The costs of producing solar power are getting cheaper and cheaper all the time, and here’s one good example. According to Bloomberg, El Paso Electric Co., a power utility in the southwestern United States, has agreed to buy electricity from a solar power project, owned by solar panel manufacturer FirstSolar, for a much lower price than coal.
El Paso Electric Co. has apparently agreed Â to buy the electricity for 5.79 cents per kilowatt-hour. This is less than half the 12.8 cents per kilowatt-hour needed to pay for new coal plants.
So far, FirstSolar has developed over 50 megawatts of solar projects in New Mexico since 2011, and is planning for a further 21.5 megawatts by the end of 2013. The company has also been installing solar capacity elsewhere. Its project in Yuma County in Arizona was the biggest solar project running in the world back in October of last year.
Some analysts have long predicted that the costs of generating solar power will rapidly change to be able to compete with coal, and it looks like that’s already starting to happen. There are of course some federal and state subsidies at work on the price of power from this Macho Springs project. New Mexico’s state production tax credit is equivalent to between 2.5-2.7 cents per kilowatt-hour for the first decade of the project. There is also a 30 percent federal investment tax credit. Even when these are not counted, the price is still lower than Bloomberg’s stated average price for new coal plants.
And let’s not forget that even the big oil companies, even though they are making tens of billions in profit a year, for some strange reason still get government subsidies. I’d say some government subsidies to help develop solar power is money well invested.
Image: A FirstSolar project in Cimmarron, New Mexico