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Xcel Energy 'optimistic' as Colo. bids defy tax, solar tariff headwinds

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Xcel Energy 'optimistic' as Colo. bids defy tax, solar tariff headwinds

Proposals for new renewable energy facilities to supply power to Xcel Energy Inc. subsidiary Public Service Co. of Colorado, including many projects with battery storage, remain highly competitive despite the tandem headwinds of federal tax reform and President Donald Trump's solar trade tariffs, the utility disclosed in a March 1 regulatory filing.

Passage of the new tax law and Trump's decision to impose 30% import tariffs on photovoltaic cells and modules prompted the utility in January to ask developers to refresh their November 2017 bids in response to its all-source solicitation. Financial experts have cautioned the tax law could have a chilling effect on tax equity for renewable energy projects, while some in the solar industry have expressed concerns over rising solar prices and a market downturn.

Developers' rebooted bids to Xcel Energy, however, are a show of continued strength for renewables. The majority of bids were unchanged from the original offers, while more decreased than increased in price. Of the more than 400 refreshed offers Xcel Energy received, 58% affirmed their previous pricing, 26% lowered their offers and 16% increased their pricing.

"Based on the updated bids, Xcel Energy remains optimistic about driving Colorado toward cleaner energy with affordable prices," a spokesman said in an email. "Most bid price changes were relatively small."

While median pricing remained attractive, there were some mixed signals. The average offer for 96 wind bids increased to $19.30/MWh, rising 6.6% from $18.10/MWh previously. The average price for 11 wind bids with battery storage, however, declined to $20.63/MWh from $21/MWh, narrowing the gap between wind with and without battery storage. Median solar bids rose to $30.96/MWh, up roughly 5% from a prior average of $29.50/MWh, with four fewer bids than the original 152. Solar-plus-storage bids averaged $38.30/MWh, rising about 6.4% from $36/MWh previously, on 79 total bids. Wind-solar-storage hybrid bids, though, dropped slightly to $30.41/MWh on average.

The median of 28 stand-alone battery storage offers declined nearly 7% to $10.53/kW-month from $11.30/kW-month previously. Bids for combustion turbines, both with and without storage, increased slightly, but remained significantly lower, in both number and cost, than stand-alone battery storage. The overall competitiveness of bids pairing power plants with battery storage aligns with a burgeoning pipeline of such hybrid projects.

Xcel Energy expects to select winners by late April, with a final Public Utilities Commission decision anticipated in July. (Colorado PUC Proceeding No. 16A-0396E)