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Georgia Is the Latest State to Procure Dirt-Cheap Solar Power

In Obama's America, according to conservatives, utilities are forced to consume expensive green energy mandated by the government.

In an ideal conservative America, however, utilities would procure the cheapest and most reliable resource to deliver value to consumers.

Those worlds have officially collided. 

One year ago, Tea Party members in Georgia joined forces with environmental advocates to force the state's utility, Georgia Power, to competitively procure more solar power. Upset about a lack of consumer choice and the $1.5 billion in cost overruns from the Vogtle nuclear power plant, the groups convinced regulators to expand Georgia Power's solar target by an additional 525 megawatts.

The results of competitive bidding through the utility-scale portion of that program are now coming in. And they once again show that solar -- maligned by many national Republicans, but often embraced locally by conservatives -- is a very cost-competitive technology.

After a second round of bidding from developers seeking to build hundreds of megawatts' worth of solar plants in the state, Georgia Power reported that the average price of electricity came in at 6.5 cents per kilowatt-hour. That's 2 cents cheaper than last year's bids.

In a filing with the Georgia Public Service Commission this week asking for approval of the projects, the utility lauded the prices as proof that solar can "provide competitive pricing when challenged to do so."

The projects, which were procured through two programs set up by Georgia Power, range from 101 megawatts to 30 megawatts in capacity. In total, Georgia Power is seeking approval for ten new solar power plants worth a total of 515 megawatts of capacity, planned for build-out in 2015 and 2016.

Georgia Power reported 5,100 megawatts' worth of bids from 56 different companies. 

"While the primary evaluation criterion was economic benefits to customers, as required by the RFP, the evaluation also included non-price factors such as projects with a meaningful economic impact on the Georgia economy, the inclusion of RECs from the facility, financial strength and experience of the developer and interconnection due diligence," wrote the utility in its filing.

The power-purchase agreements (PPAs) for each winning project were not revealed -- only the average of 6.5 cents per kilowatt-hour.

These competitive prices for large-scale solar projects are not unique to Georgia. In Texas, Austin Energy recently signed a PPA for 150 megawatts of solar for 5 cents per kilowatt-hour; in Colorado, Xcel Energy said it can buy electricity from 170 megawatts of solar plants for less than buying from natural gas plants; and in Utah, Rocky Mountain Power also signed deals for 80 megawatts of solar for less than gas.

“This is the first time that we’ve seen, purely on a price basis, that the solar projects made the cut -- without considering carbon costs or the need to comply with a renewable energy standard -- strictly on an economic basis,” said David Eves, CEO of an Xcel subsidiary, in an interview with the Denver Business Journal last year.

There is also a distributed system component of Georgia's large solar program, which offers a 13-cent-per-kilowatt feed-in tariff for residential and commercial projects up to 1 megawatt in size. However, that program is not seeing the same level of activity as the utility-scale -- partly because of its size, and partly because of incentive levels.

Some of the 11 megawatts devoted to projects of 100 kilowatts or less were rolled over into a 2014 solicitation because of limited activity. There were 45 megawatts bid on the commercial side last year, but 12 megawatts were folded into this year's targets. Some solar companies believe the tariff is too low for residential and commercial installations, and also worry that incentives for smaller systems could soon change again.

Although there is still a contentious ongoing debate in Georgia about how to compensate distributed solar, this latest solicitation shows that the utility-scale solar market is moving ahead cost-competitively.

Georgia Power called the low pricing proof of "the robust nature of the marketplace."

Turns out, President Obama and the Tea Party do agree on something: solar power can actually compete in a competitive market today.

    

Trade Gaiacoin

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