HelioSage Energy and the Gulf Power subsidiary of Southern Co. (NYSE: SO) have agreed on the development of three large-scale solar projects across Northwest Florida totaling 120 MW.
Gulf Power and HelioSage have partnered with the U.S. Air Force and U.S. Navy to develop the solar facilities on three military sites along the Florida Gulf Coast. Once constructed, the projects will serve as the three largest photovoltaic (PV) solar facilities in Florida, and among the largest solar projects east of the Mississippi.
“This is an important collaboration between Gulf Power, the Navy, the Air Force, and HelioSage,” said Stan Connally, Gulf Power President and CEO, in a Jan. 22 statement. “We’re excited to be able to add solar energy to our generation mix.”
Following approval by the Florida Public Service Commission, HelioSage will develop, finance, and operate the solar projects. The power generated by the facilities will then be sold to Gulf Power under a long-term Energy Purchase Agreement.
“HelioSage is honored and excited to be partnering with Gulf Power, the Air Force, and the Navy on these landmark projects, which will bring renewable energy to Northwest Florida at rates competitive with traditional energy sources,” said Chris Quarterman, Vice President of Strategy for HelioSage. “These projects serve as another example that large-scale solar has become a cost-effective, proven technology, and one that will play a major role in the energy future of not only the Sunshine State, but the nation.”
The solar facilities will be constructed at Eglin Air Force Base in Fort Walton Beach (30 MW), Holley Naval Outlying Landing Field in Navarre (40 MW), and Saufley Naval Outlying Landing Field in Pensacola (50 MW). Construction is slated to begin early next year, with the projects reaching commercial operation by the fourth quarter of 2016.
HelioSage Energy is a leading national developer of utility-scale solar projects, with a development pipeline including over 400 MW of executed Power Purchase Agreements and projects across 20 states. The principals of HelioSage have developed and financed over 500 MW of renewable energy facilities, representing over $1bn in invested capital.
Gulf Power has right of first refusal to buy these solar projects
The solar contracts are with HelioSage affliates Gulf Coast Solar Center I LLC, Gulf Coast Solar Center II LLC and Gulf Coast Solar Center III LLC, collectively called “Gulf Coast” in Gulf Power’s Jan. 22 application for approval with the Florida PSC.
Said the Jan. 22 application: “Gulf Power emphasizes to the Commission that it has taken many steps to minimize exposure to its customers in entering into these Agreements, that all three Agreements share the same basic terms and conditions, and that timely approval of these Agreements is essential. Each Agreement is for a term of twenty-five years, subject to early termination provisions, including a termination provision for failure to obtain Commission approval of the Agreements. Specifically, Article 3.4 of the Agreements provides a termination right in the event that the Agreements are not approved in their entirety by the Commission through a final non-appealable order within 180 days of filing.
“Time is of the essence with regard to Commission approval because the solar facilities to be constructed pursuant to these Agreements must be in-service on or before December 31, 2016 in order for the projects to qualify for the 30 percent federal business energy investment tax credits (‘ITCs’) initially established by the Energy Policy Act of 2005 and extended until December 31,2016 by the Energy Improvement and Extension Act of 2008. Failure to qualify for the ITCs could jeopardize the project economics.
“Because of the time sensitivities associated with the lTC deadline, it was necessary for Gulf to seek Commission approval of the Agreements prior to finalizing the land lease agreements. Gulf is currently in the process of negotiating land lease agreements with the Navy and Air Force and anticipates finalizing those agreements in calendar year 2015.
“These are energy-only agreements. Gulf Power is only required to pay for energy which is received at the point of interconnection. Gulf Coast’s entitlement to payment is solely a function of the actual megawatt hours (‘MWh’) produced by the solar facilities and delivered to Gulf Power. Based on an anticipated capacity factor of 23 percent, the three solar facilities are expected to deliver approximately 240,000 MWh combined to Gulf Power on an annual basis. This is roughly equivalent to 2.2 percent of the Company’s total annual jurisdictional energy sales forecasted for 2016. All Agreements share the same annual pricing. Pricing is based on a formula which begins with a fixed annual contract energy price.
“In consideration of the purchase of energy, Gulf Power will be entitled to receive and retain, at no cost to Gulf Power, all environmental attributes associated with the output of the solar facilities including renewable energy credits, carbon offsets, allowances and any other transferable environmental interests.
“Contemporaneously with the Agreements, the parties executed separate Right of First Refusal Agreements (‘ROFRs’). … The ROFRs provide Gulf Power with a right to purchase one or more of the solar facilities in the event that Gulf Coast decides to sell one or more facilities to a third party. The ROFRs provide additional optionality to Gulf Power and its customers.”