Warren Buffett’s Nevada utility has lined up what may be the cheapest electricity in the U.S., and it’s from a solar farm.
Berkshire Hathaway Inc.’s NV Energy agreed to pay 3.87 cents a kilowatt-hour for power from a 100-megawatt project that First Solar Inc. is developing, according to a filing with regulators.
That’s a bargain. Last year the utility was paying 13.77 cents a kilowatt-hour for renewable energy. The rapid decline is a sign that solar energy is becoming a mainstream technology with fewer perceived risks. It’s also related to the 70 percent plunge in the price of panels since 2010, and the fact that the project will be built in Nevada, the third-sunniest state.
“That’s probably the cheapest PPA I’ve ever seen in the U.S.,” Kit Konolige, a utility analyst at Bloomberg Intelligence in New York, said Tuesday. “It helps a lot that they’re in the Southwest when there’s good sun.”
The power-purchase agreement for energy from First Solar’s Playa Solar 2 project was the cheapest offered to NV Energy this year for new power plants. The utility also agreed to pay 4.6 cents a kilowatt-hour for power from SunPower Corp.’s 100-megawatt Boulder Solar project, the best price offered last year.
Both 20-year, fixed-rate contracts were submitted to Nevada’s Public Utilities Commission for approval July 1.
“When compared to existing solar contracts and to other fossil-driven generation,” the rates are “very reasonable,” the utility said in the filing.
“Power generated from solar plants is cost-competitive with power from traditional, fossil fuel burning plants, and becoming more cost-competitive every day,” SunPower Chief Executive Officer Tom Werner said in an e-mailed statement.
Steven Krum, a First Solar spokesman, said the contracts demonstrate that solar projects, especially large-scale power plants, are becoming cheaper to build and operate.
“That’s quite aggressive bidding by First Solar,” Jenny Chase, an analyst at Bloomberg New Energy Finance in Zurich, said by e-mail. The power price is “one of the lowest, definitely.”
Dubai’s government-owned utility agreed in January to pay 5.85 cents a kilowatt-hour for power from a 200-megawatt solar farm, a deal that the Middle East Solar Industry Association said at the time was “the lowest solar tariff in the world.”
Nevada regulators will probably make a decision by the end of the year, said Jennifer Schuricht, a NV Energy spokeswoman. The state requires utilities to get an increasing amount of power from renewable sources, including 20 percent this year and 25 percent by 2025, she said.