The Phoenix Business Journal reported today that the Arizona Corporation Commission (ACC) has approved the site west of Gila Bend for the Solana solar power generating facility – which if built will be the largest in the world.
Solana has been slowly jumping over all the major hurdles it faces on its way to viability. The initial contingency in building the plant was getting the federal renewable energy tax credit extension passed into law. This was supposed to happen much earlier in 2008 so renewable energy projects did not have to delay their new projects waiting to see if the credit extension would be granted. But political wrangling in Washington held up the process for most of the year. An eight year extension was finally passed by tacking it on to the “Bailout Bill” in October 2008 to much relief of the renewable energy crowd. Without this, Solana would not go forward.
The second major hoop to jump through was getting the ACC approval that was reportedly received today. The ACC regulates all public utilities in Arizona. In this case, APS is purchasing the power to be generated by Solana as part of the benchmark requirements they need to meet under ACC regulations of generating 15% of their energy from renewables by 2025. Solana will generate about 5%, putting APS one-third of the way to their goal. The ACC has a siting committee that does a study of utility projects over a certain output size and recommends to the full ACC whether the project is feasible environmentally and logistically. The ACC in this case approved the site based on the siting committee recommendations and now the question is how much of the cost will get passed on to consumers. In their filings, APS has requested that the ACC approves consumer rate increases to cover the added expense of purchasing renewable energy. In APS’ estimation, the power from Solana comes in at a 19% premium in cost over conventional power generation.
The final hurdle for Solana may be the highest however – obtaining financing. The Arizona Republic carried this article last week about how the tight credit markets are making it very difficult to find the debt financing necessary to make the project viable. Hopefully the credit markets will open sufficiently by the mid-2009 timeline for when the project hopes to get started. It’s about time Arizona started to capitalize on its 320 days of sunshine a year.
To read the full case history before the ACC – click here and do a docket search for docket # E-01345A-08-0106. To read the ACC regulations for renewable energy benchmarks, click here and scroll to Article 18 (Renewable Energy Standard and Tariff).
Update: Here is the official press release from Abengoa Solar (the Solana developer).
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Posted by: Solar Power | May 08, 2009 at 06:21 AM