SCE Buys 20 Years of Solar Power for Less than Natural Gas

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A milestone in solar pricing has been met in California this month, according to Vote Solar.

Southern California Edison has selected 250 MW worth of solar bids from companies able to produce solar electricity for 20 years for less money annually than the 20 year levelized cost of energy of a combined-cycle natural gas turbine power plant.

SCE’s bidding process for smaller renewable projects is smart. These small projects do not face the multi-year bureaucratic delays for extensive reviews, like most utility-scale solar, so each small unit can be built as quickly as normal commercial rooftop solar projects. They are made up of multiple distributed solar installations of under 20 MW, which in combination total a power plant-sized 250 MW.

The utility already gets more than 19% of its electricity from renewable sources, placing it in the lead between California’s three big utilities to reach the Renewable Energy Standard requirement to get 20% of its electricity from renewables (which excludes large hydro and nuclear) by 2013.

This year SCE had put out a request for bids to get 250 MW of just solar power, made up of multiple smaller rooftop arrays. Fremont-based Solyndra was one of the early bidders to be accepted. Solyndra will supply 20 years of power, with its unique cylindrical solar panels, to be installed by its subsidiary, Photon Solar.

With a bidding process, SCE can save money by making renewable energy companies compete to offer the lowest price for supplying the utility some of its electricity through its Renewable Standard Contract

The requirement is that the renewable energy has to be priced to cost no more than the Market Price Referent (MPR) – which is an annual calculation of the 20 year levelized cost of energy of a combined cycle gas turbine.

This year, the solar bids are below the MPR, meaning that they cost less than the annual cost of getting the same amount of electricity from natural gas over the same time period.

Even more interesting, SCE says that they received over 2.5 GW – 2,500 MW – of offers from solar companies eager and apparently able to supply solar power for less than the cost of gas.  I was not able to locate that price in their detailed filing with the California Public Utilites Comission (PDF), a hefty tome. but the MPR for 2010 appears to be in the 11 cent range.

According to Adam Browning at Vote Solar, “prices are kept confidential for something like 3 years. All we know is whether it is above or below MPR—and the advice letter says it is below”.

Susan Kraemer@Twitter

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