El Paso Electric’s (EPE) agreement with Hecate Solar is not only a good deal, it may be record-setting.
In a November 18, 2019 filing with the New Mexico Public Regulation Commission (NMPRC), EPE applied for the approval of three Purchase Power Agreements (PPA), which are long-term contracts for the purchase of electricity.
The December 19 El Paso Herald-Post article entitled “El Paso Electric plans to add Utility-Scale Battery Storage, 100s of MWs of Solar Energy by 2023,” the capacity additions are highlighted but not the terms of the agreements.
The PPA with Hecate Energy is for 100 MW of capacity from a solar facility located in Santa Teresa, New Mexico. The contracted price is $14.99 per Megawatt-hour (MWh) for 20 years. Hecate Energy will finance, plan, construct, and operate the solar farm.
At 1.5 cents per kilowatt-hour (kWh), the rate is possibly lower than any solar PPA in the US.
Greentech Media reported in July 2019 that a Los Angeles Department of Water and Power (LADWP) 400 MW project with 8minute Solar Energy achieved a PPA price of $19.97 per MWh, or 2 cents per kWh, which at that point was the record low US price.
For comparison, the average residential electricity price in the US is 12 cents per kilowatt-hour and the EPE summer price for Texas customers is 9.8 cents per kWh.
The low price of solar power in sunny West Texas and Southern New Mexico represents substantial future savings to its residents.
Contrast the cost-saving Hecate renewable energy project to EPE’s plan to self-build an additional natural gas plant its Newman facility. This carbon-emitting fossil fuel plant will cost ratepayers $157M in upfront costs.
In its November 22, 2019 application for the Newman plant addition with the Public Utilities Commission of Texas (PUCT), EPE does not provide an electricity generation price for comparison, fuel price forecasts, or operations and maintenance estimates due to their proprietary nature.
These costs will increase electricity rates for EPE customers according to testimony in the filing by EPE representatives.
Energy consulting firm Lazard, whose yearly price report comparing electricity generation methods is considered authoritative by energy analysts, reports an average price for natural gas peaker facilities at $150-199 per MWh, or 15-20 cents per kWh. This includes assumptions for financing, construction, fuel, and operation costs.
Solar prices have decreased drastically in the last decade and continue to move lower. This trend coupled with the immense solar resource in West Texas and Southern New Mexico has resulted in record low prices. Natural gas facilities have a useful life of 45-60 years and risk being stranded assets as the cost of solar continues to drop.
EPE does not need additional gas capacity and should replace its retiring power plants with solar.
Former El Paso resident now living in Austin, Brown is a graduate of University of Texas at Austin with an MA in Energy & Earth Resources from the Jackson School of Geosciences and a Master of Global Policy Studies from the LBJ School of Public Affairs.
Brown also worked as a researcher/consultant for the UN Economic Commission for Europe Sustainable Energy Division and the EU Energy Community
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