Florida PSC okays Gulf Power deals to buy power from three solar projects

The Florida Public Service Commission members, in a unanimous vote, on April 16 approved the Gulf Power subsidiary of Southern Co. (NYSE: SO) to enter into energy purchase agreements with Gulf Coast Solar Center I LLC, Gulf Coast Solar Center II LLC and Gulf Coast Solar Center III LLC.

The commission found that the Agreements will provide cost-effective renewable generation that will enhance fuel diversity in the state. The agreements are projected to produce savings of between $2.8 million and $17.4 million and contain provisions to ensure that the associated solar facilities will not adversely affect the adequacy or reliability of electric service to Gulf Power’s customers.

Gulf Power and HelioSage Energy 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. HelioSage will develop, finance, and operate the solar projects.

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.

Said the Jan. 22 application with the PSC: “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.

“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.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.