Yeah, you read that right. First Solar’s proposed 100 megawatt Solar Playa 2 project for NV Energy in Nevada is the lowest-cost electric project proposal that NV Energy received this year. The bid for the project came in at 3.87 cents per kilowatt-hour (kWh) under a 20-year power-purchase agreement (PPA), which is at a rate lower than any other electric projects offered to the company if not throughout the entire country.
“That’s probably the cheapest PPA I’ve ever seen in the U.S.,” Kit Konolige, a utility analyst at Bloomberg Intelligence in New York, said Tuesday. “It helps a lot that they’re in the Southwest when there’s good sun.”In its July 1 filing with the Nevada utility commission NV Energy the utility said: “Overall, the two projects are very reasonable priced when compared (a) to existing solar contracts and (b) to other, fossil-fuel driven generation. The projects advance the purposes of Nevada's emission reduction and capacity replacement statute, and provide value to customers.”
The utility added that the average cost of renewable energy has fallen significantly—even from 2014. “In 2014, the average cost per megawatt-hour of solar renewable energy delivered to Nevada Power from renewable energy systems was approximately $137.65.” First Solar’s project comes in at $38.70 per megawatt hour and SunPower’s was $46.00 per MWh.
“The two PPAs offer the best pricing value to the customers and fit well with customers’ energy needs. Adding the two contracts to the company's portfolio adds fuel diversity at a time when the retirement of coal-fired generation reduces fuel diversity,” the company said. “Moreover, the two PPAs are favorably priced, especially in contrast to prior solar PPAs.”
These contracts are ushering a new era for solar energy. John Rogers, senior energy analyst, Clean Energy with the Union of Concerned Scientists said: “Some might dismiss these deals by pointing to the sunniness of the states in question or the incentives (federal or state) that are buying down the cost. Don’t let ‘em.”
“Just a week earlier, Austin Energy signed a deal for solar at under 4 cents/kWh,” Rogers noted. He added that even without the federal investment tax credit these projects would come in below 6 cents per kWh.
“That price trajectory could lead some to think about waiting till prices come down even more, but that would be a mistake,” Rogers said. He said there’s no guarantee that solar prices will continue to drop and that they may drop based on expanding the amount of solar already installed.Tweet