Palo Alto Municipal Utility: Going Big on Solar

The city of Palo Alto (CA) has set a goal of 100% carbon-free power for its municipal utility. To achieve this goal, they are going solar in a big way…and with some mindblowing results.

The utility just signed 80 MW worth of contracts with 3 solar plants (40 MW, 20 MW, and 20 MW) at a great price: 6.9 cents/kWh over a 30 year term. Try building a new nuke or coal plant at that price.

The total output of these 3 solar plants are enough to serve about 18% of the city’s load, well over the 65,000 residential customers in the city.

When these contracts come online, the city will be powered by 48% renewable energy by 2017. Quite a bit higher than the current state requirement of 33% by 2020.

And the cost impact? 1/11th of a penny per kWh. That’s right. When the city approves renewable energy contracts they calculate the difference between the levelized cost of the renewable resource and the levelized cost of a comparable amount of non-renewable market power for the same period (doing their best to estimate the all-in delivered cost for both products, adjusting for time-of-delivery, transmission costs, capacity value, etc.) They use that difference to determine the net impact of the contract on the City’s average retail rates. So far, they calculate the total rate impact of all of their renewables contracts to be in the range of 0.11 cents/kWh.

The plants are to be built on distressed agricultural land in Fresno, Stanislaus, and Los Angeles counties. To better ensure project viability, developers put up $30 – $35/kW in development assurance.

One more time, so it sinks in: Palo Alto is buying 80 MW of solar at 6.9cents/kWh, on track to reach 48% renewables by 2017, and all at a cost-premium over non-renewable market rates of a de minimis 0.11 cents/kWh. Truly remarkable.

These guys are early contender for utility solar champion of the decade.

Press release here.

Contracts here (pdf).

Vote Solar is a non-profit grassroots organization working to fight climate change and foster economic opportunity by bringing solar energy into the mainstream.