First Solar is also establishing a vertically integrated photovoltaic manufacturing plant in the same region. The company plans to commence production by 2025, showcasing its commitment to expanding renewable energy capabilities in the area.
According to Roger Waldrep, the vice president of major projects at TVA, the utility remains dedicated to investing in the future energy system to benefit the people of the Tennessee Valley. He expressed enthusiasm for collaborating with First Solar and emphasized TVA’s intent to incorporate more domestically developed and manufactured solar technology into their portfolio.
Earlier this year, TVA initiated a request for proposals in search of up to 5 GW of carbon-free power to be operational by 2029. Currently, the utility is in negotiations with 40 developers, potentially enabling an expansion of up to 6 GW.
Despite only owning 1 MW of solar capacity across 13 sites, TVA has an impressive 993 MW of contracted operational solar capacity and an additional 2,212 MW of committed projects in various stages of development as of June 30.
Furthermore, there are plans for an additional 100 MW of solar capacity at the Shawnee Fossil Plant near Paducah, Ky., pending environmental review. To complement intermittent renewable generation, up to 7,000 MW of natural gas generation is also set to be developed.
TVA participates in the voluntary Green-e program, registering the renewable energy certificates produced by its portfolio. These certificates are then made available to customers through various green pricing options.
It is important to note that RECs generated in Southeastern states are not assessed by OPIS, as these states generally do not partake in wholesale power markets.
Regional Transmission Organizations and REC Prices
REC prices can vary significantly across regional transmission organizations. For instance, on the Nodal Exchange, Green-e Texas Front Half V23 RECs were traded at $2.30/MWh, while PJM Tri-Qualified V23 RECs, which can be retired in New Jersey, Pennsylvania, or Maryland, were assessed by OPIS at $34.05/MWh.
Growth in TVA’s Service Region
The population in TVA’s service region has been experiencing remarkable growth, surpassing the national average by a factor of six in recent years. Between 2019 and 2022, the utility’s load has increased annually by 3%, as confirmed by Fiedler.
Challenges in Solar Implementation
Similar to other utilities, power suppliers, and developers, TVA has faced several challenges while bringing solar projects online. These challenges include supply chain disruptions, inflationary pressures, and shifts in U.S. trade policies. In their recent 10-Q filing with the U.S. Securities and Exchange Commission, TVA highlighted that most of their contract purchased power agreements from previous RFPs have been impacted by project delays, price increases, and cancellations.
Termination of a Solar and Storage PPA
Earlier this year, TVA terminated a power purchase agreement (PPA) for a 66 MW solar and 66 MW storage development after a counterparty defaulted on the agreement. This information was disclosed in their filing with the U.S. Securities and Exchange Commission.
Market Stabilization and Clarity on Policy
Fiedler acknowledged both the supply chain challenges faced by TVA and the market’s ongoing stabilization. However, TVA is currently awaiting further clarity on the Inflation Reduction Act passed by Congress last year before making commitments to additional projects.
Potential Relief with Increased Solar Manufacturing Capacity
It is anticipated that some of the existing bottlenecks will ease as American solar manufacturing capacity expands. Notably, First Solar has invested approximately $1.3 billion in expanding its current U.S. capacity of 6.5 GW direct-current modules per year to over 10.9 GW DC modules by 2026. The majority of this investment will be directed towards its Lawrence County plant, which is scheduled to come online in 2025.
