Nevada Power, a utility owned by Warren Buffett’s Berkshire Hathaway, has signed a deal to build more than 1GW of new large-scale solar in the US, with power purchase agreements starting as low as $US21.55/MWh, a record low in the US.
The stunning low PPA prices locked in for the six new solar farms – more than half of which will be co-located with battery storage, priced in separately – are documented in a state government document published this month.
The document details the specs of the six projects – which amount to a combined total of 1001MW, as you can see in the table below – all of which come in under $30/MWh over 25 year contracts.
Among those projects, the 200MW Dodge Flat Solar Farm, to be paired with a 50MW/200MWh battery system, secured a PPA of $27.51/MWh for 25 years; and the 250MW Copper Mountain Solar farm signed a contract for $21.55 for 25 years.
The most stunning of them all, however, is the 300MW Eagle Shadow Mountain Solar Farm, which is to be built by 8minute Energy Renewables within the Moapa River Indian Reservation in Clark County, Nevada.
For that project, Nevada Power has signed a PPA for $US23.76 – but that is a flat price for 25 years, and equates to a 2018 dollar price of just $US17.95/MWh if a 2.5 per cent deflator is applied, according to IEEFA’s Tim Buckley.
“Even taking into the account the 30 per cent investment tax credit, US solar priced at $US18/MWh real highlights the magnitude of the strategic energy shift that is upon us due to simple economics,” Buckley said in comments emailed to RenewEconomy.
“Renewables are now the low-cost source of new supply. And increasing battery deployments will only accelerate this, and will increasingly challenge the role of gas peaking power plants,” he said.
“With flat US electricity demand for the last decade, despite strong economic growth, coal-fired power generation’s share has shrunk from 50 per cent to just 30 per cent in this time-frame; half the share loss to gas, and half to renewables.
“The same trend will continue over the coming decade, but it is likely gas’ share of electricity generation will stabilise and least-cost renewables will take nearly 100 per cent of the share gain going forward,” Buckley said.
“Nuclear and coal will see a gradual ongoing share loss, despite the White House’s empty rhetoric to deliver the opposite.
“Imagine what happens in a country where there is no cheap gas and a price on carbon emissions? Actually, not hard – look at Netherlands and England right now.”
For those wondering, Buckley explains that the $US23.76/MWh flat PPA is “far better” than the Copper Mountain $US21.40/MWh deal, which is indexed at 2.5 per cent per annum for 25 years, which takes it up to an average PPA of $US29.24/MWh.
The deal represents the largest clean energy investment in Nevada’s history, and will double its investment in renewables. CEO Paul Caudill says the company’s long-term goal is to serve Nevada customers with 100 per cent renewable energy.
It is not the only stunning solar price being obtained in the US.
Greentech Media reports that in Arizona, the local utility has contracted a solar farm to partially replace an old coal fired generator it is shutting down. The cost of the solar plant is $US25/MWh, half the cost of the output from the coal generator.
And with Bloomberg New Energy Finance forecasting a further one third fall in the cost of solar modules, thanks to a China policy decision to halt subsidies this year, and a resultant 30GW glut of panels, those prices could fall further very soon.
Sophie is editor of OneStepOffTheGrid.com.au and deputy editor of its sister site, RenewEconomy.com.au. Sophie has been writing about clean energy for more than a decade.