Arkansas approves power contract for 81 MW solar PV project

Solar is coming to the U.S. South in a big way. After years of resisting solar in their service areas, falling prices are now making the technology irresistible to Southern utilities who seek lower rates for their customers and a hedge against fluctuating gas prices.

A month after Alabama regulators rubber-stamped Southern Company subsidiary Alabama Power’s plan to procure up to 500 MW of renewable energy over the next six years, the action has moved to Arkansas. Last Thursday the Arkansas Public Service Commission (PSC) approved a 20-year contract for Entergy Arkansas to buy power from an 81 MW solar project that NextEra plans to build in the state.

The Stuttgart Solar project in Arkansas County will be the first large-scale solar project in the state. In requesting approval for the contract, Entergy cited a number of factors, including saving ratepayers money. The utility’s witnesses testified that the project will reduce residential customer bills by $0.11 per month over the life of the project.

The plant will only supply 0.8% of the power needs of Entergy Arkansas’ 700,000 customers, but the utility says that it will be a money-maker even under scenarios that contemplate low gas prices, and may displace higher-cost generation.

Whether or not this is the case, Entergy will be insulated, as the commission also approved an energy cost recovery rider for the utility’s customers.

This is a particularly interesting move for an Entergy subsidiary. In addition to its retail electricity business, Entergy is one of the largest operators of nuclear power plants in the United States. Unsurprisingly, the company has long shown a preference for nuclear power, and in Arkansas an estimated 70% of annual demand is met by nuclear generators.

Similar to other utilities like Southern and Duke, Entergy may be becoming more flexible.

“Meeting the needs of our customers now and in years to come means Embracing new technologies in our industry that make sense for our customers and for the communities we serve,” said Entergy Arkansas President and CEO Hugh McDonald in April.

Entergy specifically asked regulators to make a decision on the project by the end of September, as it hopes to get it online before the pending drop-down of the federal investment tax credit (ITC) from 30% to 10% at the end of 2016. The Arkansas PSC described this as “prudent” in its ruling.