Arizona has set a new low price for large-scale solar power in the US, but more importantly has also smashed expectations of the combined cost of large-scale solar and battery storage.
Arizona utility Tucson Electric Power (TEP) this week announced it would buy solar energy from a new 100MW solar plant at the historically low price of less than US3c/kWh – less than half of what it had agreed to pay in similar contracts over the last few years.
The project will also include 30MW/120MWh of battery storage, and the company says that the power purchase agreement for the combined output is “significantly less” than US4.5c/kWh – nearly two-thirds cheaper than the previous such contract struck in Hawaii, and well below the cost of a gas-fired peaking plant.
“This new local system combines cost-effective energy production with cutting edge energy storage, helping us provide sustainable, reliable and affordable service to all of our customers for decades to come,” said Carmine Tilghman, senior director of Energy Supply and Renewable Energy for TEP.
According to Utility Dive in the US, the solar and storage array – to be built by NextEra – represents a major cost reduction for combined solar and storage facilities since the signing of the last significant PPA — which was a $US0.11/kWh Hawaii contract signed only in January this year.
The development is significant because it is confirmation that dispatchable renewable energy can compete with peaking gas-fired generators on price.
This is believed to be already the case in Australia, although it is yet to be tested because no large-scale storage arrays have yet been built. Two auctions are currently underway in Victoria and South Australia.
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