Finance, Industrial, Sourcing Renewables, Wind  -  August 17, 2017

In 1st VPPA, Cummins invests in Indiana wind

Global power equipment company Cummins Inc. has made its first wind energy investment in signing a virtual power purchase agreement to offset the amount of electricity used at its Indiana facilities.

Cummins said the agreement is another step for the Columbus, Ind.,-based company as it works ambitiously to reduce greenhouse gas emissions.  The agreement with with EDP Renewables North America will expand a wind farm in Northern Indiana, adding 75 MW to the existing 600 MW capacity at the Meadow Lake Wind Farm complex.

"At Cummins, our strategy is to provide clean, fuel efficient and dependable power for our customers with the least environmental impact possible," Brian Mormino, executive director of worldwide environmental strategy and compliance at Cummins, said in a statement. "Greenhouse gases are our largest impact, and we are currently working our third facility greenhouse gas reduction goal since 2006. As we explored ways to even further reduce these emissions, we learned we could add to the renewable energy market in our headquarters state. That led us to this partnership with EDP Renewables to add low-carbon energy capacity in Indiana that will benefit the environment and the community for a long time to come."

In a VPPA, the wind farm owner sells the power into the broad power markets that feed the regional electric grid. The agreement with Cummins provides certainty that enables the project to move forward as it guarantees a fixed price for that electricity. Cummins benefits as the VPPA provides a hedge against rising energy prices, and the company will receive the renewable energy certificates to ensure greenhouse gas reductions.

Mark Dhennin, director of energy and environment, said it was important to Cummins to choose a project that added physical renewable energy capacity into the market while also providing tangible environmental and community benefits. 

"With all of our environmental sustainability goals, we want to maximize our impact," he said. "Our analysis showed that supporting wind power through a VPPA was the most cost effective way to achieve the greatest greenhouse gas reduction in Indiana."

Cummins — whose business segments design, manufacture, distribute and service diesel and natural gas engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems —has been pursuing energy efficiency and greenhouse gas reduction in its facilities since 2006, when it set its first GHG reduction goal. The company has a total of 11 solar arrays including projects installed in Jamestown, New York and in Beijing, China, but this VPPA marks its first wind farm agreement. 

The company's environmental sustainability plan includes a 2020 energy intensity reduction goal of 32% from a base year of 2010. Also part of the 2020 goal was a commitment to increase renewable energy, and this VPPA delivers on that promise. Cummins has committed to use science-based target methodology as it develops its next GHG reduction goal.

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