For Murray Power, here comes the sun
Sep 30, 2019 02:43PM
By Shaun Delliskave
Navajo Tribal Utility Authority constructs a giant solar farm, from which Murray Power will purchase 5 megawatt hours. (Photo courtesy NTUA)
By Shaun Delliskave | [email protected]
One city council meeting in August included a lively discussion over the merits of increasing the city’s stake in an unproven energy technology, a small modular nuclear reactor. During their Aug. 27 meeting, the council debated over purchasing more of one of the oldest renewable energy sources, the sun. Obviously, the topic of diversifying the city’s energy portfolio can be, well, electrifying.
The City Council unanimously approved buy-in to the Red Mesa Tapaha Solar Resource project. The Red Mesa Tapaha Solar Resource, a 66 megawatt photovoltaic solar generation facility, is under construction on the Navajo Nation in San Juan County, Utah.
The council authorized Murray Power to engage in a 25-year contract with Navajo Tribal Utility Authority (NTUA) for five megawatts of solar energy, starting at $23.15/MWh and escalating by 2% yearly. The arrangement comes through the Utah Associated Municipal Power Systems (UAMPS), of which Murray Power is one of 16 entities. In comparison, subscription amounts by other UAMPS members range from 142 kilowatts for Fairview to more than 18,000 kilowatts for St. George.
“I believe that resource will be a nice fit into our portfolio,” Murray Power General Manager Blaine Haacke said. But he is also quick to point out that the sun is only reliable when it is shining.
UAMPS has entered into a power purchase agreement (PPA) with NTUA on behalf of UAMPS members electing to participate in this project. The purchase agreement between NTUA Generation and UAMPS provides for the delivery of solar energy for 25 years, once the project comes online in June 2022.
According to Haacke, “We like the idea of it being a contract versus ownership. We won’t have a stranded investment. We will pay for what we get. Kilowatt hours will pay for it as they are produced, so we won’t have a stranded capital investment, and in some places that is kind of tough for places that never generate.”
The solar power is relatively cheap at $23.15/MWh, compared to the projected cost of $65 per megawatt hour for the proposed small-modular nuclear reactor. Over the life of the NTUA contract, the average price will be $29.50 per megawatt hour with the annual 2% escalation.
The tradeoff, of course, is that solar goes off the market during the night or inclement weather, while coal and nuclear can be continuously generated to meet demand. “I think down in the Four Corners area that there is going to be a lot of sunshine, and that this will be a good producer for us,” Haacke said.
Murray’s energy resource mix includes 50% from three different coal-generation projects; 25% hydro; 12% renewable landfill gas; 6% natural gas turbines; and the remaining 7% from spot market (producers of surplus energy who instantly locate available buyers for this energy) purchases. One-third of Murray City sits outside the Murray Power grid, since eastern Murray was annexed into the city as customers of Rocky Mountain Power.
NTUA has broad experience in developing solar projects. It has successfully deployed two utility-scale solar projects within the last three years on the Navajo Nation and is in the process of generating additional solar resources on and off the reservation. Returns from the solar projects are being used to keep NTUA’s electric rates low and to pay for the electrification of Navajo homes, including expanding the Light Up Navajo initiative.
Buying into the project will allow Murray Power to offer Renewable Energy Credits (RECs). RECs are certificates that transfer the “renewable” aspects of renewable energy to the owner. In other words, renewable energy credits, paired with electricity from the grid, are renewable energy that is being generated on behalf of consumers.
Murray Power will be able to sell RECs on the market to businesses or individuals who wish to be fully renewable. If an individual or business buys RECs, they are purchasing the “renewable” aspect of the electricity from the solar plant and are able to say that their electricity comes from a renewable source. RECs also support the renewable energy market by providing a demand signal to the market, which in turn encourages more production of renewable energy.