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Interesting news from a former stomping ground of mine... the city electric utility in Austin is contracting to purchase Solar PV electricity at the lowest cost yet reported...
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Cheapest Solar Ever? Austin Energy Buys PV From SunEdison at 5 Cents per Kilowatt-Hour
Texas utility Austin Energy is going to be paying 5 cents per kilowatt-hour for solar power, and it could mean lower customer rates.
City-owned Austin Energy is about to sign a 25-year PPA with Sun Edison for 150 megawatts of solar power at "just below" 5 cents per kilowatt-hour. The power will come from two West Texas solar facilities, according to reports in the Austin American-Statesman. According to reports, around 30 proposals were at prices near SunEdison’s. Austin Energy has suggested that the PV deal will slightly lower rates for customers.
Here's what is most surprising to me about this... "around 30 proposals were at prices near SunEdison’s." In other words, this is not merely an outlier or a fluke, not when more than two dozen suppliers' quotes were in the same ballpark. For perspective, 5 cents per kWh to purchase electricity sourced from Solar PV is lower than the city's current estimates of 7 cents/kWh for natural gas generation, 10 cents/kWh for coal, or 13 cents/kWh for nuclear.
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Austin Energy's net sub-five cent price does not include any state PTC, according to Monty Humble of energy development firm Brightman Energy LLC. He said that the utility was "to be commended" for this solicitation. Humble added, "Based on our analysis, it can be done. There's not a whole lot of profit in it, but it's not a loss leader. It's a legitimate bid."
As the article also points out, there's been a strong trend in that downward direction recently, with utilities in New Mexico, Georgia and North Carolina all contracting to purchase solar power for under 7 cents/kWh. So much for the critics who say solar energy will never be cost-effective.
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Kadison notes, "This is below the all-in cost of natural gas generation, even with low fuel prices and before factoring in commodity volatility and cost overruns." He also points out that the original RFP was for 50 megawatts, but the utility ended up buying 150 megawatts "in a red state where hydrocarbons dominate the political landscape." Kadison suggests that "one of the biggest cost reduction drivers that allowed solar to reach this parity came from the massive reduction in financing costs."
WOW, 5 cents per kwh is insane. I have wind and pay 7-8 cents per kwh, compared to coal thats 5-6 cents savings already. Austin will most likely be able to do this though, just based on how the city is setup and its size.
WOW, 5 cents per kwh is insane. I have wind and pay 7-8 cents per kwh, compared to coal thats 5-6 cents savings already. Austin will most likely be able to do this though, just based on how the city is setup and its size.
Keep in mind this is the wholesale price Austin Energy will pay, not what their retail customers will pay. They'll need a higher percentage of their purchased power to be at similar low costs to bring down the average of all their costs, and thus lower the rates to end users. But I think it's a real milestone achievement.
It's also quite interesting to me that while windpower has been the leading renewable energy source that Texas is known for, it's a state with lots of wide open spaces and lots of sunshine, so big solar power installations are an obvious choice for development now that the cost of generation has come down so much. Plus solar and wind energy are quite complementary, since wind power tends to be strongest at night, while solar is obviously a daytime resource, so they somewhat balance each other. And given the enormous draw on the existing electricity supply due to all the air conditioning used during hot, sunny afternoons in Texas, increasing the peak capacity using a resource that exactly parallels the demand cycle should help avoid the rolling afternoon brownouts that have become more common in the area in recent years.
Now I think the biggest limitation to widespread adoption is going to be infrastructure buildout... getting electricity generated in the hinterlands in to the big urban centers.
The question is what is SunEdison getting making it so cheap?
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Originally Posted by OpenD
For perspective, 5 cents per kWh to purchase electricity sourced from Solar PV is lower than the city's current estimates of 7 cents/kWh for natural gas generation, 10 cents/kWh for coal, or 13 cents/kWh for nuclear.
Coal and natural gas are something like 4 cents on average wholesale. I pay less than 10 cents retail.
The question is what is SunEdison getting making it so cheap?
As the article says, low cost financing is what made it all possible. And the cost of PV panels has continued to fall. Some are now selling for less than $1 per watt capacity.
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