TVA approves gas-plant purchase, solar contract

OREANDA-NEWS. February 13, 2015. Tennessee Valley Authority (TVA) directors today approved the purchase of a natural gas plant in Mississippi and a power contract with a new utility-scale solar plant to be built in Alabama as the government-owned utility works to rely less on coal-fired generation.

The board unanimously approved the purchase of Quantum Utility Generation's 760MW Choctaw combined-cycle power plant near Ackerman, Mississippi, for about \\$340mn, or \\$447/kW, half the cost to build a new gas plant, TVA chief operating officer Charles Pardee said.

TVA has bought most of the output of the Choctaw gas plant since 2008. If the deal closes, Choctaw will be the sixth combined-cycle gas plant TVA has purchased or built since 2007. Two more combined cycle plants are under construction.

The board also approved a 20-year contract for solar power from an 80MW solar facility to be built by NextEra Energy in 2016 in Lauderdale County, Alabama. The solar facility will be near TVA's Colbert coal plant where units are expected to be retired by mid-2016.

The average price of the solar contract equates to \\$61/MWh, Pardee said, which compares favorably with the price of power from the Choctaw plant of \\$59/MWh, based on a 20-year power purchase arrangement.

The NextEra contract starts at \\$42/MWh and escalates 5pc/year during the contract.

In comparison, round-the-clock assessments for the 2016-20 calendar strips average \\$36/MWh in the Virginia-Carolinas sub-region to the east of TVA and \\$31/MWh in Southern Co's service territory, to the south of TVA.

Director Virginia Lodge, who said she supports TVA's increased use of solar power, voted against the NextEra contract because it was not part of a competitive bidding process.

NextEra's 80MW solar facility will be significantly larger than any existing solar facility in the Tennessee valley.

TVA already has 128MW of operating solar and is considering contracts for as much as 182MW more. Most of the existing installations are small-scale distributed solar, mostly home rooftops, TVA said.

On the nuclear front, TVA director Marilyn Brown said that for the first time in eight years, all six TVA reactors are classified as "green" by the Nuclear Regulatory Commission, meaning all are under normal oversight.

In October, the federal agency returned all three Browns Ferry reactors to the normal inspection category after four years of increased inspection and oversight due to significant safety questions at the site.