This blog was written by John D. Wilson, former Deputy Director for Regulatory Policy at the Southern Alliance for Clean Energy.Guest Blog | April 23, 2015
The Southeast is seeing a growing trend towards major utility-scale solar PPAs in the past few years. These deals are great for customers, because the prices are so low that they are helping utilities lock in cost savings over the long term. They are great for the utilities, because solar power is a reliable source of on-peak power. Here’s a quick rundown of some of the deals we think point to a rapidly emerging trend.
Duke Energy Renewables entered into a 20-year PPA with three academic and medical institutions in Washington, DC for the 52 MW Capital Partners Solar project located near Elizabeth City, NC. The price has not been disclosed, but it is represented to be “below what they are paying for brown power” and that “solar beat wind in terms of final delivered cost to the customers.”
Gulf Power Company entered into 25-year contracts with HelioSage, LLC for three solar facilities with a total capacity of 120 MW located at northwest Florida military bases. The prices have not been disclosed, but “are projected to produce savings between $2.8 and $17.4 million.”
Georgia Power Company entered into five 30-year contracts, one 25-year contract, and four 20-year contracts for solar facilities with a total capacity of 515 MW. The prices have not been disclosed, but “the ASI winning bids were procured at an average cost of less than 6.5 cents per kilowatt-hour.”
Georgia Power deserves particular commendation for the effectiveness of its RFP process. The RFP process was the result of a Georgia Public Service Commission order that occurred at the end of an effective campaign led by Georgia’s solar industry.
As Georgia Power noted in its application, the process “Demonstrat[ed] both the robust nature of the marketplace and its ability to provide competitive pricing when challenged to do so through a market based RFP.” Georgia Power “considered all proposals including those offering any and all financial structures, and bids with terms ranging from fifteen to thirty years.” The RFP resulted in offers for “5,100 MW through 142 unique proposals from 56 different bidders.” The impact of PPA term on Georgia Power’s ranking is evident because the utility selected the projects in three groups, in order of competitiveness. The third, least competitive, group of projects were the four 20 year contracts. Thus, it appears that Georgia Power ranked the longer term PPAs as more competitive than the shorter term PPAs.
So the story in the Southeast appears to be that solar developers are able to offer utilities projects scaled at 50-100 MW for a price of 6-7 cents per kWh, as long as the contracts are for at least 20 years, and ideally 25 or 30 years.