Recent news that Austin Energy is looking to sign a 25-year solar energy PPA for less than 5 cents per kilowatt-hour is not just solar notable, it’s utility notable. (Austin Energy is seeking city council approval to execute the PPA at a 3/27/14 meeting.) The two projects totaling 150 megawatts are admittedly larger than typically seen for PV, creating obvious economies of scale, but we must take note as most other aspects are replicable by utilities across the U.S.:
The projects leverage broadly available incentives available to all solar project; the federal investment tax credit and accelerated depreciation.
Austin has a good solar resource, but its capacity factor is only 5-6 percent better than that of a project in Minneapolis and 11-12 percent better than a similar project in Baltimore.
The RFP reportedly received over 30 other bids in the same ballpark.
And this isn’t the first utility to report this type of competitive pricing — Xcel Energy, in both Colorado and Minnesota — is finding that solar projects are proving to be cost effective even when compared to conventional resource options.