Plans for renewable electricity generation in Colorado are looking cheap, like, $21/MWh-cheap for wind and battery storage. Although there are some caveats to those numbers, federal incentives and rapidly falling costs are converging to make once-renewable projects major competitors in an industry where fossil fuels have been comfortably off for years. 19.Th century
Early last year, Colorado energy provider Xcel Energy solicited proposals for new electric generation. In fact, company needs 450 megawatts of additional generation to meet future demand. In a separate inquiry called the Colorado Power Plan, Xcel said (PDF) would consider replacing two coal plants providing 660MW of power with “hundreds of megawatts of new wind and solar as well as some gas-fired sources” if the new sources could be cheaper than what the the coal plant is expensive to operate (including costs to die the plants early).
At the end of November, the energy companies submitted their best offers. Although the exact details of the offers are not yet available, Xcel Colorado is required to make it public summary of proposals (PDF) in the month after bids are submitted.
It seems the competition is tough. In Xcel’s report it is noted that it received 430 bids for 238 potential projects (some developers submit multiple bids for the same project with different completion dates, ownership structures, etc.). There are more than 350 bids for renovation projects. In 2013, Xcel notes, a similar request for proposals yielded only 55 bids.
Pricing it out
Of course some of this work is due to deadlines—renewable energy developers are eager to get projects on the books and land contracts before the Federal Investment Credit begins to expire. Currently, wind and solar projects can build their installations with a 30-percent tax credit (that is, a dollar-for-dollar reduction in tax revenues, according to the Solar Energy Industry Association).
Even if the contracts work fast enough to take advantage of federal tax credits, the cheaper renewable costs reported by Xcel today aren’t guaranteed to win a spot on Colorado’s grid. That’s because the bids don’t include the costs of connectivity, network upgrades, or “credits for things like quick-start power,” Xcel said, and all of that will have to be taken into account when the utility models your computer. to test out the options on its grid.
However, the prices quoted are very competitive. Although Xcel’s report doesn’t have many details, here’s what we do know:
- Out of 152 lonely sleep bid, the median bid price was $29.50/MWh.
- Ready air received the second-most bids from potential producers (that is, 96), and the median price was surprisingly low $18.10/MWh. That’s on the same level as we accepted the low-$17.70/MWh bid put forward in Mexico in November.
- 87 bids were placed to develop sleep-plus-storage installations, with an average price of $36/MWh. However, we do not know the nature of the proposed storage or the proposed amount. If you have a large solar field that is sending electricity to the grid as you do it, and installing a small battery to control the frequency process or serve the local area for an hour of downtime, that is not much fun. This median price has dropped from the previous competitive price of under $45/MWh signed by Tucson Electric.
- 11 bids were placed to be rejected air-with-storage in the middle bid $21/MWh. The same problem with calculating Xcel’s solar-and-storage bid is in the reported wind-and-storage bid: without more information, it is difficult to evaluate how much storage is included.
- Seven bids suggest a combination wind, solar, and battery storage installation, with an average price of $30.60/MWh.
- Five bids suggested total sun and wind for around $19.90/MWh.
More traditional, dispatchable technologies are proposed as well, but Xcel asks bidders to price these in terms of dollars per kilowatt-month ($/kW-mo). That measurement is the cost of energy, or the cost for the electricity you generate when the request exceeds a pointtherefore not comparable to the $/MWh seen above.
Among those sources, combustion turbines are at $4.80/kW-mo, and combustion turbines with battery storage are at $6.20/kW-mo. For context, in the 2010 paper (PDF), New England’s grid sees $4.50/kW-mo bid for more traditional fossil fuel generators.
Interestingly, 28 bids for battery storage alone were placed, with a median bid of $11.30/kW-mo. Standalone battery storage is the only feature in which Xcel offers some space for how much storage will be available. The 28 offers represent 12 projects ranging in size from 100MWh (25MW with a four-hour duration) to 1,500MWh (150MW for a 10-hour duration), with an average capacity of 450MWh. If you consider that there is no chemical battery connected to the grid in the world as large as the intermediate one reported by Xcel, the storage bids seem very attractive. The only planned project in the US that could come close, to our knowledge, is the 100MW / 400MWh system being built by Fluence (a joint venture of Seimens and AES) in Southern California. Fluence has said that when that battery installation is built, it will be the largest in the world.
Xcel does not include pricing for generation programs in which two or more bids are submitted, presumably to protect company secrets prior to the final decision on whether to accept bids. Two bids were made to build gas-fired combined cycle turbines and one bid was placed to build a compressed air energy storage (or CAES) system, which is interesting because there are hardly any grid-connected CAES installations around the world (recently Ars). The study found that CAES systems are currently operating in only three businesses).
An invitation also offers the idea for an “internal combustion engine with a solar system”. That system would have “a small photovoltaic field and a small off-site” internal combustion engine burning wellhead and/or pipeline gas” where solar would provide 60 percent of the annual energy, and part of gas will provide 40 percent of the annual energy, Xcel said that the two sources will not be connected, and neither will be sent, so it is a kind of project.
So what’s next?
The numbers above give an exciting taste of what may be in store for Colorado, but Xcel’s report is best approached with a tinge of optimism. The utility now has months to develop a project using information from these offers, and the Colorado Public Utilities Commission (CPUC) will make a decision on Xcel’s proposed proposals in late July. such as Denver Post.
A lot can change in the next few months. For one, the Trump administration is considering potential tariffs on imported solar panels after the International Trade Commission ruled this fall that domestic solar manufacturers are being unfairly harmed by cheap imports from China and Chinese factories in other Asian countries. A price will almost certainly make some bids with the sun more expensive, and those Post Note that bidders will have the opportunity to revise their bids with any updated information should such an event occur.
In addition, any delays in obtaining a permit or breaking ground may cause some projects to become more expensive if they are not in operation in 2023, when the higher rates of the Investment Tax Credit Federal limits.
But there is a deadline by which these rates will take effect: The CPUC is set to vote in March on whether to adopt the Colorado Power Plan that would shut down those two coal plants if cheaper, clean energy could be found. This recent bid report suggests that the case may be made to move forward with that plan.
Amendment: This article identifies a Tucson electric project as standing-only solar when it is actually a solar-plus storage project. The wind-storage project is also wrong as the most expensive of the projects we have numbers for.