Recent news that Austin Energy is looking to sign a 25-year solar energy PPA for less than 5 cents per kilowatt-hour is not just solar notable, it’s utility notable. (Austin Energy is seeking city council approval to execute the PPA at a 3/27/14 meeting.) The two projects totaling 150 megawatts are admittedly larger than typically seen for PV, creating obvious economies of scale, but we must take note as most other aspects are replicable by utilities across the U.S.:
And this isn’t the first utility to report this type of competitive pricing — Xcel Energy, in both Colorado and Minnesota — is finding that solar projects are proving to be cost effective even when compared to conventional resource options.
What this really means is that we are moving into a new era in utility solar purchasing, from policy- to economically-driven procurement. One where 10+ MW projects are increasingly cost-effective from a utility resource cost alternatives and integrated resource planning perspectives (for more information on the IRP process, read the SEPA/NREL recent report on “Treatment of Solar in Electric Utility Resource Planning”). Assuming the inputs reflect this type of pricing, the IRP process will signal a growing role for solar based on economics alone. RPS requirements, often viewed as “ceilings” could seem limiting as market forces pull solar adoption faster than policymakers can reflect new market economics.
Will this happen everywhere? Not immediately. But it can happen in more areas of the U.S. than most utilities realize. For the solar and utility industries there are real emerging opportunities both in non-traditional solar states and for small to medium sized utilities.
Certainly this transition from mandates to markets will be a point of discussion at SEPA’s upcoming “Solar Procurement Workshop” (May 1; Newport Beach, CA). Registration is now open to any interested party; we hope to see you there.
Lead image: Austin, Texas via Shutterstock
The information and views expressed in this blog post are solely those of the author and not necessarily those of RenewableEnergyWorld.com or the companies that advertise on this Web site and other publications. This blog was posted directly by the author and was not reviewed for accuracy, spelling or grammar.