS Director Jeff Stewart characterized the two-year contract for 50 megawatts of wind energy. It's on the extreme short end for wind energy contracts, which can range up to 30 years, but Stewart said LUS is considering longer ones for all types of renewables.
Mayor-President Joel Robideaux on Friday named Jeffrey Stewart as the interim director of the Lafayette Utilities System and LUS Fiber.
Part of what Stewart wants to do is ease the concept of renewables into the collective consciousness of LUS customers. If at one point in the future, for example, LUS considers acquiring its own renewable energy production facility, the idea of using wind and solar will already be “old news,” he said.
“I don’t want people to have a stigma around renewables,” Stewart said. “Let’s just keep moving forward and incorporate these things.”
Stewart figures diversified energy sources will be an easier sell to customers if rates remain steady. LUS has explored solar and wind sources for years, Stewart said, but only recently have the prices lowered to the point of being able sign a contract without affecting rates.
That reflects downward pricing trends over the last decade. Wind and solar prices have dropped 67 percent and 86 percent, respectively, since 2009, according to Lazard, a financial advisory firm.
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In the case of wind, the price decreases result in part from advancing technology, said Hannah Hunt, deputy director with the Wind Energy Association. Taller wind turbine towers with increased blade lengths are capturing more energy, she said.
“The more energy you’re capturing, the better the economics for the project,” Hunt said.
Wind energy has been slow to catch on the southeast, Hunt said, in part because of the scarcity of transmission lines. Stewart said that future delivery capacity is part of what LUS is examining when it comes to long-term deals.
The new wind energy contract includes the cost of delivery, Stewart said, and the fixed price reduces exposure to the volatile energy market.
"You know at least 20 percent of your fuel cost won't be fluctuating with the market," Stewart said. "We can be more precise with how we calculate and project our fuel."
Yet the LUS announcement occurs at a time that wind energy is finding its way south. In June, for example, the Arkansas Electric Cooperative Corporation announced a 20-year agreement to purchase wind from an Oklahoma facility.
Unlike LUS, Arkansas Electric released the name and location of its developer providing the energy, Wildhorse Wind Energy. Stewart said the name, location and cost of the LUS developer are “commercially sensitive,” and specifying these details would violate the contract.
Nothing precludes an extension of the LUS deal at the end of two years, or inking one in line with the one in Arkansas, but Stewart said doing so requires more extensive risk analysis.
Lafayette Utilities System director Terry Huval has abruptly departed city-parish government, three months earlier than expected.
“You have to make sure it will fit in your long-term outlook,” Stewart said. “We are still in the very early stages of a long-term assessment."
Stewart said he hopes that, over time, renewable energy can help attract corporations, as the Omaha Public Power District recently did recently by providing Facebook with its own rate structure for wind power for a new data center in Papillion, Nebraska.
Plans call for the $435 million data center to be built on 290 acres, and powered with 100 percent clean energy, according to the Omaha World Herald.
“This is just the next thing we want to use to perhaps attract people to consider Lafayette for all sorts of economic development,” Stewart said.