Article

Xcel Energy paying $41M to get out of Colorado solar power experiment

But parts on the solar farm have been starting to fail and there are no ready replacements — and the project’s owner, Kepco Solar of Alamosa LLC, tells Xcel Energy it’s becoming increasing difficult and expensive to maintain. Getting out of the power-purchase agreement, which runs through 2022, will save Xcel Energy customers millions over the next 11 years, the company says.

Xcel Energy wants to stop buying electricity from the world’s largest high-concentration solar energy plant, located in the San Luis Valley, and it will pay $41 million to the federal government to do it.

The utility company has been purchasing power from the 30-megawatt solar plant in southern Colorado since 2012, when the federally backed project was one of the first of its kind and the largest using the technology anywhere.

But parts on the solar farm have been starting to fail and there are no ready replacements — and the project’s owner, Kepco Solar of Alamosa LLC, tells Xcel Energy it’s becoming increasing difficult and expensive to maintain. Getting out of the power-purchase agreement, which runs through 2032 [correction from 2022], will save Xcel Energy customers millions over the next 11 years, the company says.

Xcel Energy (Nasdaq: XEL) and Kepco Solar struck an agreement to end the power purchase contract, and they proposed to state utility regulators that Xcel pay $41 million to the U.S. Department of Energy in an early termination fee.

Xcel Energy is the only buyer of the plant’s power, so ending the power purchase agreement would likely spell... more [truncated due to possible copyright]  

Xcel Energy wants to stop buying electricity from the world’s largest high-concentration solar energy plant, located in the San Luis Valley, and it will pay $41 million to the federal government to do it.

The utility company has been purchasing power from the 30-megawatt solar plant in southern Colorado since 2012, when the federally backed project was one of the first of its kind and the largest using the technology anywhere.

But parts on the solar farm have been starting to fail and there are no ready replacements — and the project’s owner, Kepco Solar of Alamosa LLC, tells Xcel Energy it’s becoming increasing difficult and expensive to maintain. Getting out of the power-purchase agreement, which runs through 2032 [correction from 2022], will save Xcel Energy customers millions over the next 11 years, the company says.

Xcel Energy (Nasdaq: XEL) and Kepco Solar struck an agreement to end the power purchase contract, and they proposed to state utility regulators that Xcel pay $41 million to the U.S. Department of Energy in an early termination fee.

Xcel Energy is the only buyer of the plant’s power, so ending the power purchase agreement would likely spell the end of the experimental, industrial-scale solar technology there. It echoes what’s happened with similar projects based on the once-promising technology.

The utility company “does not take the early termination of a power purchase agreement lightly and understands that pursuing innovative technologies and fostering opportunities for the development of such technologies will be key to a low-to-no carbon and reduced greenhouse gas emissions future,” said Brooke Trammell, Xcel Energy regional vice president of regulatory affairs, in an affidavit to state regulators.

But the solar project is not panning out, and the termination agreement will save Xcel Energy rate-payers $38 million in the long-run, Trammell’s testimony says.

The solar plant was initially backed by a $90.6 million U.S. Department of Energy loan.

It was built by Charlotte, North Carolina-based Cogentrix Energy LLC and later sold to Kepco Solar of Alamosa.

The solar plant features panels attached to hydraulic motors to tilt and rotate the special solar cells and have them follow the sun’s path across the sky each day. A layer of optical material concentrates sun rays, and the solar cells contain a variety of semiconductor materials, catching different light frequencies.

The technology was expected to produce twice as much electricity of a similar-sized solar plant using traditional photovoltaic panels.

When it opened, the DOE projected the 75,000 megawatt hours of electricity it would generate annually as enough to power over 6,500 homes.

The power generation worked, but now the failure of aging hardware is a problem, Xcel said.

The manufacturer for some of the technology no longer exists, and Kepco cannot find a cost-effective way to have replacement parts made, Xcel said in a regulatory filing. Kepco also says it’s not commercially viable to “repower” the site by installing new, traditional solar panels there — the financial investment is too great.

Instead, Xcel Energy seeks to spread the cost of the termination fee payment over 11 years.

The power contract with Kepco would cost Xcel and its customers $121.4 million through the remainder of its term, Xcel says.

Paying the termination fee and buying replacement solar energy from other projects would save Xcel customers $38 million, the utility argues.

The Colorado Public Utilities Commission has scheduled an April hearing before an administrative law judge about Xcel’s request and to double-check the financial calculations.


Source: https://www.bizjournals.com...

JAN 15 2021
http://www.windaction.org/posts/52063-xcel-energy-paying-41m-to-get-out-of-colorado-solar-power-experiment
back to top