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Costs Coming Down Fast Enough?

The cost of solar may be coming down, but the decline needs to accelerate for the resource to become a meaningful part of the generation mix.

That was the consensus view during the Executive Utility Roundtable at the recent Solar Power International conference.

What with the balancing act of cost, reliability and the move toward cleaner sources, the progress in recent years needs to be sustained. But for all that, the discussion still referred to the elusive price on carbon, rising costs of plant retrofits and retirements, all the things that customers don’t want to hear in a troubled economy: higher rates

“At the end of the day it comedown to costs because of economic pressures. We have to make decisions in regards to allocation of capital,” said Randy Mehrberg, president & chief operating officer, PSEG Energy Holdings. “We just spent $1 billion on the back-end of our coal plants to make them some of the cleanest in the country, and we have to compete with those expenditures when we do solar.”

Armando Olivera, president & CEO, Florida Power & Light Company, said solar gives the utility “diversity in a system that’s becoming more and more dependent on natural gas.”

The system has 110 megawatts, based on a state program, and wants to do more. “We’ve seen dramatic decrease in costs,” Olivera said. “We think we can do the same projects 30 to 40 percent cheaper than we did three or four years ago.”

But the uncertain political environment, leading to uncertain policy, has stalled growth. “We have 500 megawatts we could start if right policies were in place,” he said.

James Rogers, Chairman, president & CEO, Duke Energy, said the utility tried to invest $100 million that could be rolled into its rate base, but North Carolina regulators allowed only $50 million.

Utility advantages are fairly obvious, he added, because of their balance sheets, which provide lower cost of capital is cheaper and the ability to integrate the resource faster.

Solar costs are falling due to efficiencies, for sure, but he cited one reason not always mentioned by the industry.

“Costs are coming down, but the reality is that costs are coming down because there is an oversupply hat driving prices down,” Rogers said. “The question is if the price of the panels comes down and I personally believe they will

One piece of the puzzle the utility industry discusses, but is anathema to the public and regulators is the expectation that the real price of electricity is going to rise as old fossil fueled plants are retired.

“But the opportunity for solar exists as the cost continues to come down,” Rogers added.

About the only applause line in the session came from Doyle Beneby, president & CEO, CPS Energy. “We need to talk about cost avoidance. For ever megawatt of solar I add that’s one megawatt don’t have to worry about in the mitigation of SOx, NOx or mercury,” he said.

Larry Weis, general manager, Austin Energy, noted how the industry can’t turn off legacy plants for a rapid switch to solar. One item on his agenda, which is succeeding with an oversubscribed residential program, is tapping public interest. “It comes down to marketing we want to say solar cool. It has to be something a family wants to have.

A lot of families already do, but the economic benefit would help, too.

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