The city of Palo Alto could claim the title of being the Heart of Silicon Valley (against the protestations of San Jose, Mountain View, Cupertino, and Menlo Park). The Northern California city is the home of Stanford University, Packard's garage, a high concentration of venture capitalists, and a crop of high-tech startups that's growing like kudzu.

And now it's home to a municipal utility which has approved 80 megawatts in solar power purchase agreements (PPAs) to meet approximately 18 percent of the city's load -- and essentially provide power for all of Palo Alto's 65,000 residents, according to the utility. 

But the big story is the price.

The price is an eye-opening 6.9 cents per kilowatt-hour for the 30-year PPA.

"Try building a new nuke or coal plant at that price," was Adam Browning of Vote Solar's take on the number. The price compares favorably to the typical market price referent and would seem to be able to take on prices paid for natural gas or wind. The projects still include the 30 percent federal Investment Tax Credit.

The city looked at 92 project proposals and ultimately selected:

  • The Elevation project in Fresno County (40 megawatts proposed by Silverado Power)
  • The Western Antelope project in Los Angeles County (20 megawatts proposed by Silverado Power)
  • The Frontier project in Stanislaus County (20 megawatts proposed by Ridgeline Energy)

All of the solar plants are sited on "distressed agricultural land." 

The city has a goal of 100 percent carbon-free power from the utility. These solar plants are a big step.

When the three solar projects come on-line in 2017, Palo Alto will generate almost half of its electricity from renewables. The city estimates that meeting its goal of being 100 percent carbon-neutral will cost the ratepayer about $3 per year.

The utility calculates the impact of its renewables contracts to be in the range of 0.11 cents per kilowatt-hour compared to conventional generation. The math looks to adjust for time-of-delivery, transmission costs, and capacity value.

According to the City of Palo Alto, this is the lowest-cost renewable energy it has procured in the last eight years.