By: Jordan Blum
More solar power will enter Texas’ power market next year to compete “apples to apples” with coal and gas power now that Dallas-based Luminant has signed the largest such deal in the country with SunEdison.
Power generator Luminant will buy 116 megawatts — enough to power 58,000 homes during normal demand — from SunEdison’s new 800-acre Castle Gap facility in Upton County, just south of Midland. The complex will have 485,000 solar panels when it is completed next year.
The companies are touting the deal as the largest in the country in which solar power is being bought to compete in a competitive wholesale marketplace with all other power generation.
“That is a first and that is a big deal,” said Julie Blunden, SunEdison chief strategy officer. “Solar is ready to compete head to head.”
Unlike typical agreements in which the solar power is sold to a specific customer or in a regulated portion of Texas, Luminant will sell the electricity to the competitive market managed by the Electric Reliability Council of Texas. The companies are not revealing the financial terms of the deal.
Solar power currently makes up less than 1 percent of the Texas power grid’s generation capacity, while wind power represents 14 percent, but several solar projects in the state are being planned.
The costs for solar power have come down 15 percent in the last year, said Steve Muscato, Luminant chief commercial officer, in a video presentation.
“When our customers are running the most amounts of electricity is when solar is producing,” Muscato said about the hot summer days in Texas. “So it doesn’t necessarily replace coal or replace gas because coal and gas are sort of there 24 hours a day, seven days a week.”
Blunden said she expects a lot more solar growth in Texas through large solar farms, as well as a lot more solar panels on roofs. It will take time, she said, but solar will eventually catch up to wind power growth in Texas.
“As we evaluate our future generation needs, we focus on projects that are profitable and able to compete in the wholesale market. This agreement with SunEdison meets those goals since solar generation costs have become increasingly competitive,” Luminant CEO Mac McFarland said in the announcement.