Austin
Energy in Texas is set to sign a deal expected to result in one of the
lowest-priced solar power arrangements in the world.
According
to a report by The
Austin American-Statesman, the utility, owned by the city of Austin, has
approved an agreement with SunEdison to buy electricity from two solar farms in
West Texas at a price of just below $0.05 per kilowatt
hour – considerably lower than
the standard price for solar energy and
less than a third of the price Austin Energy agreed to pay in 2009 for
electricity from a smaller solar installation east of the city.
Raj
Prabhu, CEO of energy consulting group Mercom Capital, told the newspaper that
the deal was “the cheapest I’ve seen,” adding that it appeared "to be new
territory."
The
Austin American-Statesman also
cited Jurgen Weiss, an energy economist with the Brattle Group, who added, "It
is certainly at the very low end of the prices I have seen. As many had
predicted, we’re entering a time in which, with some caveats, solar presents quite an attractive
alternative to conventional sources."
The
two solar farms comprise a 350,000-panel,
100 MW facility and a
nearby 150,000-panel,
50 MW plant. Austin
Energy declined to say where exactly the proposed project is in West Texas,
saying the location had to be kept confidential for competitive reasons until
the contract was signed.
Austin's
city council is scheduled to vote March 20 on the 25-year contract, under which
the utility would pay up to $21 million a year, depending on the plants' output.
The installations will be able to power some 14,000 homes at peak output.
Austin
Energy hopes to employ solar energy to help handle the increasing strain that
the city’s growing population is putting on the grid during peak-demand times in the late
afternoon and early evening.
The Austin
American-Statesman notes that
SunEdison's price is nearly identical to that of natural gas and even cheaper
when the cost of building a gas plant is taken into account.
A
number of factors contributed to the low price, according to the newspaper,
including a federal tax credit that helped lower the original price from $0.08
per kilowatt
hour to $0.05.
In
addition, the city's large-scale purchase of solar energy as well as the
utility's strong credit rating also helped to keep the price down, said Austin
Energy General Manager Larry Weis.
"I
think they're willing to take a haircut on price to have that steady income
coming from us," Weis said, cited by the newspaper. He added that prices would
probably not fall much further in the near future, partly because federal
subsidies are set to be reduced in 2016.
Austin
Energy had asked companies to submit proposals and about 30 offered prices near
those of SunEdison, Weis said, adding that the company received a very good
price.
Austin
Energy expects the agreement to lower rates slightly for customers.
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