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Warren Buffett secures amazing low prices for 1GW of solar

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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.  

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  • Joe

    The jobs and expansion is in CHEAP and CLEAN Renewable energy.Then we have Trumpy ready with the bailing out of EXPENSIVE and DIRTY old Coalers. Wasn’t he supposed to be the successful, smart billionaire businessman who knows all about making good deals. He knows all about making ( and then almost straight way BREAKING ) deals when he isn’t insulting world leaders via Twitter – too weak to do it face to face. Then almost straight away breaking agreements again via the Twitter 30,000 feet up in the air – again too weak to do it face to face. Weak and Dishonourable Donald J Trump.

    • solarguy

      I think Robert De niro said it best about trump, he’s is a mutt, a con, a bullshit artist!

      • Joe

        Yes, I remember that ‘appraisal’ of Trump very well it was a withering take down of the Donnie. And De Niro was ‘reminding’ us all (11/6) at the Tony Awards of just how much he dislikes the Trump with this gem…”I’m gonna say one thing, F… Trump.” “It’s no longer down with Trump. It’s F… Trump.”

      • Ren Stimpy

        De Niro’s exact words were “Hooray Henry Trump!” 🙂

  • Ian

    In some respects, these energy wars are fought with FF Titans. We probably need equally giant heroes like Buffett to fight for renewables. Perhaps someone can ask him to invest a few of his billions into lithium battery production , the next critical phase of decarbonising our civilisation is electric transportation and his utilities can directly benefit from EV uptake.

    • Alastair Leith

      Why lithium ion batteries in particular?

      • Ian

        Lithium batteries are currently the most viable form of motor vehicle storage device. These types of battery are mostly chosen for pure BEV. The limited production of batteries is severely limiting the expansion of EV manufacturing. Anyone who has the means , like Buffett, could make a huge difference to decarbonising transportation, and turn a very good profit by constructing the manufacturing capability. To completely replace current ICE vehicle production to EV will require at least 200 gigafactories. The one or two gigafactories worth available at present is woefully inadequate.

        In a consumer-restrained future where machines make machines and dominate manufacturing, there may be an abundance of battery manufacturing capacity with cheap prices and slim profit margins, but right now that’s not the case. The market is open to anyone with enough foresight and money, whatever they make they will be able to sell.

        A similar example, in a more mature stage of evolution is the renewables electricity generation economy: We all think Australia is struggling to decarbonise its electricity sector and we are desperate for our government to grow up and facilitate this transition, but truth be told , there is only so much consumer- load capability in this small population/economy that any available market slots will be quickly gobbled up. First in, best dressed. Witness Gupta’s idea of building out 10 GW of renewables, admirable, right, of course it is – we need all the renewables we can get. But, how much generating capacity of any kind can we support? 50 000MW, 60 000MW? We have wind and solar resources to install many multiples of this. Take an installation cost of $2/kWh roughly. The market could manage $120 billion of investment and then that’s it, where else are people going to park their money in this sector? 😉

        Once the pioneers of EV battery and EV manufacture have opened up the land to this opportunity, everyone wanting to make a buck will be in on the act and we will have to throw away car batteries every few years just to turn over consumption for all these manufacturers.

        Ie. what seems an impossible task now : decarbonising transportation and electricity production could very quickly become a saturated market. There is only a limited time to take advantage of this opportunity, quite unprecedented but not boundless. Getting back to Buffett’s case, he has the means, and the motivation to invest, well, he better get in quick before this open licence to print money closes.

        • Ian

          The world would need and therefore only support 200 Gigafactories. Each would cost $5 billion to build (roughly speaking). How much investment opportunity could EV battery factories possibly provide? Answer $1 trillion. If you are an investment genius like Buffett or a sovereign fund like Norway’s or Australia’s where are you going to put your money. Coal, gas and oil have been excellent places to safely store money but that ain’t going to be much use in the near future. Anyone smart enough will divert this cash to battery and EV manufacturing and/ or solar and wind farms before the opportunity dries up.

    • GearsOfWoe

      I think he just meant that there are other storage options. Pumped hydro or vanadium flow cells come to mind. Unlikely Warren will buy batteries from his arch-rival Elon. Or panels from SolarCity.

      I have mixed feelings about this story. NV Energy has done its best to kill residential and commercial roof-top solar in order to retain this type of monopoly on utility solar. I wonder how much of this could have been replaced by a virtual power plant given the right net-metering rates.

  • David leitch

    In translating these prices to Australia, you do need to adjust for the ITC, worth perhaps US$15-US$20 MWh and accelerated depreciation. These tax advantages make quite a difference to the price. Still a great deal, but not as good as the headline.

  • Sektong Chan

    Solar no good, high cost low yield & spoiling environment! 1 GW less than 1/2 Gwh yield. Fossil fuels about exhaust, pollution and high price. ( prices controlled by countries & peoples) Nuclear Energy been assume the best clean energy, But high cost high risks. After two big accidents are banned. https://en.wikipedia.org/wiki/Nuclear_power_plant Renewable Energy not well developed. High cost low yield unstable & even spoiled natural environment! https://www.ucsusa.org/clean-energy/renewable-energy/barriers-to-renewable-energy#.WyAYwUgvxpg We been invented Innovational breakthrough renewable power system project. Looking for Countries, Organizations & Energy Investors Review & Cooperation! Can fully supply cheapest renewable energy fuels for whole World & fixed all climate problems. Cost to build; About 100 million/unit=2.5 cents/watt. Occupy area; 3000 sq m/unit, environmental friendly. Almost can put everywhere. Production; After 2 year installation will continue producing 4 Gwh 24/365/unit actual. 35040 Gwh/year. (billion dollars value) Better than 4 Nuclear Power Plants (36bn) Zero emission. And better than 4 Gansu wind farm. https://en.wikipedia.org/wiki/Wind_farm Duration; 30-50 years less maintenance & without fuels. More unit can fully supply stable cheapest renewable electricity fuels for whole World. With our well design storage & distribution systems. Other functions; Support farms factories for food goods production, Reverse Climate Change, deserts areas, poverty for better living. Detail? Contact [email protected] Chicago. Once connected I will come to your place personal present explain all details and procedures. All at my own expense!

  • Sektong Chan

    BAD NEWS; South Pole Ice melt been forecasted faster than expected. All coastal cities and some island are in big trouble! Simply lead seawater into Salton Sea. Will fixed global warming flooding forest wildfire and fatal storms problems immediately. And further improving climate weather & ecological conditions of North America. Make canal share water from Missouri & Chicago River to desert are perfect http://www.en.netralnews.com/news/international/read/21834/sea.level.rises.due.to.melting.of.south.pole.ice https://en.wikipedia.org/wiki/Salton_Sea