Yup. At least that’s what’s rumored to be in the works under a pending deal between Austin Energy and SunEdison. However no one will really know until the final paperwork is signed, which is expected as soon as next week.
At the heart of the deal, SunEdison is rumored to sell solar electricity from two projects for under 5 cents per kilowatt hour. The two projects would be a 100 megawatt facility and nearby 50 megawatt solar farm, both in West Texas. “That is far cheaper than solar energy had generally been going for—and less than a third of the price Austin Energy agreed to pay in 2009 for electricity from a much smaller solar array just east of the city,” said The American Statesman’s Marty Toohey. According to Toohey, Austin City Council could vote on whether or not to approve the 25 year contracts on March 20.
Just last month the U.S. Department of Energy said that cost of utility-scale solar power was coming in on average at 11 cents per kilowatt hour at the end of 2013. This deal likely puts the cost of such energy generation below the the DOE’s goal of 6 cents per kilowatt hour.
“This is one of the lowest, if not the lowest, reported prices for contracted solar that we have seen,” said Greentech Media’s Editor in Chief Eric Wesoff. “Last year, First Solar (FSLR) entered a 25-year PPA in New Mexico for 50 megawatts of solar power at 5.79 cents per kilowatt-hour.”
In the same post Wesoff observed that unlike in New Mexico Texas doesn’t offer a state tax incentive for solar, showing that the price of utility-scale solar is continuing to drop. In North Carolina some solar projects are also coming in a prices between 4.5 and 5 cents per kilowatt-hour. But they include a state tax incentive.
“The SunEdison price is almost identical to what natural gas is selling for and is cheaper when the cost of building a gas plant is taken into account,” Toohey wrote. The Investment Tax Credit is helping trim the cost of the solar projects below 8 cents a kilowatt hour, which allows it to more directly compete with natural gas on a cost level.
What’s more, SunEdison’s bid was just one of 30 or more bids for Austin Energy’s request for proposals that came near the cost threshold. The only power source with a projected lower cost would be wind power in Texas.Tweet