Entergy Arkansas on April 14 sought Arkansas Public Service Commission approval for a power purchase agreement with an 81-MW solar project, which would be the first major solar facility built in the state.
The utility, which is a subsidiary of Entergy Corp. (NYSE: ETR), noted that with its passage of the Arkansas Clean Energy Development Act of 2012, the state General Assembly found that it is in the public interest to require all electric public utilities subject to the jurisdiction of the APSC to consider clean energy and the use of renewable energy resources as part of any resource plan. Act 1088 was recently passed by the General Assembly and provides that a utility cannot enter into a PPA for a term longer than five years, without a finding from the commission that, among other things, the cost of the PPA is reasonable and prudent.
On April 3, Entergy Arkansas executed a 20-year PPA with Stuttgart Solar LLC for a renewable energy resource. The Stuttgart Solar Project, which will be located near Stuttgart, Arkansas, is planned to be an 81-MW solar photovoltaic project interconnecting to the existing 115-kV Ricuskey-Almyra transmission line.
Stuttgart Solar is affiliated with one of the largest generators of solar energy in the United States that currently owns and operates approximately 771 MW of solar facilities in the United States, Canada, and Spain. NextEra Energy (NYSE: NEE), through its affiliates, is the largest generator of wind and solar power in North America, with nearly 120 facilities in operation in 26 states and four Canadian provinces. Stuttgart Solar is an indirect wholly-owned subsidiary of NextEra Energy Capital Holdings, a subsidiary of NextEra Energy.
The project will cover nearly 500 acres of land in Stuttgart and will be comprised of solar panels mounted to a racking system and cabled to intermediate field transformers, inverters and ultimately to a step-up transformer which is interconnected to the Entergy Transmission System.
The energy price is fixed for all years of the contract, and EAI will pay this price for all energy that the facility is capable of producing up to a maximum hourly amount. This energy will be utilized for the benefit of EAI’s retail customers in a manner similar to the energy received from the Entergy Arkansas nuclear, hydro, natural gas, and coal fueled resources.
The bulk of construction of the project is expected to begin in the spring of 2016, with engineering, procurement, and permitting occurring in 2015. The project is designed to qualify for the 30% federal investment tax credit (ITC) that will be used by the provider to offset its cost of construction.
In May 2014, the utility issued a 2014 Request for Proposals for Long-Term, Supply-Side and Renewable Generation Resources, which resulted in this winning bid. The 2014 RFP sought up to 200 MW from renewable resources, with deliveries as early as 2015. Generally speaking, the renewable resources contemplated generation facilities powered by biomass, run-of-river hydroelectric, solar photovoltaic, and wind-powered resources. This would be the first large-scale solar project constructed in Arkansas. The utility asked the commission for an approval by Sept. 30 of this year.
H. Matt Wolf, the Manager, Resource Planning for Entergy Arkansas, said in April 14 supporting testimony about the long-term need for new capacity: “Before the solar PPA term expires (approximately 2036), it is possible that EAI will retire some or all sources of coal generation (1031 MW), retire its Lake Catherine 4 gas fired generator (516 MW), decommission the ANO 1 nuclear unit (834 MW), retire the Hot Spring and Ouachita CCGT units (1,085 MW) and, retire the UPP PB2 (495 MW) should it be approved. No decision has been made to deactivate or retire any of those resources, and the possibility of those retirements is based merely on nominal life expectancies, the current license expiration date of ANO 1, and proposed environmental compliance rules and regulations. Nonetheless, the uncertainties are real, and the magnitude of such uncertainty warrants taking steps now to address those potential future planning issues. Stuttgart Solar will help the Company meet the future needs of its customers.”
Kurtis W. Castleberry, the Entergy Arkansas Director of Resource Planning and Market Operations, wrote in his April 14 supporting testimony: “As the Commission has recognized previously, there are always risks with respect to resource planning decisions, because the outcomes are always dependent upon future facts and circumstances. However, in this instance, the solar PPA would be the first long-term PPA that EAI has executed in a number of years, and accordingly, the manner in which those risks are allocated and borne by the seller on one hand and the Company and its customers on the other should be considered in the evaluation of whether the terms of this solar PPA are in the public interest.”