Texas application Austin Energy is going to be profitable 5 cents per kilowatt-hour for solar power, and it could meant reduce patron rates.

City-owned Austin Energy is about to pointer a 25-year PPA with Sun Edison for 150 megawatts of solar appetite during “just below” 5 cents per kilowatt-hour. The appetite will come from dual West Texas solar facilities, according to reports in the Austin American-Statesman. According to reports, around 30 proposals were during prices nearby SunEdison’s. Austin Energy has suggested that a PV understanding will somewhat reduce rates for customers. 

This is one of a lowest, if not a lowest, reported prices for engaged solar that we have seen. Last year, First Solar (FSLR) entered a 25-year PPA in New Mexico for 50 megawatts of solar appetite during 5.79 cents per kilowatt-hour. That series enclosed a poignant PTC from a state. The Macho Springs project, a Austin plan and many solar projects of this inlet rest on a 30 percent sovereign Investment Tax Credit.

Austin Energy’s net sub-five cent cost does not embody any state PTC, according to Monty Humble of appetite expansion organisation Brightman Energy LLC. He pronounced that a application was “to be commended” for this solicitation. Humble added, “Based on a analysis, it can be done. There’s not a whole lot of distinction in it, though it’s not a detriment leader. It’s a legitimate bid.”    

GTM Solar Analyst Cory Honeyman points out that “new PPAs sealed in North Carolina fetched prices between 4.5 and 5 cents per kilowatt-hour.” Like Macho Springs, those projects could also take advantage of an in-state taxation credit to make a economics work. Honeyman pronounced that nothing of a projects in Georgia or North Carolina were incomparable than 20 megawatts, so 5 cents does seem like “an rare low for large-scale projects.”

Bret Kadison, COO of Austin-based Brazos Resources, an appetite investment firm, pronounced this was “a rarely rival solicitation.” Although historically, “Texas hasn’t been a hotbed of solar, you’re starting to see that change. ERCOT needs a generation.”

He expects to see some-more solar activity “not only as a immature source of energy, though as an affordable source of energy. Texas is saying mercantile growth, though a appetite grid has not kept pace.” Kadison added, “When we consider about a sensitivity of healthy gas, a 25-year PPA starts to demeanour flattering attractive.”

Kadison notes, “This is next a all-in cost of healthy gas generation, even with low fuel prices and before factoring in commodity sensitivity and cost overruns.” He also points out that a strange RFP was for 50 megawatts, though a application finished adult shopping 150 megawatts “in a red state where hydrocarbons browbeat a domestic landscape.” Kadison suggests that “one of a biggest cost rebate drivers that authorised solar to strech this relation came from a large rebate in financing costs.” 

The 5-cent cost falls next Austin Energy’s estimates for healthy gas during 7 cents, spark during 10 cents and chief during 13 cents. The application points out that it authorized a 16.5-cent cost for a Webberville solar plant in 2009.

Austin Energy has a 35 percent renewable appetite apparatus idea by 2016 and a solar idea of 200 megawatts by 2020. The application is now during about 25 percent, most of it done adult by a 850 megawatts of wind.   

Humble of Brightman Energy said, “I design that this will force a lot of players to reexamine their proceed and get distant some-more aggressive. Because of a distance of a ERCOT marketplace and a distance of a state, Texas is potentially a largest solar marketplace in a country.” According to GTM Research’s 2013 U.S. SMI report, Texas ranked 8th in a republic with 75 megawatts commissioned in 2013.

GTM’s Honeyman notes, “This is a second vital proclamation in that a application has settled skeleton to gain some-more than 100 megawatts of solar PV formed on a cost-competitiveness with healthy gas, as against to RPS-driven demand.”

If developers continue to bid in during these prices — it won’t be a last.

Lazard’s estimates of unsubsidized levelized cost of energy

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