The first solar projects from California’s Renewable Auction Mechanism (RAM) are now on-line. This is some of the world’s lowest-cost solar, now up and running.
For those that need a primer, the RAM is a 1.3 gigawatt program to procure renewable projects under 20 MW in size. In the first RAM solicitation (there have been 4 so far, with a 5th planned), Southern California Edison received 92 bids from 28 companies, totaling over 1,200 MW in offers. That’s some robust competition. Of these, they selected 7 contracts, totaling 67 MWs of PV projects. Details here.
Even though these contracts are not required to come online until October 29, 2013, two of the projects are already up and running: Solar Electric Solutions’ SEPV8 and SEPV9, built by SolarWorld, and recently sold to Duke Energy. They are now called Highlander 1 and 2. Press and pics here and here.
What’s the price of these solar projects? Well, we don’t know exactly — the contract terms are kept confidential. However, the CPUC did release some information: the weighted average of the highest executed contract price from each of the three California utilities for RAM projects is 8.9 cents/kWh (see page 44 of this report, and note that price is pre-Time of Delivery adjustments). Each individual contract is definitely lower than that…and potentially much lower.
So there you have it. Some of the world’s cheapest solar, now online and working for ratepayers.
What are the keys to the program?
Standard contracts. Keep the playing field level and predictable, let developers put time into developing, not lawyering. Fair, financeable contracts also keep the cost of money low.
Strong project viability requirements. In order to deter speculators, it’s important to ensure that participants have the ability and intent to deliver. In this case, winning bidders had to have advanced interconnection efforts, and posted significant development security ($20/kW for projects < 5 MW, $60/kW for projects 5-20 MW).
Scale. A good-sized program, with many market opportunities, has project developers bringing their A-game and allows them to amortize fixed costs over more projects. One-off projects, and short term or itinerantly scheduled programs will not receive the same kind of attention, or produce the same results.
We’ve developed a guide of best practices in implementing competitive wholesale distributed generation programs. Check it out, here.
Solar doesn’t have to be expensive. All you have to do is develop a program to get some.