Energy transition and electric cooperatives
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Declining renewable energy prices mean that new wind and solar projects are now often cheaper than continuing to operate old coal plants. Battery storage projects and other technologies are creating new opportunities to manage energy use and reduce costs. And electricity consumers today are increasingly empowered to shift to cheaper renewable energy - with or without their power provider.
What do these disruptive changes in the utility industry mean for electric cooperatives? Wind and solar power prices continue to decline The most recent levelized cost of energy (LCOE) report, published November 2018 by investment bank Lazard, found that “The mean levelized cost of energy of utility-scale PV technologies is down approximately 13% from last year and the mean levelized cost of energy of onshore wind has declined almost 7%.” That report also noted the "dramatic" price declines for new renewable energy projects over the last nine years; wind energy prices have decreased 69%, while solar energy prices have decreased 88%. |
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Image from Lazard report, "Levelized Cost of Energy and Levelized Cost of Storage 2018"
Building new wind and solar projects is now often cheaper than continuing to run existing coal plants
Those price declines mean that building new renewable energy isn't just cheaper than building a new coal plant - it's now often cheaper than continuing to run existing coal plants, as the Lazard report noted:
The low end levelized cost of onshore wind-generated energy is $29/MWh, compared to an average illustrative marginal cost of $36/MWh for coal. The levelized cost of utility-scale solar is nearly identical to the illustrative marginal cost of coal, at $36/MWh. This comparison is accentuated when subsidizing onshore wind and solar, which results in levelized costs of energy of $14/MWh and $32/MWh, respectively.
That means utilities can now often reduce costs by replacing coal plants with new renewable energy. And that's especially true in regions with the best solar and wind energy resources.
A March 2017 report from Moody’s Investors Service found that in the 15 states with the best wind energy resources, new wind power now costs significantly less than existing coal-fired power plants. Those states include Indiana, Minnesota, Missouri, Kansas, Oklahoma, Minnesota, Iowa, Colorado, Wyoming, New Mexico, Utah, Nebraska, North Dakota, South Dakota, and Montana.
Those price declines mean that building new renewable energy isn't just cheaper than building a new coal plant - it's now often cheaper than continuing to run existing coal plants, as the Lazard report noted:
The low end levelized cost of onshore wind-generated energy is $29/MWh, compared to an average illustrative marginal cost of $36/MWh for coal. The levelized cost of utility-scale solar is nearly identical to the illustrative marginal cost of coal, at $36/MWh. This comparison is accentuated when subsidizing onshore wind and solar, which results in levelized costs of energy of $14/MWh and $32/MWh, respectively.
That means utilities can now often reduce costs by replacing coal plants with new renewable energy. And that's especially true in regions with the best solar and wind energy resources.
A March 2017 report from Moody’s Investors Service found that in the 15 states with the best wind energy resources, new wind power now costs significantly less than existing coal-fired power plants. Those states include Indiana, Minnesota, Missouri, Kansas, Oklahoma, Minnesota, Iowa, Colorado, Wyoming, New Mexico, Utah, Nebraska, North Dakota, South Dakota, and Montana.
Image from Moody's Investors Service report, "US Power and Utilities: Rate-Basing Wind Generation Adds Momentum to Renewables"
Cheap solar power is increasingly available to electric cooperatives - and their customers
Solar power costs have fallen even more dramatically, including for smaller solar projects that connect directly to the distribution grid. Lower costs for these "distribution scale" solar projects have opened up new opportunities for electric cooperatives. For example, one co-op in New Mexico switched on a 3 megawatt solar project in 2018 that delivers power at a price below 4.5 cents/kilowatt hour, saving the co-op more than $250,000 each year on purchased power costs. Several other co-ops in Colorado and New Mexico have also pursued distribution scale solar projects.
Cheap solar power options are also increasingly available to electric cooperatives' and utilities' customers, from rooftop solar arrays for homes and small businesses, to much larger projects that can help power commercial and industrial customers, local governments, and other major electricity consumers.
For example, the city of Gallup New Mexico signed a deal for a 10 megawatt solar project that is expected to save the city $1 million over the next 25 years. In Pueblo Colorado, Xcel Energy is helping develop a 240 megawatt solar project for the Evraz Rocky Mountain Steel mill - a deal that "could redefine the scope of behind-the-meter solar."
That is driving some electric cooperatives to try and reduce the risks of losing those customers, by managing their purchased power costs and pushing for changes that would allow them to pursue renewable energy deals with their major customers.
Solar power costs have fallen even more dramatically, including for smaller solar projects that connect directly to the distribution grid. Lower costs for these "distribution scale" solar projects have opened up new opportunities for electric cooperatives. For example, one co-op in New Mexico switched on a 3 megawatt solar project in 2018 that delivers power at a price below 4.5 cents/kilowatt hour, saving the co-op more than $250,000 each year on purchased power costs. Several other co-ops in Colorado and New Mexico have also pursued distribution scale solar projects.
Cheap solar power options are also increasingly available to electric cooperatives' and utilities' customers, from rooftop solar arrays for homes and small businesses, to much larger projects that can help power commercial and industrial customers, local governments, and other major electricity consumers.
For example, the city of Gallup New Mexico signed a deal for a 10 megawatt solar project that is expected to save the city $1 million over the next 25 years. In Pueblo Colorado, Xcel Energy is helping develop a 240 megawatt solar project for the Evraz Rocky Mountain Steel mill - a deal that "could redefine the scope of behind-the-meter solar."
That is driving some electric cooperatives to try and reduce the risks of losing those customers, by managing their purchased power costs and pushing for changes that would allow them to pursue renewable energy deals with their major customers.
Image from Guzman Energy presentation at the 2018 E2 ENGAGE Energy Conference
More resources about the energy transition and electric cooperatives
Rocky Mountain Institute: Envisioning the Rural Electric System of the Future
Rocky Mountain Institute: Envisioning the Rural Electric System of the Future
Clean Cooperative articles about the energy transition and electric cooperatives
Rural America could power a renewable economy - but first we need to solve coal debt
July 2, 2019 - Federal policies could help solve electric cooperatives' coal debt burden, supporting new renewable energy in rural America
More Colorado co-ops announce clean energy goals
February 11, 2019 - Co-ops have shifted their approach to renewable energy amid declining prices and growing public support
Next PUC Commissioner John Gavan "consensus choice" of Governors Hickenlooper and Polis
December 20, 2018 - New commissioner highlights how "new technologies and market forces drive a new level of change and innovation"
Clean Energy Means Business Summit highlights renewable energy opportunities and challenges in rural Colorado
November 16, 2018 - Companies like Vail Resorts want to work with the utilities and cooperatives that supply power to its operations
Governor-elect Jared Polis says moving Colorado toward more renewable energy will be a top priority
November 8, 2018 - New report shows that renewable energy prices continue to decline, undercutting the costs of existing coal plants
Electric cooperative officials discuss cheap renewable energy and an “eroding monopoly”
November 1, 2018 - Cheap renewable energy is only part of the broader shifts underway in the utility industry - competition is another
Holy Cross Energy plans to shift away from coal, aiming for 70% renewable energy
September 25, 2018 - "We have the opportunity to bring on new renewable energy resources at costs comparable to our existing supply"
What do corporate renewable energy commitments mean for electric utilities?
September 14, 2018 - Major companies expect 100% renewable energy options, and some push for broader changes in power markets
Colorado Energy Plan approval will mean new renewable energy investments in rural Colorado
August 28, 2018 - Colorado PUC approval of Xcel Energy's plan will mean $2.5 billion investment, mostly in Eastern Colorado counties
Report: Tri-State could save $600 million by shifting from coal to renewable energy
August 23, 2018 - Rocky Mountain Institute report highlights risks if Tri-State fails to cut costs and continues to rely on higher cost coal
Colorado Energy Plan analysis shows switching from coal to renewable energy will boost jobs and local tax revenue
June 22, 2018 - Xcel Energy's plan "includes unprecedented low pricing across a range of generation technologies"
Poudre Valley Electric and Xcel Energy Colorado President win national awards from Smart Electric Power Alliance
June 12, 2018 - The co-op's two megawatt community solar project helps lower energy bills for members
Moody’s report: “High quality renewable resources” could help Tri-State and Basin Electric navigate rising carbon transition risks
May 25, 2018 - Moody's says Tri-State and Basin could "benefit from abundant wind resources in their rural service territories"
Moody’s report shows Tri-State’s coal plants are more expensive than new renewable energy
April 12, 2018 - All of Tri-State's coal units cost more than $30/MWh - "more expensive than long-term PPAs for utility-scale renewables"
Bids for Xcel’s Colorado Energy Plan include a proposal for the world’s largest battery
January 23, 2018 - A glimpse of the "infinite scalability" of energy storage, and other takeaways from Xcel Energy's bid for new renewables
New wind and solar power in Colorado is now cheaper than existing coal plants
January 3, 2018 - Wind and solar prices have continued to fall, opening up a huge market: replacement power for existing coal plants
Companies' 100% renewable energy goals are getting results in Colorado
December 20, 2017 - A look at corporate renewable energy goals in three sectors of Colorado’s economy: skiing, technology, and beer
What does cheap solar mean for electric cooperatives?
November 30, 2017 - A look at two Colorado electric cooperatives navigating the implications of solar power’s declining costs
Colorado towns and cities are helping push utilities to embrace renewable energy
November 20, 2017 - Municipal 100% renewable energy goals are helping push the region toward a cleaner electricity grid
How are electric cooperatives navigating the transition from coal to cheap clean energy?
November 13, 2017 - Just as energy producing states will be impacted by the energy transition, a lot is at stake for electric cooperatives
Blocked from building more solar projects, United Power shifts to community batteries
November 8, 2017 - The latest data from investment bank Lazard shows the declining costs of energy storage technologies
Economic reality sets in for Tri-State efforts to expand the Holcomb coal plant
September 14, 2017 - A Moody’s report found that win windy states, new wind generation now costs less than existing coal plants
Rural America could power a renewable economy - but first we need to solve coal debt
July 2, 2019 - Federal policies could help solve electric cooperatives' coal debt burden, supporting new renewable energy in rural America
More Colorado co-ops announce clean energy goals
February 11, 2019 - Co-ops have shifted their approach to renewable energy amid declining prices and growing public support
Next PUC Commissioner John Gavan "consensus choice" of Governors Hickenlooper and Polis
December 20, 2018 - New commissioner highlights how "new technologies and market forces drive a new level of change and innovation"
Clean Energy Means Business Summit highlights renewable energy opportunities and challenges in rural Colorado
November 16, 2018 - Companies like Vail Resorts want to work with the utilities and cooperatives that supply power to its operations
Governor-elect Jared Polis says moving Colorado toward more renewable energy will be a top priority
November 8, 2018 - New report shows that renewable energy prices continue to decline, undercutting the costs of existing coal plants
Electric cooperative officials discuss cheap renewable energy and an “eroding monopoly”
November 1, 2018 - Cheap renewable energy is only part of the broader shifts underway in the utility industry - competition is another
Holy Cross Energy plans to shift away from coal, aiming for 70% renewable energy
September 25, 2018 - "We have the opportunity to bring on new renewable energy resources at costs comparable to our existing supply"
What do corporate renewable energy commitments mean for electric utilities?
September 14, 2018 - Major companies expect 100% renewable energy options, and some push for broader changes in power markets
Colorado Energy Plan approval will mean new renewable energy investments in rural Colorado
August 28, 2018 - Colorado PUC approval of Xcel Energy's plan will mean $2.5 billion investment, mostly in Eastern Colorado counties
Report: Tri-State could save $600 million by shifting from coal to renewable energy
August 23, 2018 - Rocky Mountain Institute report highlights risks if Tri-State fails to cut costs and continues to rely on higher cost coal
Colorado Energy Plan analysis shows switching from coal to renewable energy will boost jobs and local tax revenue
June 22, 2018 - Xcel Energy's plan "includes unprecedented low pricing across a range of generation technologies"
Poudre Valley Electric and Xcel Energy Colorado President win national awards from Smart Electric Power Alliance
June 12, 2018 - The co-op's two megawatt community solar project helps lower energy bills for members
Moody’s report: “High quality renewable resources” could help Tri-State and Basin Electric navigate rising carbon transition risks
May 25, 2018 - Moody's says Tri-State and Basin could "benefit from abundant wind resources in their rural service territories"
Moody’s report shows Tri-State’s coal plants are more expensive than new renewable energy
April 12, 2018 - All of Tri-State's coal units cost more than $30/MWh - "more expensive than long-term PPAs for utility-scale renewables"
Bids for Xcel’s Colorado Energy Plan include a proposal for the world’s largest battery
January 23, 2018 - A glimpse of the "infinite scalability" of energy storage, and other takeaways from Xcel Energy's bid for new renewables
New wind and solar power in Colorado is now cheaper than existing coal plants
January 3, 2018 - Wind and solar prices have continued to fall, opening up a huge market: replacement power for existing coal plants
Companies' 100% renewable energy goals are getting results in Colorado
December 20, 2017 - A look at corporate renewable energy goals in three sectors of Colorado’s economy: skiing, technology, and beer
What does cheap solar mean for electric cooperatives?
November 30, 2017 - A look at two Colorado electric cooperatives navigating the implications of solar power’s declining costs
Colorado towns and cities are helping push utilities to embrace renewable energy
November 20, 2017 - Municipal 100% renewable energy goals are helping push the region toward a cleaner electricity grid
How are electric cooperatives navigating the transition from coal to cheap clean energy?
November 13, 2017 - Just as energy producing states will be impacted by the energy transition, a lot is at stake for electric cooperatives
Blocked from building more solar projects, United Power shifts to community batteries
November 8, 2017 - The latest data from investment bank Lazard shows the declining costs of energy storage technologies
Economic reality sets in for Tri-State efforts to expand the Holcomb coal plant
September 14, 2017 - A Moody’s report found that win windy states, new wind generation now costs less than existing coal plants