More power from the sun

Oct 13 - McClatchy-Tribune Content Agency, LLC - Kevin Robinson-Avila Albuquerque Journal, N.M.

 

By the end of 2016, New Mexico will be producing another 165 megawatts of solar electricity from three large-scale generating facilities scheduled to come online near Roswell and Deming.

Southwest Public Service Co., a subsidiary of Xcel Energy that serves about 385,000 customers in Eastern New Mexico and West Texas, signed a long-term power purchase agreement with Florida-based NextEra Energy Resources to build and operate two 70 MW solar facilities near Roswell that, once operational in 2017, will be the largest such solar photovoltaic facilities in the state.

Tri-State Generation and Transmission Association, a wholesale power supplier for 44 electric cooperatives in New Mexico and three other states, also announced a deal, with D.E. Shaw Renewable Investments LLC and Denver-based TurningPoint Energy for a 25 MW solar facility in Luna County, about 25 miles northeast of Deming.

The projects -- particularly the SPS facilities near Roswell -- are drawing broad attention in the renewable energy industry because of the low-cost electricity they will provide. SPS will pay about 3.5 cents per kilowatt hour starting in 2017 for the 140 MW of electricity supplied by the NextEra Energy facilities -- one of the cheapest power purchase agreements in the nation to date for utility-scale solar energy.

"It's among the best solar deals recently signed in the nation," said Xcel spokesman Wes Reeves. "It's a good deal for our customers."

At 3.5 cents per kwh, the Roswell facilities will supply electricity at cheaper rates than some of Excel's older natural-gas generating plants, he said.

Tri-State Transmission won't say what it will pay for electricity from the Luna County facility, but spokesman Drew Kramer said the price is "very competitive" with other power sources. "We never disclose the financial terms, but it's very cost-effective," he said. "The costs in this case are quite economical for our customers."

Costs for solar-generated electricity have been rapidly declining in recent years, spurring accelerated development of solar facilities nationwide. That's making state mandates for utilities to add renewables to the grid less important than the cost-benefits of building solar and wind facilities.

SPS, for example, is already on track to meet New Mexico's mandate to derive 15 percent of its electricity from renewables this year. Its new solar facilities are being added because they're cost-competitive, not because of government mandates, Reeves said.

"The way the economics are changing, we're often looking to add renewables now because of the economic value and the diversified mix of energy it provides for our system," he said.

That could change if current federal and state tax incentives are allowed to expire at the end of 2016 as planned. But with the incentives still in place, solar generation is reaching the economies of scale needed to spur more development, said Chuck Noble, chief attorney for New Mexico's Coalition for Clean Affordable Energy. "More deals are now being announced in many places across the country that are even lower than the SPS contract," Nobel said. "It's shows solar is truly becoming cost-effective."

 

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