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Texas cooperative buys blocks of solar power under a short-term contract

Highlights

Brazos Electric's CoServe to buy 51.5 MW of solar

7X will build 100-MW solar PV in West Texas

Houston — A North Texas cooperative is stepping away from a traditional long-term power purchase agreement and will buy solar power from a generating firm under what it has called a "innovative" short-term fixed-price contract for firm blocks of power.

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CoServe Electric, based in the Dallas-Fort Worth area, said Monday it will buy 26.5 MW of power from a solar power facility to be built in West Texas that will deliver blocks of power under what was called a more "flexible and shorter-term contract" than a than a typical PPA, and one that "minimizes energy costs and mitigates risk."

Through its generation and transmission provider Brazos Electric Power Cooperative, CoServe will be buying the power from the 100-MW Lapetus solar PV project that is being financed and built by Austin-based developer 7X.

A "unique" aspect of the contract with CoServe and Brazos is that 7X will remove intermittent variability associated with solar generation from the facility by delivering fixed hourly blocks of energy, 7X has said.

It is the second block of power CoServe has contracted to buy from 7X. In May, CoServe contracted for the purchase of 25 MW of power from the Lapetus facility that is to be built in Andrews County in West Texas.

The two deals call for the delivery of 51.5 MW of firm solar power to be delivered to the ERCOT North hub from the PV facility to be located west of Midland, Texas, with construction slated to begin in the late first quarter of 2019.

CoServe said it was the "competitively priced fixed blocks" of power that prompted it to double its original power purchase. It said that the low-priced power will benefit the co-op's more than 235,000 electric meters.

BRAZOS BOUGHT 42.5 MW OF SOLAR FOR SEVEN MEMBERS

Additionally, Brazos said Monday that it agreed December 3 to buy 42.5 MW of the remaining solar power from the Lapetus project on behalf of its seven distribution cooperative members. While Brazos did not describe the terms of it short-term contract with 7X, it did say the contract will go into effect December 31, 2019.

"After taking a poll of our owner-members, seven of our distribution cooperatives requested Brazos to procure cost-effective solar power to supply to their retail members," Brazos Electric's Executive Vice President and General Manager Clifton Karnei said in the Monday release.

7X said in an email that some energy buyers want more flexibility and control than a traditional 20-year fixed-price PPA agreement allows -- such as shorter contract terms, the ability to procure specific amounts of energy at low fixed prices when loads are high, or the option to procure energy at wholesale prices during off-peak hours when it is least expensive.

In its December 3 statement announcing its deal with Brazos, 7X said the fixed blocks of solar can be forecast down to the 15-minute settlement interval for the duration of the purchase contract.

Buyers can lock in low energy rates during peak periods when electricity can be most expensive "and remove the intermittent variability and weather risk of delivered energy associated with traditional solar PPAs," the company said.

-- Jeffrey Ryser, jeffrey.ryser@spglobal.com

-- Edited by Valarie Jackson, newsdesk@spglobal.com