INTERVIEW: RAI Energy executives discuss Washington State market and recent draw of data centers
- Western regionalization is creating difficult seams for developers to navigate
- RAI Energy is running another process to find investors on other projects
RAI Energy executives provided some additional details on its business model and the complexity of the renewables market in Washington State following the sale of its paired project, Big River Energy Farm, in Grant County, Washington state, in an interview with NPM.
Mohammed Alrai, president and CEO, told NPM that the recent sale of the 75 MW solar and 75 MW battery energy storage system (BESS) is very similar to the processes run for other mid-stage projects developed by RAI.
“We get them to mid-stage and find a buyer and stay with them until we get them to the finish line, which is where we are at now,” he said. “Big River is one of those projects we have been developing several years and got to a point where we are ready to bring in a partner.”
He said that what makes the project unique is the market dynamics in Washington State, where demand is going up but supply has gone down due to drought conditions and the region’s heavy reliance on hydro.
Alrai said that there was strong interest in Big Rivers Energy Farm because it could potentially be serving a load of data centers as well.
Though the name of the buyer is being kept confidential for now, NPM was told that it was one of the largest VCs in the country with assets under management of USD 40bn.
“In the past, we have hired bankers,” Alrai said of the process. “In this transaction, we didn’t because it was a single transaction. We generally hire a banker when we have multiple projects, but because this is one single project, we ran that internally.”
The next step for the project is to secure a power purchase agreement (PPA) and complete permitting so the project can come online within “a reasonable time.”
RAI Energy anticipates the project to begin construction 2Q27.
Beyond the Apple State, RAI actively looking at other nearby states for development opportunities, including Nevada, Utah, and Wyoming.
The platform is running a process to find investors on other projects and that they are in conversation with several folks but remain interested in engaging with strategic partners.
Business model
Alrai compared the Big River process to the one run for RAI’s 150 MW solar and storage, 600 MWh, Vikings Energy Farm in southern California in 2022 in Imperial County.
Alrai stated that RAI Energy began developing the project in 2019, went through the permitting process, secured the land and contract with San Diego Community Power (SDCP), and eventually ran a sales process. RAI identified several potential partners and began negotiations, which led to Arevon being selected in 2022. Construction began in 2023 and the project came online in 2024.
Washington state market
Mark Juergensen, RAI Energy’s vice president of project development, told NPM that the Big Rivers Energy Farm site was initially selected two miles from one of the largest data center clusters in the country in the City of Quincy.
It is the location of a number of data centers, including Microsoft and Amazon, though Amazon’s is further away though still in the county.
The reason these data centers are in the area is because of the “very cheap power that comes off the Columbia River and one reason we are there is the predictability of that power is not there anymore,” Juergensen said.
He explained that the region is experiencing “huge fundamental changes” in the energy market, which is impacting the entirety of the Pacific Northwest which has mainly and proudly run off hydro-electricity, which can no longer keep with the power growth and the slowdown of hydro power due to droughts.
“You’d get low water years every 100 years and now that’s starting to look like a one in ten or one in 20,” Juergensen said. “This year, for example, you’ll hear the term ‘snow drought’ and see a lot of moisture early, but it came in fairly warm.”
This translates to the snowpack in the mountains being low and melting early. Juergensen pointed to places in Canda where there is a noticeable lack of snow and even in Tahoe, California where there are rocks in place of snow at skiing locations.
“That’s a water issue, but also a power issue,” he said.
Power pricing has shifted in new ways as a result. Traditionally, inexpensive power came off the dams, but the water risk is keeping utility executives up at night, Juergensen said.
“The cheap dams along the Columbia won’t go away but you are seeing the shallow dams along the Snake (River) pull out so the nameplate of hydro is dropping at a time when load is growing,” he said.
Compounding things are the increasing heat domes over the Pacific Northwest, where places like Portland, Oregon and Seattle, Washington didn’t have AC in most buildings, which is changing.
“That’s a tricky load for everyone to deal with,” he said.
Regional challenges
Juergensen highlighted the growing regionalization out West, where there is a split in PUDs and IOUs going to EDAM versus Southwest Power Pool’s (SPP) Markets+ option.
“If you draw a map of the split, there are seams in there that will make it tough to function moving power throughout the West,” he said, adding that EDAM is joined by WAPA and PacifiCorp, while Markets+ has Bonneville Power Administration (BPA), among others.
When asked about transmission as RAI pursues projects in the region, Juergensen said that BPA – being the biggest, single player in transmission – has a fairly overloaded queue and the region suffers from insufficient transmission.
Additionally, Alrai spoke on the upcoming Section 232 of the Trade Expansion Act decision which will impact tariffs.
“Based on that, we have to decide which path to take with modules and the whole sector will make that decision,” he said. “We are in discussions with several parties to make sure we are compliant with the rules, especially now with FEOC being in place.”
RAI announced in June 2023 that it secured a project development loan from Leyline Renewable Energy.