Bielarski: Solar PPA ignores important factors

Letter to the editor

The vote to approve the amended solar PPA with Origis Energy is a wonderful example of why the Clemons Bill should be embraced by the Gainesville community as well as GRU customers. The amended PPA flew through the City Hall session with nary a bad word nor a tough question. That’s not how it should have happened. I know. I executed the first Origis Energy Solar PPA in 2020 at a price of approximately $31 per megawatt-hour. In that deal, GRU committed to accepting up to 50 megawatts per hour from that facility, and Origis was going to back up that facility with battery storage to protect against the challenges of solar intermittency. It was a good deal. Heck, it was a great deal. 

I signed the deal because at 50 megawatts, GRU could handle the additional supplemental power without impacting its own generation fleet. At $31 per megawatt hour, GRU could, in most cases, beat its internal marginal cost of generation over the next two decades. It made financial and operational sense.

All that changed when the County Commission denied Origis the permit to build the facility. Origis was looking at the need to acquire another site and was staring at higher costs after having lost pricing and tax advantages.  

I attended meetings with Origis during that time, and they asked GRU to amend the PPA. It would come at a higher price, and it would be a larger solar farm. I told Origis no. I was happy with the deal we had bargained for – the price and the megawatts we’d receive. If they didn’t like it, they could call for a force majeure and move on. That’s what should have happened. 

Here’s why: GRU has decided that a 30% higher price ($41/megawatt-hour) and 50% more solar generation (75 versus 50 megawatts of capacity; keep in mind that the contract requires GRU to buy all the power produced by the facility) are now acceptable. Mayor Ward said that it’s just about math. GRU staff said the price is lower than GRU’s anticipated future weighted cost of generation. 

Here’s what they don’t say: Solar is supplemental power, not accepted by the regulatory bodies as reliable power. That means in situations where solar generation is lost, emergency reserves can’t be called upon to support it. At 75 megawatts, the size of solar in GRU’s portfolio is extremely high and puts them at risk according to the last Integrated Resource Plan (IRP). The IRP put the upper range at 75.  That’s why I decided on 50. It gave GRU a margin of error, a margin that it no longer has. Put simply, GRU doesn’t have the right generating assets to support up to almost 100 megawatts of solar power on any particular day (75 from Origis and 25 from Solar FIT and Net-metering). 

Second, we shouldn’t be talking about weighted average cost. We should be talking about the next megawatt produced, or marginal cost. Solar doesn’t replace base load generation such as Deerhaven. It replaces the 75^th megawatt at Deerhaven or the 95^th at the biomass plant (just examples). Those last megawatt costs are a lot cheaper than the costs at lower production numbers because they come when the plants are operating at higher efficiency. So, the weighted cost argument is not a good comparison.  It means in some cases, Origis’ cost will be higher than GRU’s marginal cost of generation. That’s not been considered.  

What is also ignored is the stack of plants that will need to run when the facility comes online. With such a high level of solar flowing into the grid, GRU’s other assets may not be able to run (electric load from customers must balance electric generation). Less efficient plants may need to run on standby (using solid fuel, but not sending power through the lines). All of these operating conditions are costly and are not being considered.  

From what I heard, GRU’s governing board doesn’t even know these conditions or situations exist. One commissioner in particular is crowing that this solar PPA will allow GRU to reduce rates. That’s irresponsible, given what I’ve just said. It’s time for GRU to have a professional board that can ask the right questions, offer the appropriate direction, and govern the utility in turbulent times.

Ed Bielarski, Gainesville

Ed Bielarski is a former General Manager of GRU.

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