Solar Power To Beat Coal Prices in New Mexico

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How can cheap coal ever be beaten? With cheaper solar. A new solar power plant opening in New Mexico will be selling electricity at record low prices.

First Solar, a large thin-film solar manufacturing company based in Tempe, Ariz., recently announced that it had bought a large solar power plant that was being developed in New Mexico. When completed, the 50-megawatt Macho Springs Solar Park plant will be the largest solar power plant in the state.

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The prices emerged from a power purchase agreement or PPA that First Solar is working on with the El Paso Electric Company. Expected to be signed in June, the proposed contract calls for the solar power plant to sell electricity for 5.79 cents per kilowatt hour, according to PV Magazine.

As CleanTechnica’s Nicholas Brown noted, the New Mexico price would beat coal’s median levelized cost, which is eight cents per kilowatt hour. We can also compare the anticipated solar price to the average residential retail price for electricity, which the U.S. Energy Information Administration put at 11.74 cents per kilowatt hour in their latest monthly update. It’s even below the lower average in sunny New Mexico, which is 10.81 cents per kilowatt hour.

Usually electricity produced using thin-film solar technology runs closer to a whopping 16.3 cents per kilowatt hour. As commenters were quick to point out on CleanTechnica’s site, there are some incentives involved at the state and federal levels. But as CleanTechnica moderator Bob Wallace argued, even when you separate out the subsidies, the price is still a big deal. And it’s not like coal and gas don’t get any help.

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The Macho Springs Solar Park will be constructed using First Solar’s thin-film photovoltaic modules and is expected to be completed next year, according to a joint press release. In trying to figure out what accounts for such record prices, I can only imagine it has to do with the technology. First Solar says its modules work more efficiently in hotter climates than conventional multicrystalline silicon photovoltaics. Efficiency definitely pays off.

What’s seriously newsworthy here is that utility-scale solar has finally crossed the 10-cent per kilowatt hour threshold. There’s no clean energy panacea, but it looks like coal advocates have just been dealt a serious blow.

Photo: Workers construct a solar array in Blythe, California. Credit: First Solar, Inc.