TVA gives distributors more flexibility to generate their own power

Contract change expected to boost solar, renewable power

The Tennessee Valley Authority building in downtown Chattanooga is shown in 2016. / Staff file photo

For the first time in its 87-year history, the Tennessee Valley Authority is allowing the municipal power utilities and electric cooperatives that distribute TVA electricity to generate up to 5% of their own power to sell directly to their customers.

TVA announced Monday that it is offering a more flexible purchased power agreement to those local power companies such as Chattanooga's EPB that have signed long-term contracts to buy most of their power from TVA. After an environmental assessment and public review this year, TVA said it will now allow its distributors to build their own solar farms or other power generating facilities to help serve part of their power load.

The contract flexibility is expected to spur more solar and other renewable power generation in local communities across TVA's 7-state region, especially if solar panels and wind turbines continue to become more efficient and the power they produce becomes relatively cheaper. EPB, for instance, has budgeted $10 million in the next fiscal year to explore building some of its own solar generation or battery storage under the new contract provision.

"This option empowering local generation adds another avenue to grow distributed and renewable energy resources across the Valley," said Doug Perry, TVA's senior vice president for commercial energy solutions. "Working with our local power company partners, we continue to bring new solutions to market that reduce carbon, meet changing customer needs and attract jobs into our communities."

The move reflects the growing trend toward smaller, distributed energy generation from solar, wind and other renewable sources located closer to where the power is used rather than the giant, base-load coal or nuclear plants wholesale utilities like TVA have built and operated for decades.

"This is very positive for our community, and we see a need for local generation right now," said Jeff Dykes, CEO of BrightRidge, formerly the Johnson City Power Board in upper East Tennessee. "Customers demand additional solar power, and now we can have local solutions in place to quickly improve the competitiveness of our region by proactively meeting those demands."

Currently, 140 of 154 LPCs have entered into 20-year Long-Term Partnership Agreements with TVA. TVA spokesman Scott Fiedler said those long-term agreements give TVA the flexibility to allow distributors to generate some of their own power while maintaining adequate power demand for TVA's base-load facilities, including seven nuclear reactors which account for most of TVA's $22 billion in debt.

But some environmental groups contend TVA's flexibility is limited and distributors may still be restricted from getting cheaper power from the sun or other sources if solar power continues to decline in price. A study done by Siemens for Memphis Light Gas & Water concluded that Memphis could save at least $120 million a year by building its own solar and natural gas generation and replacing TVA with power bought through the Midcontinent Independent System Operator (MISO).

"This is an improvement, but we still believe that TVA unnecessarily limited the ability of local power companies to get the full 5%," said Stephen Smith, executive director for the Southern Alliance for Clean Energy in Knoxville.

Smith said TVA's definition for the 5% limit means that some distributors will be restricted below even 5% of their total sales "and we thought that TVA should give even more flexibility to its distributors if they can better serve their customers.

"TVA needs to be acting in the public good, not for its own benefit," Smith said.

But TVA said the new contract flexibility could allow for between 800 megawatts and 2,000 megawatts of solar or other distributed generation if all 154 local power companies took advantage of the long-term power agreements.

TVA President Jeff Lyash said the contract flexibility is in addition to TVA's Green Invest program in which TVA works with local power companies to supply renewable power to business or university customers wanting to purchase only green power, similar to what Google, Facebook and Vanderbilt University have already done in the Tennessee Valley.

Gabriel Bolas, Knoxville Utilities Board president and CEO, said Knoxville is using the Green Invest program to build its own 212-megawatt solar farm projected to supply about 8% of KUB's annual electric load and the contract flexibility could be added to that share of distributed power.

"Our investments in solar through the Green Invest program have allowed KUB to start making real improvements in our power supply mix, and this contract flexibility gives us another way to support our community's climate goals in the years to come," Bolas said.

The contract change by TVA was also welcomed by a coalition of businesses in the solar, wind and other renewable energy industry.

"The Tennessee Advanced Energy Business Council applauds TVA for responding to stakeholder input and market demands for more advanced energy options in a way that will allow our sector, and all sectors, of the economy to flourish," said Cortney Piper, executive director for the council of solar, wind and other energy producers.

Piper said nearly 360,000 Tennesseans are already employed in the state's advanced energy economy.

Contact Dave Flessner at or at 757-6340