Texas’ largest power generator, Luminant, has signed a power-purchase agreement to buy 116 megawatts of solar from SunEdison’s 800-acre Castle Gap solar plant in West Texas.
The deal is the largest purchase by a merchant generator for solar in a competitive market. Luminant’s portfolio is dominated by coal. The company’s 2012 energy production was 70 percent coal, 28 percent nuclear and 2 percent natural gas.
The decision to buy solar from SunEdison was one based on economics, not in order to meet sustainability or renewable goals, according to Luminant’s CEO Mac McFarland. Luminant is a subsidiary of Energy Future Holdings.
"As we evaluate our future generation needs, we focus on projects that are profitable and able to compete in the wholesale market,” McFarland said in a statement. “This agreement with SunEdison meets those goals since solar generation costs have become increasingly competitive."
The PPA will go into effect in late 2016. The power will be enough to support about 58,000 Texan homes under normal conditions and more than 23,000 homes during peak demand. In March, SunEdison was contracted for a solar plant in West Texas to supply the city of Georgetown with 150 megawatts of solar power.
Other folks are also taking advantage of falling solar costs in Texas. Earlier this year, Austin Energy received offers for nearly 8 gigawatts of solar projects, and nearly 1.3 gigawatts of those projects were priced below 4 cents per kilowatt-hour. Khalil Shalabi, Austin Energy's vice president of resource planning, expects that price to drop further in the future, possibly to less than $20 per megawatt-hour.
On Tuesday, SunEdison also announced it is going into a joint venture with Dominion for the 265-megawatt Three Cedars project in Utah. This is the second joint venture between Dominion and Sun Edison; Dominion also invested in the 420-megawatt Four Brothers solar project in Utah.
“We are excited to expand our partnership with Dominion to a total of 685 megawatts of solar in Utah,” Paul Gaynor, executive VP of SunEdison EMEA & Americas, said in a statement. “Our joint ventures with Dominion demonstrate the market appetite for SunEdison’s high-quality, long-term contracted assets.”
Additionally, SunEdison announced a strategic partnership with JP Morgan Asset Management’s Infrastructure Investments Group on Tuesday. The partnership’s first investment will be a one-third stake in a 425-megawatt portfolio of solar assets owned by Dominion.
SunEdison is the leader in large-scale development, with more than 1 gigawatt of renewable electricity being added to its portfolio every quarter. In July, SunEdison announced plans to acquire Vivint Solar, the second-largest residential PV installer in the U.S. At the beginning of the year, SunEdison acquired First Wind.
Outside of North America, SunEdison is a dominant force in Latin America for utility-scale solar, and the region is a target for TerraForm Global, SunEdison’s YieldCo that focuses on emerging markets.
SunEdison and other developers will also welcome the recent news that India’s Prime Minister, Narendra Modi, has ordered some of the country’s oldest coal plants to bundle solar power with the sale of coal-fired generation to bring down prices. Earlier this year, SunEdison announced plans for a $4 billion solar equipment factory in India.
SunEdison’s most recently completed project in India was not a utility-scale project, however, but nearly 2 megawatts of solar systems for the Delhi Metro Rail Corporation.