Declines in renewable energy pricing are creating opportunities for electric cooperatives in the Mountain West region to deliver cost-savings to their members, according to a new study from the nonprofit Rocky Mountain Institute (RMI), “A Low-Cost Energy Future For Western Cooperatives.”
To illustrate the importance of this broad regional trend, RMI produced a case study of Tri-State Generation and Transmission Association, a nonprofit, member-owned cooperative utility that provides power to more than 1 million consumers in Colorado, Nebraska, New Mexico and Wyoming.
RMI found that Tri-State’s customers could save over $600 million through 2030 if the co-op integrated more renewable energy resources into its supply mix rather than continue to operate its fleet of legacy fossil-fuel power plants. (Coal provided approximately half of Tri-State’s generation in 2017, notes RMI.)
Furthermore, the study found that a transition to renewable energy as the primary source of electricity would mitigate the risks of member-rate increases resulting from customer self-generation, exits and environmental policy changes by 30% to 60%.
According to RMI, the results of the study are consistent with the broader market trends illustrated though publicly available contract prices for new renewable resources in the Mountain West. In Colorado, Xcel Energy has proposed retiring significant coal capacity and generating 55% of its energy from wind and solar resources by 2026. This would likely result in a net customer cost-savings, considering the highly competitive bids for wind and solar energy received in response to Xcel’s request for proposals, says RMI.
The long-term fixed prices for new wind and solar projects coming into service in the early 2020s, as analyzed in the Tri-State case study, beat the operating costs of many existing coal assets in the West – let alone the cost to build and operate new coal- or gas-fired plants there, the study finds.
The estimated $600 million savings for Tri-State members can be realized through avoiding the operating expenses and fixed costs of its fossil-fueled power plants, according to the report. Operating legacy assets, like these in the West, has contributed to rate increases for electricity customers in Colorado, Nebraska, New Mexico and Wyoming, where rates have risen by more than five times the national average between 2007 and 2016, the report claims.
RMI compared the cost of continuing to operate a typical coal plant at a historical run rate to the cost of retiring that facility and purchasing renewable energy and capacity at current market prices. The option that integrates more renewable energy resources would result in costs equivalent to about $32/MWh, versus about $40/MWh for the option that relies on the coal plant – a 20% reduction in operating costs, according to the analysis.
“The rapid cost declines in renewable energy projects present utilities in the West with an unprecedented opportunity,” says Mark Dyson, a principal at RMI and a co-author of the report. “The falling costs of these technologies compared with the costs of fossil-fuel assets allow operators to deliver lower energy bills to their customers without sacrificing reliability, all while cutting emissions, reducing risk and supporting economic development in local communities. They deserve a hard look.”
The full report can be found here.
