NV Energy (Nevada) and Austin Energy (Texas) last week agreed to two separate record-low solar farm PPAs below 4c/kWh.
As the lower rate of the two PPA rates, NV Energy has agreed to pay 3.87c/kWh for a 100MW project developed by First Solar. NV Energy is also owned by Berkshire Hathaway, a company founded by Warren Buffet.
This is the lowest recorded bid for solar electricity to date and second only to wind energy generation in terms of lowest projected levelised cost of electricity (LCOE). For comparison, the sub‑4c/kWh benchmark is well below all other LCOEs for conventional fossil fuel or nuclear generators. Coal ranges from US$66–151/MWh, nuclear between US$92–132/MWh and gas peaking plants at around the US$200/MWh mark, according to the most recent Lazard LCOE analysis report.
Unsubsidised LCOE estimates from the most recent Lazard LCOE Analysis report – v8.0, Sep 2014 [Image Credit: Lazard]
In addition to falling PV prices, US pro‑PV policies appear to be strong drivers for these record-low bids. Nevada utility regulators have mandated that 25% of generated electricity come from renewables by 2025 – Austin Energy itself is required to supply 55% of its energy through renewables by 2025.
The PPA agreements, however, do not come into fruition unless solar farm developers actually deliver an operation at rates below $40/MWh – the PPAs are essentially a bet from developers that they will be able to deliver a PV project at that cost by the dates stipulated in the agreements (generally in the order of 5 years).
Despite this, the announcement of the PPAs is still very positive news for solar supporters and the industry. There’s little sign of near term decline – especially in the US – and, if anything, PV pricing is expected to drop even further.
Top Image Credit: ecogeek.org
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