Wesoff tells us that even though the Beehive State has fantastic solar and land resources, the state has had no large scale solar projects, until now. Utah also has no Renewable Portfolio Standards (RPS), which are state goals for moving towards renewable energy sources. Even worse, Utah produces most of its electrical energy by burning cheap coal at an average residential price of 10.4 cents per kilowatt-hour according to the EIA.
Despite low electricity costs, regional utility Rocky Mountain Power (RMP) is signing several 20-year solar Power Purchase Agreements with renewables developer First Wind. The largest proposed project in this recent wave of solar Power Purchase Agreements (PPAs) is First Wind's 320-megawatt “Four Brothers” solar plant in Utah's Beaver and Iron Counties -- consisting of four separate 80-megawatt solar power sites.Greentech Media reports there is a race to get project done before RMP reduces the price it pays for solar.
RMP, (part of Berkshire Hathaway Energy's PacifiCorp) also signed PPAs with First Wind’s 20-megawatt “Seven Sisters” solar projects earlier this month. The utility, under the Public Utility Regulatory Policies Act (PURPA), must purchase power from an independent power producer if the price is less than the avoided cost of generating the power themselves.
The Juwi-developed single-axis tracker Pavant solar project in Millard County, Utah is coming in at a PPA price of $55 per megawatt, as per a public mention from the developer at a recent Energy Development Summit sponsored by Utah's Governor Herbert. Note that number is the proposed PPA price; power has not yet been delivered.
Wesoff tells us that Cory Honeyman, of GTM Research Solar Analyst reports "in the past 6 months, nearly 550 megawatts have received PPAs from 12 individual projects in Utah."
Rocky Mountain Power appears not to be happy about this arrangement because of the ways utilities are compensated on a formula based on a rate of return on the capital they own. When an external solar developer sells in power on a project like this, RMP does not collect a rate of return commission because the external contractor owns the capital. Wessoff tells us RMP is moving to lower the amounts it will pay for solar, and is also moving to charge a fee to any customers who wish to use net-metering. So, if I am reading this correctly, independent solar power companies like First Wind are rushing to get these kinds of projects approved before RMP gets the rules changed to shut down this option.
So the news may, or may not, be good for solar in Utah in the long term, but not because of the lack of great sunlight, few cloudy days, and inexpensive land.
The largest solar developer in the state, First Wind will construct the Four Brothers solar project in Utah’s Beaver County and Iron County. The project will comprise four 80 MW solar parks, with construction set to begin at the start of 2015. During construction, 500 local jobs will be created, and the projects’ 20-year life cycle will rake in an estimated $66 million in direct property and income taxes. Completion is slated for mid-2016.A week or two ago, I reported a case of a utility in Texas that signed a 20 year fixed price contract with a solar farm as a hedge against expected price increases in natural gas, as well as a hedge volatility in natural gas prices. Even though electricity produced with natural gas was still slightly less expensive than solar in that are today, natural gas prices are expected to have significant upside risk over 20 years.
"We are excited to be part of Utah’s clean energy revolution, which will transform this rural part of Southern Utah into a hub of renewable energy production," said Beaver County commissioner Mark Whitney. "In addition to the clean energy, these solar projects will be a boon for our local economy through hundreds of construction jobs and new property and tax revenue that will help support our community."
The Four Brothers solar project will generate 800,000 MWh of clean power per year – enough to service the electricity needs of 90,000 local households.
Combined with the Severn Sisters project, First Wind will boast the largest collection of solar projects in the state, which despite lagging behind other sun-rich U.S. states in fulfilling its solar potential (ranking 28th nationwide), has pressed ahead positively in recent months with a number of large solar projects.
So the fact that the solar farm was willing and able to sign a 20 year fixed price delivery contract at a slightly higher price, it was considered to be economically more attractive than having to take 20 years of chances on the roller coaster of the natural gas prices which are expected to trend upward in the next decades.
One source of expected price increase in natural gas comes from expected increased demand due to the EPA's carbon dioxide emission limits.
A second source of expected increase in natural gas prices comes from concern that the growing realization of the environmental problems with fracking is likely to lead to regulatory crackdown within 20 years which could increase price in two ways, the increased cost of environmental remediation, as well as possible reduced supply as acceptance of fracking declines.
I am not certain of this, and need to check it out with some top notch atmospheric scientist but I think one example of a potential "upside price risk for natural gas from regulatory fracking uncertainty" may be the following: fracking apparently may be releasing much more methane than previously realized. Since methane is said by some experts to be 25 times as potent a greenhouse gas as carbon dioxide, the widely held assumption that substituting natural gas for coal fired plants is a major improvement over coal with regard to slowing down global warming my not be as strong as many thought based on the original calculations of natural gas coming from non-fracking reserves.
While it is apparently a matter of simple chemistry that per BTU generated burning natural gas only generates half or so as much carbon dioxide as coal, and coal generates a whole host of Sulfer dioxide, nitrogen, heavy metals, etc, if one looks at the full life-cycle burden and adds a more significant methane release overhead for the the natural gas in the U.S. coming from fracking is this advantage still sufficient to justify natural gas as a transition strategy when solar and wind generated electricity is so close to being competitive or even superior.
If so, how sad compared to the articles we just read yesterday about Germany achieving a one hour burst record of 50% of its total electrical generation with solar and a total of 74% when one adds in wind, with politicians, industry, and residents all working together to accelerate this to 100%. Meanwhile, in the U.S. many of our states seem to be competing to see which can rush to reach third world status first.
I'm imagining for a moment some parallel quantum universe where it is Utah that is leading the world in solar power installations and leading politicians are giving speeches about making Utah the new global leaders in solar storage battery manufacturing, thriving with green jobs, with international investors, and multinational CEOs flying in daily to see if they can find a good spot to locate their modern new plants because of low energy costs and high tech modern ambiance. ... Sigh.
Even still its a matter of degree, Utah is moving forward. It will be interesting to see which way the rest of the people of Utah wish to go.
The sun seems to be rising in Utah. As long is it can break through a horizon of coal trying to hold it down.