published Thursday, December 5th, 2013

TVA to boost renewable power purchases next year but pay lower premium prices

Fred Holder, left, and D.J. Shelton, with the company Greenform, stand next to an array of solar panels on the roof of the La-Z-Boy furniture factory in Dayton, Tenn. The factory has taken steps to become more environmentally friendly which include installing a starter array of solar panels on the roof and using battery-operated power tools and energy efficient lighting on a manufacturing pod.
Fred Holder, left, and D.J. Shelton, with the company Greenform, stand next to an array of solar panels on the roof of the La-Z-Boy furniture factory in Dayton, Tenn. The factory has taken steps to become more environmentally friendly which include installing a starter array of solar panels on the roof and using battery-operated power tools and energy efficient lighting on a manufacturing pod.
Photo by Doug Strickland.

The Tennessee Valley Authority plans to let more sunshine into its mix of power generation next year, but one leading residential supplier of the solar power said he still feels like he is being left out in the cold.

TVA announced Wednesday that it will resume purchases of solar, wind and other renewable power through its Green Power Providers program next month. But the federal utility is cutting what it pays for such power from 19 cents per kilowatthour this year down to 14 cents per kilowatthour in 2014. TVA officials said solar and wind generation is getting cheaper as their technologies mature and the agency is trying to expand its solar purchases within the same annual budget of roughly $25 million.

With a premium of 9 cents per kwh above the retail market price of 10 cents per kwh, TVA's Green Power Providers program attracted far more projects than TVA allotted for the subsidized program during 2013. As a result, solar suppliers reached the program's yearly cap by May and many proposed solar projects for residential and small business customers were delayed or scuttled this summer.

"At least TVA has finally told us what the program will be for next year and we can start some new projects again, but I had hoped TVA wouldn't cut its prices so much all at once," said Steve Johnson, founder and president of Lightwave Solar, a 7-year-old company that is building 80 solar projects across the Tennessee Valley this year. "This is going to hurt the solar industry in Tennessee."

Johnson said last year's premiums paid for solar power producers totaled $8.2 million, which he said he less than what TVA's top two executives together were paid in the past year.

"We had hoped that (TVA CEO) Bill Johnson would be more solar friendly, but it turns out he is not," the head of Lightwave Solar said.

But Patty West, director of TVA's renewable energy programs, said the utility is responding to the market.

"Demand for our renewables programs is strong," she said. said "We are working with our local power companies to direct capacity to the most cost-effective programs and streamlining the processes for these programs to make it easier for participants."

TVA is removing some restrictions on the type of renewable power it buys under its Renewable Standard Offer and is trying to streamline the approval process for new solar and wind projects. Under the program announced late Wednesday, TVA could possibly double the 128 megawatts of current contracted solar power by buying up to 126 more megawatts of solar generation.

TVA estimates it has about 6,400 megawatts of renewable energy capacity. Beyond its solar contracts, TVA has 4,600 megawatts of generation capacity from its own 29 hydroelectric dams, 1,500 megawatts of wind from its own Buffalo Mountain wind farm and contracts with wind power producers in the Midwest, and 60 megawatts of power under contract from biomass generation from landfill methane.

Stephen Smith, executive director for the Southern Alliance for Clean Energy, said the program changes will likely "create some hardships for some small players and cool the market somewhat."

"But given the budget cuts TVA is making throughout its organization, it seems to be a reasonable approach for the utility to take and we hope they can do better in subsequent years," Smith said.

TVA will still not buy as much renewable power as Georgia Power to the south or what other power producers do in North Carolina where the state has adopted a renewable portfolio standard for utilities.

"I think there is certainly room for improvement, but the problem is that we need to come to a better understanding of the value and worth of solar power and I hope that can occur through the Integrated Resource Power plan TVA is now undergoing," Smith said.

Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340

about Dave Flessner...

Dave Flessner is the business editor for the Times Free Press. A journalist for 35 years, Dave has been business editor and projects editor for the Chattanooga Times Free Press, city editor for The Chattanooga Times, business and county reporter for the Chattanooga Times, correspondent for the Lansing State Journal and Ingham County News in Michigan, staff writer for the Hastings Daily Tribune in Nebraska, and news director for WCBN-FM in Michigan. Dave, a native ...

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