Xcel Energy-owned utility Public Service Co. of Colorado has put a solar power purchase agreement out to tender for a second time after the project that won the original contract was shelved, apparently because it was not financially viable.
The request for proposals was issued by PSCo for 240 MW of solar generation in Pueblo, Colo., to provide steel mill operator Evraz with fixed-price electricity as part of efforts to persuade the manufacturer to keep its operations in the state.
The utility filed with the Colorado Public Utilities Commission for approval of a solar power purchase agreement for the Evraz deal last year. Although care was taken to refer to the developer as "the IPP" throughout the filings, the public version of a diagram of the proposed structure referred to Coronal Energy (PFR, 8/17/18).
Eight months later, the utility has issued a fresh RFP for the same customer. The RFP was launched on April 9 with a deadline for bids of May 7 a final selection expected by June 7. The proposed in-service date is Jan. 1, 2022.
Spokespeople for Xcel in Denver declined to comment on the reason why the RFP had to be rerun, while Coronal’s director of project development, Russ Edwards, did not immediately respond to a request for comment.
Market observers tell PFR that the Coronal's bid was pitched too aggressively and that the project was not economic.
“It had to be rebid because it was priced in the mid-teens and didn’t pencil,” said a New York-based private equity investor, noting that this was part of a trend of developers pitching “aggressively priced” projects as a plethora of companies bid for a dwindling pool of traditional, long-term PPAs.
“We’re seeing bidders getting too aggressive and then they're unable to bring projects to fruition” notes a California-based developer. “We’re seeing a bunch of these in Texas.”