More details dribbling in about the Oceana Naval Station solar power plant…
According to Dominion Virginia Power’s SCC filing, the project is expected to cost $39.6 million, excluding financing costs, or $2,252 per kW. That is roughly three times the up-front capital cost per kW of Dominion’s newest gas-fired power plant under construction in Greensville County. Of course, solar’s “fuel” is free, while the cost of natural gas is not. The truly relevant comparison would be the so-called “levelized” cost, including both capital and fuel, plus whatever value you attach to the reduction of carbon dioxide emissions.
Quoting from Dominion filings, State Corporation Commission spokesman Ken Schrad explains the unusual deal structure, which includes the Commonwealth of Virginia as an integral component:
Through the partnership arrangement, [Dominion] will construct, own and operate the Oceana Solar Facility. …. The electrical output of the facility will be solely dedicated to the Commonwealth, which the Commonwealth has agreed to purchase for a negotiated price for a term of 25 years. … The sale of the energy is occurring pursuant to an agreement entered into between Dominion Virginia Power and the Commonwealth. Under the agreement, the Commonwealth is able to benefit from the sale of the energy into PJM [Interconnection, a regional transmission organization], while also supporting the deployment of additional solar generation in Virginia. …
The consolation for Dominion rate payers is that they are not subsidizing the project. “There will be no impacts to the Virginia jurisdiction cost of service, base rates, fuel rates, or [Rate Adjustment Clauses] as a result of [Dominion’s] ownership and operation of the project during the 25-year term of the agreement,” writes Schrad.
This is a highly unusual deal structure. The McAuliffe administration probably deserves kudos for creativity, but I still have questions about the structuring, cost ad risk allocation of the deal. Alas, it just turned Margarita time in Emerald Isle, N.C., so I must demur.
Maybe readers can provide insight. For anyone interested in digging into the details, the case number is PUE-2016-00079. The documents have been filed but, as of this moment, not yet posted online.
— JAB
