Distributed Solar Beats Coal on Cost for Co-ops

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On March 22, Rocky Mountain Institute’s Shine Program released a request for proposals (RFP) for community-scale solar on behalf of a group of rural electric cooperatives in eastern and northern Colorado. The RFP was part of RMI’s ongoing work to develop the community-scale market nationwide.

Nearly 30 developers responded to the RFP, providing highly competitive bids. Prices for solar power purchase agreements were lower than the value of solar to the co-ops, and so solar is expected to result in economic savings for participating co-ops.

RFP results confirm that we have crossed a significant tipping point where distributed solar is not only a means to supply green energy and to promote regional economic development, but also an opportunity to decrease energy costs and to drive down bills for price-sensitive energy consumers. The Colorado RFP outcomes are informative to utilities nationwide, but particularly to co-ops and municipal utilities in Colorado and neighboring states that are contemplating solar development and are interested in joining a regional procurement opportunity.

The price is right

In the request for proposals, RMI solicited prices under a power purchase agreement (PPA) structure. PPAs are a popular model for co-ops and municipal utilities to contract for solar for a few reasons:

  1. PPAs are an efficient way for not-for-profit utilities to capture the investment tax credit.
  2. PPAs are low-risk commitments because PPAs shift performance risk from the utility to the solar developer.
  3. PPAs require minimal or no up-front cash expenditure by the utility.

This article can be read in its entirety at Greenbiz.