Another five solar power plant project agreement were approved by the Idaho Public Utilities Commission.
The five 20-megawatt plants, which are owned by Boston-based First Wind were already approved in an agreement with Idaho Power. If built Idaho Power would pay $322.5 million over 20 years for the power the plants would generate.
The commission is still considering agreements on another six solar projects totaling about 181 megawatts. Last month, it approved agreements between Idaho Power and Intermountain Energy Partners from two other solar projects, Boise City Solar and Grand View Solar II, totaling 120 megawatts.
Idaho Power also recently signed six contracts for 60 megawatts of solar generation in Oregon.
The expansion of solar power comes from the requirement under the Public Utility Regulatory Policies Act that Idaho Power provide an open market for developers by paying them at the same rate it would cost the utility to build its own, new natural gas plant, the lowest price available. This is called the "avoided cost" rate.
Even with the low cost of natural gas, solar-panel prices have dropped so much that developers can make money by earning the avoided-cost rate while paying to connect to Idaho Power's grid and paying the utility the cost of providing backup power sources when the sun goes behind clouds. They also can make the projects work without counting on the sale of renewable energy credits.
The ability of developers to make projects work at the avoided-cost rate while also paying connection and backup costs made the contracts possible, Idaho Power officials said.
Despite its approval, the commission said in its order that the federal law may be compelling utilities to buy energy they do not need. The order states that utilities should inform the commission as to whether additional review of contract terms and conditions for federal PURPA projects is necessary.
Idaho Power’s 20-year Integrated Resource Plan says it has enough power generation to meet its needs into the 2020s if the Boardman to Hemingway or B2H transmission line is completed. “And yet, in less than four months time, 13 (private plants) have contracted with Idaho Power for nearly 400 megawatts of solar generation – all expected to be on-line and producing power by the end of 2016,” the commission said. Idaho Power’s customers will pay the $1.4 billion for the 13 projects if built but they will reduce the fuel costs of Idaho Power’s coal and gas plants.
Still, customers will pay the capital costs of the coal and gas plants and the hydroelectric dams, the commission said. The First Wind projects include American Falls Solar and American Falls Solar II in Power County, Murphy Flat Power in Owyhee County, Simco Solar in Elmore County and Orchard Ranch Solar in Ada County.
The developers will be paid a non-levelized avoided-cost rate over the 20-year term of the agreements, which means payments increase over the course of the agreement and vary according to light-load and heavy-load hours of the day and seasons of the year. The average levelized rate for the First Wind projects is about $63 per megawatt-hour.