Supply chain issues and rising labor costs will add nearly $74 million to the cost of the 310-megawatt solar and battery storage project planned by We Energies and other utilities in Kenosha County, according to filings with state regulators.
Wisconsin Electric, Wisconsin Public Service Corp. and Madison Gas & Electric received approval from state regulators earlier this year to acquire the solar and battery storage facility being developed by Invenergy in Paris.
The Paris project, which includes 200 MW of solar and 110 MW of battery storage capacity, is one of a number of similar projects utilities are developing around the state as they chase goals to reduce their carbon emissions in the coming years. Other projects are located in Darien, southeast Dane County and in Iowa County.
We Energies parent company, WEC Energy Group, is investing billions to shift its power generation to more renewable sources. The company and other utilities in the state had planned to shutdown a number of older coal-powered power plants but delayed those plans amid supply chain challenges and concerns about grid reliability issues next summer.
On Monday, the utilities involved in the Paris sent notice to the Wisconsin Public Service Commission that they had reached an amended engineering procurement and construction contract. When the PSC approved the project, cost recovery for the utilities was capped at $433 million and the companies were required to provide notice if costs would exceed that total.
The notice sent Monday called for a $73.89 million increase in costs, more than 17% of the original cap. The increase includes “Force Majeure Events” taking place after the initial contract was signed and through March 23.
The notice attributes the increases to “global supply chain events which caused price increases for balance of system commodities, including steel; labor market events which led to increases in labor costs; and module market and supply chain issues, which increased costs and delayed shipments.”
Brendan Conway, a We Energies spokesman, said in an email the PSC was notified cost increases were likely because of worldwide supply chain issues and the increases are consistent with other solar projects around the country.
The Badger Hollow II solar and battery project, which also includes Wisconsin Electric and MGE, saw a similar increase of nearly $32 million or 16.4% in June.
Conway noted the increases cover the solar portion of the project and some facilities shared with the battery portion of the project.
“At this point we do not know what impact, if any, these global issues will have on the battery pricing,” Conway said.
The in-service date for the solar portion of the project remains May 31, 2023, according to the notice. A new date has not been set for the battery portion of the project.
“The cost increases described above were prudently agreed to because these actions will enable the solar portion of the project to proceed without delays and will enable common facilities to be constructed in an efficient and cost effective manner. Avoiding the solar project delays will result in lower CO2 emissions and net benefits for customers through lower future energy and capacity costs,” the notice says.