Clean Power

Published on March 13th, 2014 | by Zachary Shahan


Solar Less Than 5¢/kWh In Austin, Texas! (Cheaper Than Natural Gas, Coal, & Nuclear)

March 13th, 2014 by  

austin solar guitarHere’s a milestone to mark. Solar power is apparently going to be sold to Austin Energy for a tiny bit less than 5¢/kWh under a new 25-year power purchase agreement (PPA) with SunEdison. Austin Energy says the deal will even lower electric rates a bit.

It’s from no small project either. It’s from two solar power plants totaling 150-megawatts of capacity — a 350,000-panel, 100-megawatt facility; and a 150,000-panel, 50-megawatt facility nearby.

Oh, by the way, this wasn’t the only proposal Austin Energy received. It beat out about 30 other solar power proposals. Needless to say, competition is a brewin’ in Texas!

“Austin Energy is poised to sign what could be the world’s cheapest solar-power deal,” Marty Toohey of wrote.

“It’s the cheapest I’ve seen,” said Raj Prabhu, the CEO of Mercom Capital Group, an Austin-based energy consulting group that monitors the industry nationally. He said he isn’t familiar with the details but added, “This seems to be new territory.”

“It is certainly at the very low end of the prices I have seen,” said Jurgen Weiss, an energy economist with the Brattle Group, an international consulting firm that advises the Electric Reliability Council of Texas. “As many had predicted, we’re entering a time in which, with some caveats, solar presents quite an attractive alternative to conventional sources.”

Lowest price yet for solar?

I have a hard time believing that’s the lowest solar power has gone for anywhere in the world, but it may be the lowest in the US if you remove state subsidies from other projects.

We reported last February on a PPA in New Mexico in which First Solar was selling electricity for 5.8¢/kWh. That’s the lowest I think I have seen. However, GTM Solar Analyst Cory Honeyman says that “new PPAs signed in North Carolina fetched prices for less than 7 cents per kilowatt-hour.” The notable difference in the New Mexico and North Carolina projects, as implied above — they took advantage of in-state subsidies for solar. That’s not the story with this Texas deal.

SunEdison project beat natural gas, coal, and nuclear on price

If you removed the ITC (a federal tax credit for solar), the cost would probably be about 8¢/kWh. Still, that’s not bad. Austin Energy’s 30-year LCOE estimate for natural gas was 7¢/kWh, while the estimate for coal clocked in at 10¢/kWh and the estimate for nuclear at 13¢/kWh.

Only wind — 2.8¢/kWh to 3.8¢/kWh — was lower.

Things change fast

I remember watching a utility company CEO roundtable a few years ago that featured solar leaders in the utility arena. Larry Weis, General Manager of Austin Energy, was on that panel. So, he was considered a good guy in the solar space. However, he was adamant a number of times that solar was expensive and the cost had to come down for solar to become competitive.

In 2009, Austin Energy actually agreed to contract for 16.5¢/kWh for power from a solar project in the Webberville, TX.

Clearly, things have changed fast. (Of course, anyone who reads CleanTechnica already knows that.) Still, I think it’s hard even for those in the industry to keep up with solar prices.

Here’s another big note regarding this new PPA: the original Request for Proposals for this Austin Energy contract was for 50 MW. Why would Austin Energy up that to 150 MW after getting the bids? I think you know why.

Don’t forget, this is peak power!

One final thing worth pointing out: solar power produces electricity at peak demand. That is very high-value electricity. The fact that bids are coming in below 5¢/kWh is huge.

“At this price, it’s a game changer, not just for Austin Energy but for the future of electric generation in Texas,” said Tom “Smitty” Smith, head of the Texas chapter of Public Citizen, an environmental watchdog group. “No state has more solar potential than Texas. Some states have places of more intense sunlight, but Texas has vast areas of dry, arid desert that are perfect for solar.”

Beating Targets — Big Time!

I lied. Here’s one more note: the US Department of Energy projected that the cost of solar would drop below 6¢/kWh before 2020.

Also, note that the deal is not final. It goes up for an Austin City Council vote on March 20. However, it looks like an obvious shoe-in.

For more information, check out our section on solar energy and subscribe to our solar energy newsletter or our main cleantech newsletter.

Image Credit: “Vibrancy” by Craig Hein, one of the Guitar town Austin art project Guitars on Congress Ave. as seen during the Formula One Fan Fest November 18, 2012. via Tricia Daniel /

Check out our new 93-page EV report, based on over 2,000 surveys collected from EV drivers in 49 of 50 US states, 26 European countries, and 9 Canadian provinces.

Tags: , , , , , , ,

About the Author

is tryin' to help society help itself (and other species) with the power of the typed word. He spends most of his time here on CleanTechnica as its director and chief editor, but he's also the president of Important Media and the director/founder of EV Obsession, Solar Love, and Bikocity. Zach is recognized globally as a solar energy, electric car, and energy storage expert. Zach has long-term investments in TSLA, FSLR, SPWR, SEDG, & ABB — after years of covering solar and EVs, he simply has a lot of faith in these particular companies and feels like they are good cleantech companies to invest in.

  • Russ Franey

    500,0000 panels covering who knows how much property for 150 megawatts if the sun is cooperating? And using our tax dollars to do it. Austins demand is approaching 70,000 megawatts and will increase by more than 150 megawatts in the time it takes them to install the panels. Wake up people, solar and wind are more than likely promoted by coal and oil companies to keep people distracted from any serious threat to their bottom line. If you want to get off fossil fuel the only safe viable option I have found is LFTR and if you haven’t at least watched 1 of KIrk Sorensen’s videos you ought to. If you want to change the world, you got to get your head out of the clouds and get down to business.

    • Bob_Wallace

      Oh, Russ get on your nuclear unicorn and ride out of here with your misinformation campaign.

      • Russ Franey

        What do you dispute about the figures? All facts mentioned are easily checked.

        • Bob_Wallace

          You brought no numbers, Russ.

          How many thorium reactors are in operation in the world today?

          What is the cost of their electricity?

          • Russ Franey

            I believe that was the point. everybody’s out chasing butterflies instead of using their time and energy somewhere that it could do some good. If the time and money that has been spent on solar and wind was spent on LFTR tech instead we could have been carbon neutral by now headed towards carbon negative. Don’t get me wrong, I like the warm fuzzy feeling solar and wind give me. But if the pundits are right about co2 and fossil fuels I would hate to know the world went to hell in a handbasket while I was smelling the flowers. Because there is no way solar or wind are ever going to make a serious contribution to our power needs.

          • Bob_Wallace

            OK, so you realize that there are no working thorium reactors. And claims that they would work and that they would produce affordable is purely speculation.

            We’ve pumped millions into thorium reactor research and we’ll spend more trying to figure out if they will work.

            In the meantime, warm, fuzzy wind and solar are producing very affordable electricity and being installed around the world hand over fist.

            I’m sure you can find a forum that loves to talk about LFTRs. This one does not. (Can you take a hint?)

          • Russ Franey

            They built a working thorium reactor in 1960 and that was the end of it. You couldn’t produce weapons grade plutonium with one like you could a light water reactor so they took it no further. You can’t install wind and solar fast enough to make a difference and its not affordable its subsidized.

          • Bob_Wallace

            Yes, they did. It was not financially competitive, which was part of the reason it was closed. They also built one in Germany that almost melted down on them.

            Now, since you don’t seem to be able to take a hint, I’ll spell it out for you.

            I you wish to discuss cleantech you are welcome to stay around.

            If you wish to discuss thorium reactors and similar stuff find another place.

            If you can’t follow house rules you will be shown to the door.

          • Russ Franey

            The one in Germany was a light water reactor not LFTR. LFTR is clean tech. You really have no idea what you are talking about do you? The reactor built in 1960 was proof of concept- where do you get “financially competitive”? You are responding so apparently you do want to talk about it.

  • jsong123

    Any estimates of transmission costs? The location of the solar projects is secret, but my guess is that they are located near Toyah, Pecos and Saragosa, and all Austin customers will see $2 per month added to their monthly bills for transmission of wind and solar from this area.

    • Bob_Wallace

      ” (J)ust-released Department of Energy data shows that consumers in the states that use the most wind energy have fared much better than consumers in states that use less wind energy. Consumers in the top wind energy-producing states have seen their electricity prices actually decrease by 0.37 percent over the last 5 years, while all other states have seen their electricity prices increase by 7.79 percent over that time period.”

      Texas is one of those states.

      It looks like the $2 you are paying for transmission is more than offset by the price increases wind prevented.

  • Will E

    What is the calculation to get to 5 cents a Kwh?
    Is the production time 20 years? 30 years?
    maybe Solar can produce 40 years or 50 years?
    then the price will even go down in future?
    clean and easy. good news

    • JamesWimberley

      The PPA contract is for 25 years, so the LCOE presumably uses that life. The way discounting works, it doesn’t make much difference whether you use 25 or 30 or 40 years. So investors typically use conservative estimates of asset life. The market price in 25 years will be determined by the cost of *new* capacity at that point. Old, paid-for plants will sell at any market rate above maintenance costs.

      • Bob_Wallace

        And since paid off solar and wind farms will be able to profitably sell their power for a bit more than operating costs they will be able pull down market prices.

        Perhaps the efficiency of solar panels will have risen enough and the cost per watt dropped enough to justify removing 25, 30 year old panels and replacing them with new panels.

        • Matt

          30 years is a long time to guess where the techno will be. For wind if we look at turbines install in 1983, are they being replaced today? For sure todays are bigger and more efficient, but enough to take down the old ones that are still working?

          • Bob_Wallace

            The turbines at Altamont Pass wind farm are currently being replaced. The farm was commissioned in 1981.

            What I’ve read is that these turbines are about 30 years old and maintenance costs were starting to rise.

            Add in to that the problems of bird kills at Altamont and, apparently, the decision was to replace them with much taller turbines mounted on monopods.
            With today’s more advanced technology, including all sorts of sensors that should alert maintenance staff, I would expect turbine life to be more like 40 years.

            Of course, once the initial set of turbines is worn out, a farm can be refurbished for less money than the original build. The land will be secured, access roads in place, transmission installed, etc.

  • Robo

    I see elsewhere that this is described as a $525mm/$21mm per year contract. Are there some capacity payments here, too? If it’s all energy, $21mm worth of $50/Mwh energy means 420,000 MWh per year. That’s ridiculous output for a 150MW facility…

  • Ross

    Good haul of articles on cleantechnica today. More or less wall to wall good news.

  • Brian Setzler

    That’s impressive! But the one thing I want to know is whether the PPA is the only source of revenue, or if SunEdison gets to sell renewable credits or something similar on top of the $0.05 / kWh. Does anyone know the answer?

  • Ronald Brakels

    Eight cents a kilowatt-hour! I’m used to telling Americans that there is no reason why they can’t do what Australia has done and rapidly bring down the cost of rooftop solar, but I guess now I’ll have to start telliing Australians that there’s no reason why we can’t do what America has done and bring down the cost of utility solar. Now I really hope we don’t have to wait for 4 cent a kilowatt-hour solar to kill coal use in Australia, but at least it’s good to know we’re getting closer to it all the time.

    • Matt

      Aussy/Germany have done a great job on bring down the cost for roof top solar (two at-a-boys each). USA is more a company town, so it utility solar that goes here. I still dream of the day that towns in the USA pick up the zoning rules for roof top from Aussy. And the wait to install goes from 3-6 months to as soon as you can move to the top of the installer queue.

    • Bob_Wallace

      How are you guys doing with wind? We’re under 6 cents unsubsidized.

      • Ronald Brakels

        Well, at a 5% discount rate the Snowtown II wind farm which is currently under construction here in South Australia and which may already be supplying some power, should produce electricity at about 4 US cents a kilowatt-hour at today’s exchange rates. The large proposed Ceres wind farm will be a little more expensive due to the need to build new transmission capacity, but not much. Of course, if the Coal-lition wins the state election today they may find some way to block that one despite rising natural gas prices and the fact that South Australia has next to no coal. They are very principled in their commitment to harming Australia and the world.

        And this reminds me, I need to vote. Which means I have to walk almost 100 meters and last time I had to wait almost 5 minutes! Can you imagine being made to wait to vote? Sometimes I don’t know what this country is coming to.

        • A Real Libertarian

          “And this reminds me, I need to vote.”

          Go man! Go!

          • Ronald Brakels

            Done! I voted so hard for a better future combustion now runs in reverse and if you start a fire in a field it will suck CO2 out of the atmosphere and create a Permian swamp.

          • Bob_Wallace

            With the way things are going you should head back and vote a few more times.

          • Ronald Brakels

            Don’t say that. Some pollies here want to introduce anti voter fraud measures to solve an almost non-existent problem which just by shear coincidence could also happen to reduce voter turn out among the lower socioeconomic classes. They are blowing the problem so far out of proportion your comment would probably count as a major data point.

          • Bob_Wallace

            They probably got that idea from our right wing jerks who have been trying all sorts of stuff from keeping others from voting.

          • Ronald Brakels

            Basically a lot of crud that happens in Australian politics is just what American ratbags have done on replay. I’d feel a little bit better about our own ratbags if they were at least original.

          • Matt

            Got that going for us too.

          • wattleberry

            That should be ‘sheer’. Cheers.

          • Ronald Brakels

            Ah yes, I am clearly suffering from Australian sheep on the brain syndrome.

  • Doug Cutler

    I think most readers would know Austin is a super cool music town. As a fellow musician, I like to believe its not necessarily a coincidence they would double down on solar. That’s all I was thinking . . .

    • Matt

      Don’t forget a couple years back they won the #1 sweaty City in the USA. Not hottest that is Phoenix, Arizona. I was looking at a job there, but my wife is a northern flower. She was trying to convince herself she could live there, when the radio plays one of those #10 list. And if you want sweaty in the US, Austin is your town.
      Ok this is a joke, it did happen but it is not a throw down to Austin fans.

      • Doug Cutler

        If the sweat is a result of dancing to all that live music I’m all for it.

  • Jim Seko

    The tipping point for solar energy has arrived.

  • Doug Cutler

    Hey Zachary, that last comment was meant as positive irony. You know . . . Austin City Limits . . . SXSW festival . . . Or did it not get through?

    • Yeah. 😀 Actually, I originally had a sidewalk guitar pic in there. going to put in again since that pic is not of Austin 😛

  • Doug Cutler

    This is what happens in a town that plays too much music.

  • Big G

    The picture is of Houston, not Austin.

    • Otis11

      (Agreed – update the picture! That’s Houston’s Skyline)

    • Damn, wth, searched Austin in Shutterstock. Switching…

Back to Top ↑