NV Energy’s portfolio of solar and solar-plus-storage takes
the low-price competition up a notch.
Records don't last long in the cleantech business.
Just days ago, we were reporting that the Central Arizona
Project (CAP) had secured the lowest
confirmed solar price in the U.S., when it approved a 20-year
power-purchase agreement at $24.99 per megawatt-hour. That's setting aside
an Austin
Energy PPA from December that could be lower, but has more ambiguous
terms.
That Arizona record is already under threat from projects
that utility NV Energy selected as part of its integrated resource planning.
The portfolio
of 1,001 megawatts of solar capacity and 100 megawatts/400 megawatt-hours of
energy storage still needs approval from Nevada’s utility regulators.
If that happens, the lowest confirmed U.S. solar price would
be Sempra Renewables’ Copper Mountain Solar 5 project at $21.55 per
megawatt-hour. That 250-megawatt project, though, has a 2.5 percent annual
escalation as part of its 25-year contract, so the low upfront price wouldn’t
last.
Instead, we can turn to 8minutenergy’s 300-megawatt Eagle
Shadow Mountain Solar Farm, which clocks in at a flat rate of $23.76 per
megawatt-hour throughout its 25-year PPA term.
That comfortably beats the CAP project on pricing, while
delivering 10 times the capacity. It also marks a substantial improvement on
the $29.50
per megawatt-hour median pricing for standalone solar PV in Xcel’s famous solicitation six months ago.
"We’ve always expected prices to drop a lot," said
Colin Smith, a solar markets analyst at GTM Research. "With everything
that’s happened with tariffs recently, I’m surprised to see them this low this
soon."
The record low came just months after the White House
imposed import tariffs on crystalline-silicon solar cells and modules, which
analysts calculated would reduce
total U.S. installations by 11 percent over the next five years.
The groundbreaking pricing was achieved through
sophisticated design and engineering, but also reflects how far solar equipment
and installation practices have come, 8minutenergy CEO and founder Martin
Hermann wrote in an email.
"Eagle Shadow Mountain is unique because it’s located
in an area of great solar irradiance and with remarkable access to transmission
assets," he said. "We are able to benefit from low interconnection
costs, for example, by utilizing transmission assets that had previously been
allocated for the Reid Gardner coal plant, ensuring that those assets are not
stranded."
The low pricing has the utility excited, too.
“With these projects, the Companies lock in a substantial level
of renewable energy supply at the current market’s attractive pricing for the
long-term benefit of its customers, before the ITC expires,” NV Energy said in
its filing.
That’s a notable achievement in a state that previously made
clean energy headlines for eliminating net metering for rooftop solar customers
and applying that decision retroactively to existing customers. That move, in
December 2015, was overturned
by legislation that Republican Gov. Brian Sandoval signed in June
2017.
Now, helped by a sunny, arid climate and plenty of open
space, Nevada is establishing itself as a leading market for utility-scale
solar.
“This is a great value — we’re looking at half the cost of
keeping existing coal plants alive,” said Adam Browning, executive director of
Vote Solar. “Getting clean energy for that price is a win-win for everybody.”
NV Energy’s awarded bids also included three
solar-plus-storage plants, all located in Sierra Pacific Power Company’s
service territory:
Dodge Flat: NextEra will build a 200-megawatt solar plant
coupled with a 50-megawatt/200-megawatt-hour storage system, due online
December 1, 2021.
Fish Springs Ranch: NextEra will build a 100-megawatt solar
plant coupled with a 25-megawatt/100-megawatt-hour storage facility, due online
December 1, 2021.
Battle Mountain Solar: Cypress Creek Renewables will build a
101-megawatt solar plant coupled with a 25-megawatt/100-megawatt-hour storage
system, due online June 1, 2021.
The Nevada pricing doesn’t offer an immediate
apples-to-apples comparison with recent solar-plus-storage deals.
Tucson Electric Power signed a $45 per megawatt-hour hybrid
contract with NextEra in May 2017. Xcel beat that with its median
solar-plus-storage bid of $36 per megawatt-hour.
NV Energy lists each hybrid project as two distinct
contracts: one for megawatt-hours of solar generation and one for capacity
measured in megawatt-months delivered by the co-located storage.
Xcel’s median bid for standalone storage contracts was
$11,300 per megawatt-month. NV Energy’s battery contracts handily beat that,
landing at $6,110, $6,200 and $7,755 per megawatt-month, respectively.
These aren’t standalone systems, however. They will enjoy
cost savings on labor and interconnection by piggybacking on the larger solar
construction projects, not to mention the federal Investment Tax Credit. They
would best be compared to other standalone contracts for storage capacity
paired with solar, but this is a new type of deal structure, which makes it
hard to find direct points of comparison.
What’s clear is that NV Energy is swinging toward renewables
in the face of ballot
initiatives that would expand the state’s renewables target and institute
competitive retail markets for electricity.
“An [integrated resource plan] is about identifying your
needs and finding your solutions for the future,” Browning said. “NV Energy is
making a strong affirmation that solar is the future.”
The caveat there is that if Nevada voters approve the
competitive retail markets ballot measure, NV Energy has
the right to pull out of its resource plan. The need for utility
energy production would drop considerably if other companies could compete to
supply electricity.
Nevada may be unique for just how sunny and sparsely
populated it is, but similar dynamics could benefit the solar industry in
Texas, Arizona and Colorado, Smith noted. That means Nevada might not hold on
to the trophy for long.
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