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Lightsource BP to build big solar project in Colorado to keep steel mill open

Colorado Gov. Jared Polis joined officials from local utility Xcel Energy Inc., solar energy developer Lightsource BP Renewable Energy Investments Ltd. and steelmaker EVRAZ North America Inc. on Sept. 27 to announce the 240-MW Bighorn Solar project at an Evraz steel mill in Pueblo, Colo.

Lightsource BP will finance, build, own and operate the $250 million project at the 1,600-acre Rocky Mountain Steel Mill site. It will sell all the electricity generated to Xcel Energy under a long-term power purchase agreement. The project will be the largest on-site solar facility in the nation dedicated to a single customer, Xcel Energy said.

Concerned about stable electric rates and supply, Evraz earlier indicated that the project was key to its plans to remain in Colorado and modernize, rather than shut the Pueblo mill and move to another state.

"This pioneering partnership with Xcel Energy and Lightsource BP marks a milestone for the development of our new rail mill and will make EVRAZ North America the industry leader in the use of renewable energy to produce the greenest steel and engineered steel products in the world, from rail to rod and bar," EVRAZ North America CEO Skip Herald said at the press conference. The company is a unit of Evraz PLC.

Lightsource BP is a strategic partnership between Lightsource Renewable Energy and the global oil and gas producer BP PLC. Earlier in the week, it closed more than $140 million in funding for a portfolio of solar projects in four U.S. states.

Xcel Energy has a 20-year agreement with the steel mill owner for a long-term capacity contract that includes the customer-sited solar project. While the solar project supports the fixed-rate contract between Xcel Energy and Evraz that is intended to stabilize the steel company's electric rates, the power purchase agreement is between Lightsource BP and the utility. The agreement requires final review by the Colorado Public Utilities Commission.

The Evraz steel mill gets most of its power through a direct transmission link to the nearby coal-fired Comanche plant. Xcel Energy's Colorado utility, known legally as Public Service Co. of Colorado, operates the Comanche plant but plans to retire unit 1 in 2022 and unit 2 in 2025. The solar project will provide replacement power to the mill. The mill is also Xcel Energy's largest single customer in Colorado.

The agreement bolsters Xcel Energy's broader Colorado Energy Plan to deliver 55% renewable energy to the grid by 2026 and reduce carbon emissions by 60%. Xcel Energy in late 2018 became the first major U.S. electric utility to announce a transition to 100% carbon-free power. The Polis administration said it is dedicated to moving Colorado's electric grid to 100% renewable sources by 2040.