Not long ago, utilities fought the introduction of renewables into their markets. Then, they didn’t really understand that the real energy transformation we are seeing today is consumer choice, including the potential of full individual energy independence in some markets driven by technology innovation.
Now utilities are exploiting the falling costs of solar to fend off the upcoming competition.
PPA Prices Are Crashing, despite New Tariffs
Despite all the talk about the new import tariffs and their effect on the installed cost of new PV installations, it appears that developers have squeezed procurement costs to continue breaking records for the lowest cost projects in the country. On June 11, Central Arizona Project (CAP), a local utility, signed a 20-year public-private agreement (PPA) with Origis Energy’s subsidiary AZ Solar 1 for a record low $0.0249/kWh.
A new record came only a day later. On June 12, NV Energy managed to break the $0.024/kWh floor, with a 25-year PPA signed for $0.0237/kWh. The Eagle Shadow Mountain solar project will have a total capacity of 300 MW and is being developed by 8minutenergy. This project is part of a 1 GW solar PV procurement process run by NV Energy as part of its strategy to become the first 100% renewable utility in the US. The procurement process also called for 100 MW/400 MWh of battery storage.
Saving the Monopoly
NV Energy’s push for 100% renewables does come with a caveat. The final green light to invest in these projects depends on the result of an energy choice initiative that will be voted on Nevada this year. If it is accepted, the project could be cancelled. NV Energy was also behind another controversial law, which eliminated net metering in the state in 2015.
This is part of a wider trend, where US utilities are increasingly deliberating not between new conventional generation or renewables, but between central or distributed resources. Behind this issue, utilities are also examining control of the end consumers relationship.
Maintaining control of the end user is key as the industry transitions from one in which the value was in the generation and transmission of electricity, to one in which the value will lie on the services that can be provided in addition to electricity.
Central Renewables versus Distributed Renewables
NV Energy understands that—at least in a resource-rich state like Nevada—the future is solar. Consequently, it wants to position itself as a clean and potentially cheap provider of electricity in the state in the eyes of the ballot voters this year. If it succeeds, it might dodge what is the most dangerous bullet for a utility—the opening of the retail market to competition and the potential race to the bottom that could spark. But even if NV Energy succeeds in maintaining its monopoly status, consumers will retain some choice—installing their own solar and producing their own electricity.
Tags: Distributed Energy Resources, Distributed Renewables, Energy Efficiency, Solar Power, Utility Transformations
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