Austin Energy solar PPA could be lowest-priced in US, analysts say
- Austin City Council has approved a new solar power purchase agreement that will bring to the city's renewable energy use to 51% in a deal that analysts say could be the cheapest of its kind in the country.
- The agreement allows Austin Energy to purchase 150 MW from Intersect Power at an estimated $10 million to $12 million per year, for 15 years.
- According to GTM Research, that could be the cheapest solar power purchase agreement ever arranged in the United States, with prices potentially as low as $21/MWh
Austin now has about 800 MW of solar capacity and utility officials say the new solar deal will bring its renewable energy mix to more than 50% by 2020.
But it's the estimated cost of the city's new solar deal that attracted attention of analysts. GTM Research's Colin Smith told its media outlet that "back of the envelope" calculations put the price between $23.50 and $27.25/MWh, and potentially as low as $21/MWh.
The deal is particularly significant given uncertainty in the solar sector over potential tariffs from a pending trade case.
The U.S. International Trade Commission concluded that domestic solar manufacturers have been harmed by unfair international competition, sending a decision over potential trade duties to the White House. President Trump will decide next month whether to impose tariffs — potentially as high as 35% — or other trade protections.
The decision is already having an impact. GTM Research and the Solar Energy Industries Association issued a report finding 2,031 MW of PV was installed in the third quarter — a 51% drop year-over-year.
Austin Energy has a goal of achieving 65% renewable energy use by 2027. As a part of that renewable goal, the city says installed solar capacity must increase to at least 950 MWs by 2025.
Currently, the utility produces enough renewable power to meet 40% of its 475,000 customers’ power needs.
“This purchase power agreement not only gets us closer to achieving the city’s renewable energy goals, but it’s also a good deal for our customers,” Austin Energy General Manager Jackie Sargent said in a statement.
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