Buffett strikes cheapest electricity price in US with Nevada solar farm

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A Nevada utility owned by U.S. tycoon Warren Buffett has agreed upon a purchase price for solar power from a First Solar plant that might well be the cheapest electricity available anywhere in the U.S., reports Bloomberg.

NV Energy, a Nevada-based utility owned by Buffett’s Berkshire Hathaway, has agreed to pay just $0.0387/kWh for solar electricity from the 100 MW Playa Solar 2 project being developed by U.S. thin film company First Solar.

The PPA undercuts a previous price agreed with NV Energy last year – $0.046/kWh from SunEdison’s 100 MW Boulder Solar Project – and could quite possibly be the cheapest electricity in the U.S.

"That’s probably the cheapest PPA I’ve ever seen in the U.S.," Bloomberg Intelligence utility analyst Kit Konolige said. "It helps a lot that they’re in the Southwest where there’s good sun."

Having paid $0.1377/kWh for renewable energy in 2014, this new, lower price is an encouraging reflection of the rapid decline in solar costs over the past 12 months. Nevada’s Public Utilities Commission, which oversaw the submission of the 20-year, fixed-rate PPA, called the price point "very reasonable" when compared to both existing solar contracts and other fossil-driven generation sources.

Bloomberg New Energy Finance (BNEF) analyst Jenny Chase remarked to Bloomberg that NV Energy’s power price is "one of the lowest, definitely," adding: "That’s quite aggressive bidding by First Solar".

First Solar’s Steven Krum said that the contracts demonstrate how utility-scale solar power plants in the U.S. are becoming cheaper to build and operate, while SunPower CEO Tom Werner wrote in an emailed statement to Bloomberg: "Power generated from solar plants is cost-competitive with power from traditional fossil fuel burning plants, and becoming more cost-competitive every day."

The agreed purchase price bests the $0.0585/kWh agreed by Dubai’s state-backed DEWA utility in January, and lower further the barriers for greater renewable integration.

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