Arizona delivers solar at half price of existing coal generation

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Arizona is hot for the sun – this is without any doubts. The state has built beauty in the desert, residential customers are powering up, the solar advocates are taking the seats of power, regulators are fighting back and the grid is evolving – even while the governor fights the inevitable, utilities settle Supreme Court bound lawsuits, the politicians quibble and the FBI watches.

The latest hot trend? Replacing coal plants with solar.

On June 7, another step was taken as the governing body for the Central Arizona Project, a massive water diversion project that is the largest electricity user in the state, approved a 20-year power purchase agreement with the 30 MW AZ Solar 1 project at 2.49¢/kWh(PDF). The agreement was noted by Arizona regulators as being part of the expected shutdown of the Navajo Generating Station, one of the nation’s largest running coal power plants. The contract starts on December 31, 2020.

Significant contention surrounds shutting down the plant as the Navajo tribe gains significant financial gain from hosting the plant, and the jobs that come from running the site.

Emma Foehringer Merchant, writing for Greentech Media, reported that the solar plant plus other 5-year energy contracts will offset only 14% of the coal facility’s production capability. However, the coal plant is delivering said power at US$5¢/kWh, twice the per-unit cost of the new solar project.

GTM also notes that an Austin deal might have a price as low as US$2.1¢/kWh, but those numbers aren’t official as the contract isn’t publicly disclosed.

The 30 MW plant is under development by Origis Energy USA, which will also own the plant. AZ Solar 1 is contracted to deliver an estimated 85,300 MWh. This would denote an AC capacity factor of 32%, and a DC capacity factor ranging of anywhere from 19-27% with DC:AC ratios of 1.7 and 1.2, respectively.

While the module vendor for this plant is unclear, Origis has built plants in the past using both First Solar and standard 72-cell crystalline silicon modules, along with both fixed-mount and single axis tracker configurations.

Xcel Energy of Colorado recently proposed replacing a of a bit of coal in Pueblo for some serious solar+storage volume at amazing prices as well. The solar power bids ranged from US$2.3-2.7¢/kWh, while solar plus storage ranged from US$3.0-3.2¢/kWh. While it makes for an imperfect comparison as solar project costs vary, the solar vs solar+storage delta is US$0.5-0.8¢/kWh.

Hot trend of the season, indeed.