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Texas Solar Power May Have its Day in the Sun

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Austin Energy's solar farm in Webberville
Solar Austin
Austin Energy's solar farm in Webberville

One of the most inexorable and (buzzword coming…) disruptive trends in the energy world has, for some time, been the precipitous decline in the cost of solar. Like other renewable energy technologies, solar power has obvious environmental and climate benefits but hasn’t necessarily been competitive, in strict market terms, with fossil fuels. That’s changing very rapidly—even in Texas.

Two recently announced solar projects in West Texas show how solar is becoming more than just a niche source of energy.

First, there’s Austin Energy’s brewing deal with SunEdison for a 150-megawatt solar project in West Texas. The size of the project is significant. It’s enough to power 14,000 homes and represents the second-largest solar project in Texas, following a 400 MW installation commissioned by CPS Energy, San Antonio’s city-owned utility. But the more salient fact is the price. Although the exact figure has not been released, it’s somewhere around 5 cents per kilowatt-hour—perhaps the cheapest price in the U.S. ever. A nickel per kilowatt-hour is impressively low.

For comparison’s sake, Austin Energy’s 30-megawatt solar farm just east of Austin in Webberville priced in at 16.5 cents per kilowatt-hour. That was just a few years ago. The typical residential customer in Austin currently pays about 10-11 cents per kilowatt-hour and it’s thought that the SunEdison project will slightly lower electricity rates for Austinites. Finally, and perhaps most important, the solar project is cheaper than building a new natural gas plant, when considering the costs of each over the life of the facilities.

Austin Energy received “a substantial number of bids” totaling 1 gigawatt all under 5.5 cents per kilowatt hour, said Michael Osborne, one of the gurus of the renewable energy industry in Texas and, until recently, a special assistant at Austin Energy.

“If you can aggressively price solar below [5 cents per kilowatt-hour] that is going to be a revolution,” Osborne said at a recent Solar Austin gathering. “Solar at that price is going to beat natural gas anytime.”

Osborne attributes cheap solar prices, in part, to the maturation of the market. “Solar is the new wind,” he says. Texas, of course, is a global leader in wind power but in the early years the Texas wind industry was buffeted by engineering problems, timid investors and questions about how to fit wind—with its fickle nature—into the grid. Similarly, solar developers now enjoy more sophisticated financing options, cheaper construction costs and just the general benefits of experience. “The same thing happened in the wind business: It’s a sign of the market maturing.”

The other first-of-its-kind project to be announced this year is FirstSolar’s Barilla Solar Project, a 22-MW array in Pecos County. To date, virtually all of the solar deals in Texas have been driven by the renewable energy goals of city-owned utilities. FirstSolar’s Barilla project is different; it’s a “merchant” plant that will have to compete in the open market. The developer will build the plant without a firm deal in place and then try to sell the power to an array of customers.

“The merchant plant is a really big deal,” said Stan Pipkin, CEO of Austin-based Lighthouse Solar. “It’s price-based and market-based.”

Osborne projects that 200 to 300 megawatts of merchant solar will be built in the next year or so.

Still, some in the renewable energy business think solar still has a ways to go to close the gap. In the utility world, the concept is “grid parity”—the almost-talismanic threshold at which a budding energy source can produce power equal to or cheaper than what’s coming off the grid.

Or, in layman’s terms, it’s when solar (or wind or geothermal, etc) officially kick coal, nuclear and natural gas’ ass.

Shalini Ramanathan, vice president for origination with RES Americas, points to wholesale prices in ERCOT, which hover around 3 cents per kilowatt-hour, a fair sight lower than the levelized cost (5 cents/kWh) for even the cheapest solar.

“My sense is that solar is getting closer than ever to grid parity but it’s not quite there yet,” she said.

But that gap is deceptively large. For one, notoriously volatile natural gas is the prime driver of wholesale electricity prices in ERCOT. If the fracking bonanza fizzles or natural gas exports overseas pushes the commodity price of natural gas higher, electricity prices will rise too. Renewables on the other hand provide price certainty decades into the future.

“Uncertainty in the ERCOT market could be part of the appeal of solar and wind,” Ramanathan said. “It’s so obvious that sometimes developers don’t pitch it this way: But once you build it, the fuel is free. It can provide a really good hedge against power prices from fossil sources increasing in the future.”

Wind power received a huge boost from Texas government when the Texas Legislature passed and Gov. George W. Bush (that hippie!) signed legislation establishing mandates for utilities to purchase green energy. No such concession has been made for solar in Texas, even though the resource offers the same environmental and economic benefits and is arguably the most obvious solution to the specter of brownouts on the ERCOT grid. The tea party’s anti-government grip has made public policy of this sort a non-starter. Still, if solar can assert itself in the market, the industry may have a sunny future in Texas.

  • richardguldi

    We don’t need any more fracking or any more tar sands pipelines.

    • Voodude

      Alberta oil and bitumen come by rail. Have you noticed the train accidents, lately? You need the pipeline.

      • Fred Fredrickson

        Leave the filthy tar sands junk in the ground. Invest in clean energy like wind and solar instead of tar sands crude that increases global warming more than conventional crude and has a three times higher pipeline rupture rate than conventional crude.
        Think about the fuel costs for electricity for solar and wind – it’s ZERO forever. The cost of electricity from wind energy is now on par with that from natural gas. Solar panel costs are dropping twenty to thirty percent every year, with major breakthroughs on the horizon. Storage batteries are coming.
        Goggle has a driverless electric car operating in San Francisco that gets the equivalent of over 700 miles per gallon of fossil fuel. In a few years, these cars will be all over the road, and everyone will want one.
        Let’s move away from the outdated, socially expensive dirty fuels that are the modern day equivalent of the tobacco industry scourge and into the future that is coming faster than you can imagine.

        • Voodude

          ” increases global warming more than conventional crude”
          … by how much? (state your sources)

        • Voodude

          “Goggle [Google] has a driverless electric car operating in San Francisco that gets the equivalent of over 700 miles per gallon of fossil fuel.” BS. State your sources on that one… I’ll bet the COMPUTERS burn the power of a 40MPG conventional car…

  • Doc Climate

    The tea party’s obsession with lower taxes is penny-wise and pound foolish. Tax payers have forked over more than $1 trillion ( NOAA Website) to pay for climate change 9 caused by fossil fuels, and that’s hardly started, but 50 more years of worsening climate change is now baked
    in the cake.

    • Voodude

      … and we haven’t done anything yet, but study “Climate Change”…

      • Fred Fredrickson

        Tax payers haven’t done anything useful because the fossil fuel backed puppets they elect don’t have any foresight. All they want to do is preserve their dirty industry that is as out-dated as an Edsel from the 1950s.

        • Guest

          Tax payers haven’t done anything useful because the fossil fuel backed puppets they elect don’t have any foresight. All they want to do is preserve their dirty industry that is as out-dated as an Edsel from the 1950s.

  • Chemechie

    It is great news that solar is coming down in price – but we still need natural gas/ coal/ nuclear/ something for at night or on cloudy days; we need a mature storage technology before solar and wind can truly replace anything else.

    • Voodude

      ” we still need natural gas/ coal/ nuclear/ something for at night or on cloudy days; we need a mature storage technology” Absolutely. There is no significant storage. Solar is neat, but is causing problems with grid management. This is obvious when you look at O’ahu, Hawaii. Super sunshine, so people put up solar panels. Solar panels on homes don’t seem to take up any space at all. What does a home owner do with solar electricity? Typically, the system is tied into the grid. That is the beginning of the biggest problem. Solar is even less dependable that the weather. Wind power really is the weather. I call the combination, weather power.

      Let me speak of the “grid” for a moment. The grid is the wires that interconnect the generators of electricity, with the users of electricity. At any point in time, at all points in time, the electrical generation of power must exactly match the power being consumed on the grid… no more, no less. From this viewpoint, grid storage is considered to be a load, like any other load, when it is storing energy, and a generating source, like any other source, when it is expending stored energy. Some contries have laws that essentially require that weather power must be used when it is produced. Some say wether power has a ‘priority access to the grid’, others say the laws require that the utility “must use” weather power. Curtailment of weather power production is just not done, apparently because the law requires it to be that way. Somehow, the variable nature of weather power must be dealt with, to keep the power grid stable and within specifications. Methods to deal with that are: Export & import, Storage, compensation by other electrical generation facilities, or, as a last resort, curtailment of weather power input to the grid. Oh, there is one solution that is a bit more extreme, but is growing ever more likely – shut it all off. That’s called a blackout.

      Hawai’i is a little microcosm of the larger world. Hawai’i is all alone out there in the Pacific Ocean… their electric grid is not tied in to anyone else’s grid. Hawai’i cannot import or export electricity. Hawai’i has no electricity-storage capability (speaking of the utility-level; some homeowners have batteries and stuff, that isn’t what I’m talking about). Sunshiny O’ahu-based Hawaiian Electric Company (HECO) has stopped allowing any more photovoltaic solar-equipped homes to connect to the grid, because it is unable to adjust its oil-fired generators adequately to compensate for solar and wind power variations. Weather power is produced with absolutely no regards to whether or not power is needed at the moment. Thousands of homes with solar panels on them, don’t have switches available for the grid operator to control, so curtailment of solar production by the grid operator is not an option. New options -which represent additional costs- protect the grid by diverting excess solar-electricity into modified, household hot-water heaters. Future plans call for HECO to waste additional money, which the rate-payers will have to shoulder, by placing the oil-fired burners into “early retirement” and replacing them with liquified natural gas burners, which are better able to compensate for the variations of power produced by weather-power.

      Scientific American: “HECO, in September [2013] told solar contractors on O’ahu that the island’s solar boom is creating problems. On many circuits, the utility said, there’s so much solar energy that it poses a threat to the system and a safety issue.”


      HECO’s government regulator has demanded that HECO accommodate more homeowners’ requests to tie in their solar panels to the grid. In a sign of desperation, HECO has put up a “wanted, dead or alive” poster; that is, a Request For Proposals, asking for anybody with an electrical energy storage system capable of 60 to 200 MW for up to 30 minutes.

      Honolulu Star Advertiser: “Such a [storage] system would help offset the volatility of solar and wind energy that can negatively affect the quality of power on HECO’s power distribution grid.

      WSJ: “Energy storage is one of the key missing elements in integrating high levels of renewable energy from variable sources like solar and wind,” said Colton Ching, Hawaiian Electric vice president for energy delivery.”

      • Guest

        All of that can be dealt with. People used to say that cars would never replace a dependable horse drawn carriage that required thousands of street cleaners working to minimize the smells.

        • Chemechie

          Can it be dealt with? Yes – at what cost and on what time scale? That is the catch!

        • Voodude

          A leap ahead of the state of the art, is generally into a can of worms.
          There is no grid storage well, nothing to speak of. Pumped hydro works, but none new have been built, and those that existed were fully booked (i.e. not available to buffer new wind power). When cars replaced horses, functional cars were readily available. Not so with the problems of wind and solar.

    • Fred Fredrickson

      Mature storage technologies are coming. Many California start-ups are working on them because they know this will be one of the most revolutionary industries of the not too distant future.

      • Chemechie

        Yes, there is progress being made – but it will be a long time before there is a commercially viable solution; look at how long it is taking wind and solar to be competitive on a utility scale – 40+ years is a long time!

      • Chemechie

        So far, the only viable utility scale storage is pumped Hydro, as practiced by utilities in several states, but it is opposed by environmentalists because it requires dams.