http://www.renewableenergyworld.com/rea/news/article/2014/01/minn-judge-solar-beats-natural-gas-for-utility-procurement?cmpid=WNL-Wednesday-January8-2014
[links in on-line article]
Minn. Judge: Solar Beats Natural Gas for Utility Procurement
James Montgomery, Associate Editor, RenewableEnergyWorld.com
January 03, 2014
New Hampshire, USA -- In what is being called an unprecedented decision,
solar energy went head-to-head with natural gas in a competitive
evaluation for utility resource planning — and solar came out on top.
Minnesota's renewable portfolio standard (RPS) calls for 25 percent of
generation by 2025 from renewable energy sources. For Xcel, the state's
largest electric utility, the rules are more aggressive at 31.5 percent
by 2020. Last spring the state added a solar carve-out of 1.5 percent
from solar by 2020, equivalent to about 450 MW of new solar capacity.
The Minnesota Public Utilities Commission (PUC) determined that Xcel
Energy demonstrated need for 150 MW of new electricity generation by
2017 (and possibly 500 MW by 2019) and directed the Office of
Administrative Hearings (ALJ) to look at several proposals to decide
"the most reasonable and prudent strategy" to meet Xcel's needs. Five
proposals were received and accepted:
Xcel: three 215-MW natural-gas-fired, simple-cycle combustion
turbine generators, two at its Black Dog facility in Burnsville, MN and
two others at its Red River Valley facility in Hankinson, ND;
Calpine: a 345-MW combined cycle gas plant at its Mankato Energy
Center, adding 290-MW of intermediate combined-cycle capacity and 55-MW
of peaking capacity;
Geronimo Energy: 100-MW (AC) distributed solar capacity
intermittent resource, spread across approximately 20 sites;
Great River Energy (GRE): proposed sale of capacity credits;
Invenergy: a 179-MW combustion turbine peaking facility at Cannon
Falls and two 179-MW combustion turbines near Hampton, MN
Geronimo's proposed Aurora solar project encompasses roughly 20
different commercial-sized sites (2-10 MW) adding up to 100 MW, sized to
offset roughly 20 percent of the existing load at each respective
substation. Construction would begin in 2015 and all of the sites would
be online by the end of 2016 to serve Xcel's capacity needs in 2017 (and
to qualify for expiring investment tax credits). Two different pricing
proposals were submitted under a 20-year PPA structure: one with a fixed
monthly payment per kilowatt (kW) for capacity and an energy payment for
all energy generated, and another as an energy-only payment bundling
everything into a single dollars/MWh price. The total cost of Aurora is
projected at $250 million.
Using computer models, the ALJ's administrative law judge Eric Lipman
compared each proposal against each other, gauging cost savings, fuel
consumption, pollutants emitted, and other factors, and then added a
number of contingencies for mandated CO2 reductions, market pricing
fluctuations for each energy source, and both short- and long-term
demand projections — as well as the mandated RPS and solar carve-out.
Lipman also added criteria to be "compatible with protecting the natural
and socioeconomic environments, including human health." He also
narrowed the scope to a short-term window, since Xcel could face a
capacity deficit of 93 MW in 2017, and as much as 307 MW by 2019;
calculations for demand beyond 2019 should revisited later, he said.
(Here's the full PDF from the state's PUC.)
Thus, Lipman decreed that in the short-term "the greatest value to
Minnesota and Xcel's ratepayers is drawn from selecting Geronimo's solar
energy proposal" and possibly adding GRE's capacity credits. Geronimo's
proposal, he declared, "when properly analyzed under either a LCOE or
strategist modeling, is the lowest cost resource proposed," plus it
represents the lowest risk against policy compliances.
Lipman himself noted the importance of this decision, calling it "an
important turning point in Minnesota's energy resource planning
process." For twenty-odd years the state has had policies supporting
renewable energy sources, yet "nonrenewable energy sources always won
the head-to-head cost comparisons. Not anymore." This time, he noted,
"Geronimo entered this bidding process as the sole renewable technology
and beat competing offerors on total life-cycle costs."
Responding to the ruling, Xcel issued a statement saying it appreciates
the work of the ALJ toward resource acquisitions but it "disagree[s]
with some of the findings and recommendation," and the company pledged
to file a complete response once exceptions are filed with the
commission, expected later this month. The PUC's final ruling should
come a month or two after that.
--
Darryl McMahon
Failure is not an option;
it has to be beaten back every day on all fronts.
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