Pima County’s Solar Power Math

Pima County has agreed to buy $22 million worth of solar-produced electricity over a period of 20 years from Solon Development, a local company which received a no-bid contract from the County. Solon will build 11 solar arrays over parking lots.

Pima County will pay a fixed price of 12.8 cents per kilowatt over the life of the contract, versus 12.1 cents per kilowatt the County now pays to Tucson Electric Power. Doing a little math shows that while the TEP price remains at 12.1 cents, the County (taxpayers) will be spending about $60,000 more per year for electricity under this deal.

The math:

12.8 cents /kilowatt = 7.8 kilowatts/$

$22 million times 7.8 kilowatts/$= total purchase of 171.8 million kilowatts.

171.8 kilowatts divided by 20 years = 8.59 million kilowatts per year.

8.59 million kilowatts at 12.8 cents = $1.10 million.

8.59 million kilowatts at 12.1 cents = $1.04 million, difference = $60,000 per year.

Pima County anticipates, however, that TEP will raise its price; probably a good assumption. The County therefore claims there will be a savings of $4.5 million over the 20-year contract.

Apparently, the County’s crystal ball is able to tell them when and by how much TEP will raise its prices.

I wonder, also, if the County calculations are based on the name-plate capacity of the solar panels or the realistic probable production of electricity. Typically, solar panels produce only about 20 percent of their name-plate rated capacity.

If the solar panels produce less electricity than anticipated, then much of the projected savings disappear because the County will actually have to buy more electricity at the anticipated higher TEP prices. Over the long run, there may be some actual savings, but the price will be a much less stable grid because of the unpredictable variability of solar power.

See also:

Is a proposed Tucson Metropolitan microgrid of solar energy feasible and cost effective?

Five reasons Arizona should repeal its renewable energy standards mandate

Top Google Engineers Say Renewable Energy ‘Simply won’t work’