Dive Brief:

• The Tennessee Valley Authority (TVA) Board has authorized a 20-year power purchase agreement (PPA) with NextEra Energy for 80 megawatts of solar, the AP reports. TVA currently has 128 MW of solar, but this is the first installation of over 20 megawatts.
• The Board approved the most competitive pricing for solar it was offered. TVA will pay about $61 per MWh, comparable to the $59 per MWh it expects to pay for electricity from Mississippi’s Quantum Choctaw natural gas power plant, which TVA will buy for $340 million.
• The installation will be built near TVA’s Colbert Fossil Plant in Northern Alabama, which will be shuttered in 2016, making room on adjacent existing transmission for the solar generation.

Dive Insight:

One TVA Board member asked why the PPA was for 20 years if solar installations are expected to operate for 35 years or more. The answer is that solar module efficiency degrades over time and the lost output erodes the value proposition. After 20 years, the contract can be renewed if it is not more cost-effective to upgrade to new technology.

This deal follows a Florida proposal by Gulf Power, a subsidiary of Southern Company, to build a 30 MW solar installation for Eglin Air Force Base, a 40 MW installation for Holley Field, and a 50 MW installation for Saufley Field, in conjunction with the Air Force and Navy.

It also follows deals from Gulf Power and Southern Company subsidiaries Georgia Power and Alabama Power for Oklahoma wind power.

All these commitments suggest a significant inflection point for Southern Company and TVA, which have traditionally been staunch utility advocates for conventional generation.