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Murray Journal

Solar arrives on Murray Power grid at a higher cost

Oct 01, 2022 08:01PM ● By Shaun Delliskave

By Shaun Delliskave | [email protected]

Murray City will soon have more renewable energy powering its homes and businesses as the long-awaited Red Mesa Tapaha Solar Project comes online. At the Aug. 23 city council meeting, the city authorized a 25-year agreement at a set price agreement with the Navajo Tribal Utility Authority (NTUA) to start receiving power transmissions in June 2023.

However, the city will pay $37 per megawatt-hour (MWh) instead of the previously agreed $23.15/MWh. In 2019, the council adopted a resolution authorizing the city to enter into a long-term agreement with the NTUA. Everything was in order and set for an initial commercial operation date of midyear 2022, but supply-chain issues delayed the project.

The Red Mesa Tapaha Solar Project is located in the Navajo Nation near Bluff, Utah. Murray City has a 5,000 kW interest (7.5758%) in the 66 mW project.

Murray Power General Manager Blaine Haacke said at the city council’s Committee of the Whole meeting, “They (NTUA) were having trouble getting the precious metals for the photovoltaic panels. They’re having trouble getting poles, wire infrastructure, transformers, any number of items, and so actually between 2020 and 2021, very little construction was done on site.”

Haacke says the project is about 50% complete with no further expected delays.

“Another key issue was the labor down on the (Navajo) reservation. They were very tight on who they let in because of the COVID issue. Skilled and non-skilled labor were not allowed into the reservation, so the project went to a halt. Hopefully, in June 2023, this will be in our portfolio, and we’ll be able to use it. So, during the middle of COVID, the NTUA realized that $23.15 wasn’t going to cut it.”

As part of the original agreement, drafted by the Utah Association of Municipal Power Systems (UAMPS), a 2% annual increase was built into the 25-year period. The average cost of power over the 25-year agreement would be around $29-$30/MWh.

Due to increased costs related to the pandemic (labor, transportation, supply chain, and photovoltaic issues), NTUA began questioning the project’s feasibility. As a result, NTUA approached UAMPS about the possibility of renegotiating the agreement.

At first, UAMPS balked at the request. Then, NTUA decided to exercise a force majeure clause because they claimed that labor and supply chain issues were beyond their control. Finally, after months of back-and-forth inquiry, UAMPS realized that the best alternative would be to reopen and renegotiate the NTUA 2019 agreement.

“They wanted to escalate the $37 at 2% (annual increase) and so would have been like a $50 resource by the end, and we held our own and said no, $37 set for 25 years,” Haacke said.

As part of the new agreement, NTUA will provide development security to protect UAMPS from delays in the project coming online or the failure of the project to ultimately become operational.

“We will receive 15 million kilowatt hours from this resource. Our resource mix is 400 million for the city, so if you divide 15 million into 400 million or vice versa, you get about three or four percent of our energy needs from this resource. About 30% of our energy comes from Hunter, the coal-fired plant, and about 20% of our energy comes from the federal hydro,” Haacke said.

With the long-term drought impacting water levels at the Glen Canyon Dam, flipping on the switch at the solar plant couldn’t be timelier. Lake Powell’s water level is just 20 feet above the dam’s gates, so federal regulators have reduced Murray’s portfolio from 25% to 20%.

Other significant power generators include Murray’s hydro plant in Big Cottonwood Canyon, gas turbines located at 4800 South in Murray, and landfill methane gas. For remaining needs, Murray Power goes on the power market to fill gaps.

“We want power from around five in the afternoon to about eight in the evening. That’s when we need it the most. Solar by itself peaks around one or two in the afternoon. You would think that solar would peak when it’s the hottest part of the day. The heat causes less electricity to be generated, but still, it’s a good resource, but we would like it at five in the afternoon,” Haacke said.

While the original cost of the solar project would have been the most affordable in Murray’s portfolio, the new $37/MWh rate makes it comparable to the coal-fired plant’s $40/MWh rate. The most expensive portion of Murray’s portfolio is landfill methane at $50/MW