“We expect to see prices out in the future that are possibly below $20 a megawatt-hour.”
A lot more cheap solar is coming for Austin, Texas. The city's utility, Austin Energy, just released new data on
developer bids for PV projects as part of a 600-megawatt procurement.
The numbers show how far solar prices have come down over the last year
-- and will continue to drop. According to Khalil Shalabi, Austin
Energy's vice president of resource planning, the utility received
offers for 7,976 megawatts of projects after issuing a request for bids
in April.
Out of those bids, 1,295 megawatts of projects were priced
below 4 cents per kilowatt-hour. "The technology is getting better
and the prices are decreasing with time," said Shalabi during a
presentation in front of the Austin city council last week. Shalabi displayed the chart below showing an "exponentially declining curve" for PV projects in Texas. "If
you continue the curve, you can see that if the cost points continue
along this sort of exponentially declining curve. We expect to see
prices out in the future that are possibly below $20 a megawatt-hour,"
he said.
Source: Austin Energy
As part of a resource plan approved
by city officials in 2014, Austin Energy must procure 55 percent of its
electricity from renewable resources by 2025. The utility plans to
build 600 megawatts of utility-scale solar projects in the next few
years in order to meet the target.
In March of last year, Recurrent Energy signed a 25-year deal
with Austin Energy to deliver electricity from a 150-megawatt solar
plant for just under 5 cents per kilowatt-hour. It was a landmark
contract. But today, more than a thousand megawatts of projects are
coming in for 20 percent cheaper.
"These bids are without question
the cheapest bids ever seen in a utility solar solicitation," said Cory
Honeyman, a senior analyst with GTM Research. This price trend is
a mixed blessing for developers and the utility. It shows that Austin
Energy will be able to meet its 600-megawatt target with competitive PV
resources. But Shalabi also said the company has "a little bit of
buyer's remorse" when bids came down 20 percent after signing the
150-megawatt contract with Recurrent.
Yes, solar prices are coming down so quickly that a 5-cent contract can induce buyer's remorse. This
could cause delays for developers if Austin Energy cuts its procurement
in 2015 in the hopes that solar prices keep dropping. According
to Austin Energy's projections, contract prices will likely rise for 18
months if the federal Investment Tax Credit (ITC) expires at the end of
2016. But then prices will drop back down to today's levels -- or lower.
With that scenario in mind, the utility may only sign one-third of
expected contracts as it plans through 2020.
"The prices of
equipment and installations are going down so fast that if you were to
issue another RFP post-2016, you would wipe out that difference, which
is very, very small -- in the order of single digits," said Shalabi. "In
other words, the ITC is not a driver for us making a decision today. We
don’t have to gobble up all 600 megawatts because of the ITC." Nationwide,
an ITC expiration is expected to slow utility-scale project development
for at least a year. According to GTM Research, large installations
will drop from 7.2 gigawatts in 2016 to around 1 gigawatt in 2017.
http://www.theenergycollective.com/stephenlacey/2245543/cheapest-solar-ever-austin-energy-gets-12-gigawatts-solar-bids-less-4-cents