(Bloomberg) — Warren Buffett’s Nevada utility has lined up what may be the cheapest electricity in the U.S., and it’s from a solar farm.
Berkshire Hathaway Inc.’s NV Energy agreed to pay 3.87 cents a kilowatt-hour for power from a 100-megawatt project that First Solar Inc. is developing, according to a filing with regulators.
That’s a bargain. Last year the utility was paying 13.77 cents a kilowatt-hour for renewable energy. The rapid decline is a sign that solar energy is becoming a mainstream technology with fewer perceived risks. It’s also related to the 70 percent plunge in the price of panels since 2010, and the fact that the project will be built in Nevada, the third-sunniest state.
“That’s probably the cheapest PPA I’ve ever seen in the U.S.,” Kit Konolige, a utility analyst at Bloomberg Intelligence in New York, said Tuesday. “It helps a lot that they’re in the Southwest when there’s good sun.”
The power-purchase agreement for energy from First Solar’s Playa Solar 2 project was the cheapest offered to NV Energy this year for new power plants. The utility also agreed to pay 4.6 cents a kilowatt-hour for power from SunPower Corp.’s 100- megawatt Boulder Solar project, the best price offered last year.
Both 20-year, fixed-rate contracts were submitted to Nevada’s Public Utilities Commission for approval July 1.
“When compared to existing solar contracts and to other fossil-driven generation,” the rates are “very reasonable,” the utility said in the filing.
“Power generated from solar plants is cost-competitive with power from traditional, fossil fuel burning plants, and becoming more cost-competitive every day,” SunPower Chief Executive Officer Tom Werner said in an e-mailed statement.