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October 21, 2014

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ENERGY:

NV Energy flush with ‘green’ power proposals

Obstacles to pursuing one are considerable, even with renewables mandate in 2015

The number of renewable energy developers responding to a call from NV Energy to design the utility’s next green project has doubled from last year.

Tom Fair, renewable energy executive for the company, said about 40 developers responded to the utility’s September request for proposals, compared with about 20 last year. Each year the utility has received more proposals than the last since it started seeking renewables projects early this decade.

But Fair cautioned that most of the projects proposed this year would never go beyond the drawing board. A proposal is only the first step in a sometimes years-long process of building a power plant.

“There are 100 things that will kill a project,” Fair said this week.

Of the approximately 20 proposals the utility received last year at this time, one solar project and four geothermal projects are likely to go before the Public Utilities Commission. A second solar project is still in the works, although Fair said its fate is unclear.

The challenges include cost, technological failures and roadblocks along a lengthy permitting process. But new challenges have arisen for the nascent renewable energy industry, such as fluctuating commodity prices and the difficulty of securing financing in a tight credit market.

“If you go to a bank today and you want to borrow a significant amount of money in the hundreds of millions, the bank will probably tell you, ‘Sorry, we don’t have money to lend,’ ” said Fred Morse, a senior adviser for U.S. operations of Spanish renewables developer Abengoa Solar. “You can’t even buy a house or a car in some places.”

Morse said the industry is counting on the credit market loosening to keep projects on track.

But even before developers get that far, there’s extensive screening by the utility.

Fair said this year’s proposals include geothermal, solar, wind and biomass power plants. The utility will evaluate such factors as whether the technology works, the reliability and experience of the company involved and the likely cost of power generated by the plant.

Developers who make it past the first round will meet with utility executives and consultants specializing in the resource the plant would use. Analysis will include potential environmental effects, the existence of power lines to the site, and the strength of the resource, whether sun, wind or hot water.

Fair said the company may do computer simulations of how a project would mesh with the system of power plants the utility owns.

Executives will choose projects that are cheapest and most likely to work and to produce energy the most often or at peak times. The utility will then negotiate long-term contracts to purchase energy from the new plants. Power purchase agreements typically last about 20 years.

Those agreements must be approved by the utility’s risk committee and its board of directors, as well as the state’s Public Utilities Commission. Getting that far in the process can take a year or more.

Although the utility has agreed to buy more geothermal power in the past because it has been less expensive and available 24 hours a day, this year it received more solar proposals. Fair would not discuss the specifics of those projects, citing privacy concerns, but said in general more developers are proposing energy storage alongside their solar plants than ever before.

By storing heat in molten salt tanks, solar plants can produce electricity long after the sun has gone down, which makes the projects more attractive to utilities.

Morse said Abengoa has proposed a $1 billion, 280-megawatt solar plant with molten salt storage outside Phoenix, and said that trend will continue. Even the federal government thinks heat storage will be a key to making renewables competitive with traditional fossil fuel plants, he said, and the Energy Department is pouring money into researching the technology.

Fair said NV Energy plans to spend about $2 billion on renewable projects by 2015, when it must be producing 20 percent of its electricity from renewable sources. Energy efficiency measures also count toward that 20 percent total.

NV Energy has eight renewables projects under contract in various stages of permitting and construction that will produce 280 megawatts, or enough for about 200,000 homes.

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