Dive Brief:

• The Alabama Public Service Commission (PSC) approved a proposal from Southern Company subsidiary Alabama Power, the state’s dominant electricity provider, to procure up to 500 MW of renewable energy from 80 MW or smaller facilities. The utility’s proposal cited both a need for renewables to meet Clean Power Plan emissions reductions requirements and customer demand.
• The utility’s request for proposals (RFP) requires renewables projects to be priced below what it would expect to pay for other generation sources, unless the off-taker agrees to pay the difference. 
• This decision is being recognized as a significant inflection point in the attitudes of utilities, their industrial customers, and regulators across the Southeast. It is also a recognition that solar and other renewable resources may be able to compete on cost with the region’s traditional fossil and nuclear generation.

Dive Insight:

Alabama Power's customers are clamoring for renewables, but it also wants to ensure it doesn't pay too much for them.

Under its RFP, approved this week by state regulators, the estimated cost of a renewables project must come in below estimates of what the utility would pay over the lifetime of other generation sources — such as natural gas plants. If not, the off-taker must pay the difference between the lifetime avoided cost and the power purchase agreement price.  

While the RFP is considered a possible inflection point for renewables in the Southeast, Southern Company's utilities have already made significant investments in clean energy elsewhere. 

Alabama Power is currently getting 404 MW of wind power from two Oklahoma wind projects through PPAs signed and approved by regulators in 2012.

Southern Power, Southern Company’s unregulated subsidiary, acquired Oklahoma’s 130 turbine, 299 MW Kay Wind facility earlier this year, bringing its renewables capacity and pipeline to 970 MW, including seven solar projects in partnership with Turner Renewable Energy and one solar project in partnership with First Solar.

Southern Company subsidiary Gulf Power recently purchased 180 MW from Oklahoma’s Kingfisher Wind project and has proposed 120 MW of solar development in partnership with the Air Force and Navy.

Southern Company subsidiary Georgia Power has a 20 year PPA signed in 2013 for 250 MW from Oklahoma’s Blue Canyon II and Blue Canyon VI wind projects, to be delivered beginning in 2016 and recently announced it would enter the rooftop solar business through an unregulated subsidiary.