Dive Brief:

• Austin Energy is being offered to buy solar power from developers at record low prices, leading the utility to ask its oversight arm to slow the acceptance of bid in hopes that waiting a little longer or developing the solar itself can get it an even better deal, the Austin Monitor reports.
• Response to the utility's request for 600 MW of solar has yeilded a string of declining bids. The most recent bid of under $40 per MWh (less than $0.04 per kWh) was 20% lower than 2014’s $0.045 per kWh Recurrent Energy contract price for a 150 MW solar project due online this year. It was only 25% of 2008’s $160 per MWh ($0.16 per kWh) bid for the 30 MW Webberville array.
• Leaders at Austin Energy asked its regulatory Utility Oversight Committee, made up of the Austin City Council, to slow acceptance of bids on its recent request for proposals (RFP) for 600 MW of solar. The RFP is considered a major part of meeting the 55% renewables mandate in the Austin Energy Resource, Generation and Climate Protection Plan to 2025.

Dive Insight:

Utility leaders say the risk of buying solar too high can be mitigated by slowing the march toward the 600 MW target by completing contracts for only 200 MW at present. They also suggest the Committee allow the utility to develop the other 400 MW rather than contract for them.

A power purchase agreement with a developer fixes the utility’s price is fixed for 20 or 25 years, typically the productive life of the solar modules in the array. But Austin Energy buys and sells power at market prices from the state grid operated by the Electric Reliability Council of Texas (ERCOT). Average electricity prices are low in Texas because of its abundant natural gas and wind resources.

A member of the Oversight Committee suggested signing contracts and getting solar projects online in time to qualify for the 30% federal investment tax credit (ITC) before it drops to 10% on January 1, 2017. Utility leaders responded that “prices for 2017-2020 are lower still if the ITC is extended at 30 percent and only moderately higher if not.”