We announced some exiting news today: Recurrent Energy has been awarded a 150MW power purchase agreement by Austin Energy. If that sounds big, that's because it is: the project will be the largest single solar power plant in the state of Texas when completed in 2016.
The project is a milestone for Recurrent Energy in a two important ways. It's our first successful project award in Texas--a market we've been focused on for a couple of years now. And the additional 150MW contract with Austin Energy brings our total contracts to date to over 1GW.
In the big picture, projects like this are a good example of the continued transition solar is making to mainstream energy markets. Texas’ wholesale market, unlike many other states, is completely deregulated, meaning that generators have to compete on cost. Solar PV has now reached a point where it is highly competitive with the foward cost of natural gas in many regions. I expect the future of solar power is now beginning to unfold in Texas.
Beyond cost, solar is a great fit for Texas’ energy needs. Peak solar generation is correlated with peak energy demand, underscored by ERCOT’s decision last summer to assign solar a higher capacity value. Solar can play a valuable role as part of Texas’ energy mix, helping alleviate price shocks and rolling black outs in the hot summer months.
Solar is also well-positioned to take advantage of the investment Texas has made in expanded CREZ transmission lines, and can pair with the state’s sizable wind portfolio. The production profiles of solar and wind actually complement each other well. Typically West Texas wind blows the strongest at night and in the shoulder months, while solar produces during the day and is strongest during the summer peak.
The solar industry is already taking off in Texas, driven by solar’s merits as a generating technology. Texas does not have an RPS in place, and yet more than 1,600MW of solar has already been submitted to Texas’ interconnection queue. Austin Energy’s decision to grant Recurrent Energy a contract for the state’s single largest solar facility also speaks volumes about our growing competiveness and maturation as an industry. The potential is enormous, and could drive the growth of solar energy in the U.S. at a scale we have yet to see.